5 ms·

We’ve also learned this lesson the hard way. These are now the clauses we require in every project we do: - Payment is due X days after receipt of invoice, or

We’ve also learned this lesson the hard way. These are now the clauses we require in every project we do: - Payment is due X days after receipt of invoice, or immediately after the consultant has addressed any quality issues, whichever is sooner - Late payment shall incur interest at 8% above the BoE base rate and a late fee of 100 GBP as per the UK Late Payment Legislation. Partial payments on invoices shall apply to late fees, interest, and then principal, in that order. - In the event of a late payment the invoice for the next deliverable shall immediately fall due. - The consultant shall be entitled to shift deadlines on deliverables in the event of a late payment as a result of any work disruption, without incurring any liability. - Payment shall be made in X currency, or an exchange rate at X date on Oanda.com shall apply. - The client is responsible for any bank fees incurred by their, or any intermediary bank. In the event of a SWIFT transaction it shall be made with the OUR payment code. - The jurisdiction in the event of a conflict shall be England and Wales. Neither party shall be bound by arbitration. - The client and consultant shall both indemnify the other up to the total value of the contract and shall not under any circumstance be liable beyond X GBP. We also no longer share downloadable links of our deliverables until they are paid up. They get a view/comment only link for reports/data etc. We’ve found that clients that aren’t willing to accept these terms won’t pay you either way. We determine the net days on the invoice based on the credit rating of the client. Ironically, the good clients pay within 2-3 days normally, and the difficult ones are very “long tail”. About 1% of contracts tend to fully or partially default on their payments. We’re in a particularly credit poor industry but our average delay due to late payment is 23 days. Those clients where we stop delivery pay on average 11 days sooner than those contracts where we don’t stop delivery. This is based on around 2,000 invoices sent over the last 5 years.

neonstatic 5mo ago
> - Payment shall be made in X currency, or an exchange rate at X date on Oanda.com shall apply. Typically you would reference average exchange rate published by the central bank
eckesicle 5mo ago
Oh and another lesson! Ensuring that each deliverable invoice is small enough that it falls under the simplified claims procedure (in the UK it’s 10,000 pounds) greatly simplifies collection. It costs something like 80 quid to file for recovery in court and in our experience invoices are immediately paid up when a “Letter before action” is sent. You burn the relationship, but arguably you probably don’t want it anyway.
- deleted 5mo ago
  [deleted]
- ilamont 5mo ago
  > simplified claims procedure I believe this is what we call small claims court in the United States. The threshold varies by state, but it is a very effective way to deal with recalcitrant companies both large and small.
  - zem 5mo ago
    recalcitrant companies with a presence within the court's jurisdiction, which in the OP's case doesn't sound likely.
  - pbhjpbhj 5mo ago
    We call it "small claims" in the UK too. In England & Wales it's officially a "court claim". In Scotland I think it's "simple procedure". https://www.gov.uk/make-court-claim-for-money https://www.gov.uk/make-court-claim-for-money
- pseudohadamard 5mo ago
  And another lesson: If it looks like a complete catastrofuck the minute you walk in the door, walk straight back out again. Sometimes the only winning move is not to play. This isn't arbitrary peanut-gallerying, I've walked away from several jobs that weren't anywhere near as bad as the one in TFA because I couldn't see any way forward that wasn't going to end in disaster. One of them at least, I'm fairly certain, would have ended up in criminal prosecution.
yellow_lead 5mo ago
It seems like none of these terms would have saved OP though
- QuarterReptile 5mo ago
  I think OP needed "emergency service is cash up front". In a different domain, this is the painful lesson of almost anyone who tries to help people in a bind -- you can try to help, but yours is unlikely to be the advice that sets them straight, so you shouldn't get too invested with unproven or, especially, proven unreliable actors.
  - doctorhandshake 5mo ago
    >> "emergency service is cash up front“ Neatly distilled I believe you are correct
    - beede 5mo ago
      This brilliantly captures what I see from YouTubers who do off-road vehicle recovery. People are super nice until the bill comes, then you learn “only release the vehicle on payment.”
- deleted 5mo ago
  [deleted]
- ufmace 5mo ago
  It's worth keeping in mind that the only practical "saving" for the OP will result in not doing the job at all, since this client most likely doesn't actually have the money and never will. It should be, oh, short-term rush job in a foreign country for a sketchy client? That is most definitely cash up front time. Oh, you can't afford that? Sucks to be you, not going to do it.
fmx 5mo ago
> Ironically, the good clients pay within 2-3 days normally, and the difficult ones are very “long tail”. Why ironically? Isn't that exactly what you'd expect?
- anonymars 5mo ago
  The ironic part is that the clients that don't need the looser payment terms (more time to pay the invoice) are the ones that get them Kind of mirrors "it's expensive to be poor"
  - joshvm 5mo ago
    This is the sort of economics that small companies face when working with large companies, particularly when physical things/CAPEX are involved. Large companies expect net 30/60 terms to pay you. That's much simpler for their accounting/purchasing department. This bureaucracy occasionally necessitates nudging, especially if the intermediary you're dealing with didn't set up the invoice request on time in whichever SAP/Salesforce/Oracle system they use. This is usually the same the other way; many vendors will give business clients net 30. That's nice if you're a small company and need to plan ahead. But occasionally, because you're considered small (liability), some vendors will want the money up-front. So unless you're very careful with cashflow, you end up in situations where your main sources of income (big contracts) are coming in after you need to spend money on a widget to fulfill deliverables. Depending on the situation, the contract can demand the client purchase/ship things and work doesn't start until you have them in hand. This is usually the best route as you now have an out, and it's not an unreasonable request, but it doesn't always pan out that way!
- moron4hire 5mo ago
  I took "good client" to mean, "is easy to work with/communicates well/knows what they want", not just "pays on time". The inverse being, the ones who don't pay on time were already a pain in the ass to work with.
veunes 5mo ago
I think the hidden advantage here isn't even enforcement, it's filtering
- shermantanktop 5mo ago
  That's almost always the case. Bad actors go find an easier target.
k2enemy 5mo ago
> - Late payment shall incur interest at 8% above the BoE base rate and a late fee of 100 GBP as per the UK Late Payment Legislation. Partial payments on invoices shall apply to late fees, interest, and then principal, in that order. Do you mean 8 percent, or 8 percentage points?
- eckesicle 5mo ago
  The exact wording in our contracts and the government guidance is “8% plus the Bank of England base rate”. They mean “percentage points”. https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt https://www.gov.uk/late-commercial-payments-interest-debt-re... As I understand it, from our lawyer, is that this exact wording is automatically enforceable in UK courts and easiest in the event of a dispute. It’s also generally internationally accepted.
  - hananova 5mo ago
    I've always wondered, in cases like this where 8%+2% (for example) can either mean 10% or 8.16%, why doesn't the contract just give a fictional example of how the maths would work out?

neonstatic 5mo ago

> - Payment shall be made in X currency, or an exchange rate at X date on Oanda.com shall apply. Typically you would reference average exchange rate published by the central bank

eckesicle 5mo ago

Oh and another lesson! Ensuring that each deliverable invoice is small enough that it falls under the simplified claims procedure (in the UK it’s 10,000 pounds) greatly simplifies collection. It costs something like 80 quid to file for recovery in court and in our experience invoices are immediately paid up when a “Letter before action” is sent. You burn the relationship, but arguably you probably don’t want it anyway.

deleted 5mo ago
[deleted]
ilamont 5mo ago
> simplified claims procedure I believe this is what we call small claims court in the United States. The threshold varies by state, but it is a very effective way to deal with recalcitrant companies both large and small.
- zem 5mo ago
  recalcitrant companies with a presence within the court's jurisdiction, which in the OP's case doesn't sound likely.
- pbhjpbhj 5mo ago
  We call it "small claims" in the UK too. In England & Wales it's officially a "court claim". In Scotland I think it's "simple procedure". https://www.gov.uk/make-court-claim-for-money https://www.gov.uk/make-court-claim-for-money
pseudohadamard 5mo ago
And another lesson: If it looks like a complete catastrofuck the minute you walk in the door, walk straight back out again. Sometimes the only winning move is not to play. This isn't arbitrary peanut-gallerying, I've walked away from several jobs that weren't anywhere near as bad as the one in TFA because I couldn't see any way forward that wasn't going to end in disaster. One of them at least, I'm fairly certain, would have ended up in criminal prosecution.

yellow_lead 5mo ago

It seems like none of these terms would have saved OP though

QuarterReptile 5mo ago
I think OP needed "emergency service is cash up front". In a different domain, this is the painful lesson of almost anyone who tries to help people in a bind -- you can try to help, but yours is unlikely to be the advice that sets them straight, so you shouldn't get too invested with unproven or, especially, proven unreliable actors.
- doctorhandshake 5mo ago
  >> "emergency service is cash up front“ Neatly distilled I believe you are correct
  - beede 5mo ago
    This brilliantly captures what I see from YouTubers who do off-road vehicle recovery. People are super nice until the bill comes, then you learn “only release the vehicle on payment.”
deleted 5mo ago
[deleted]
ufmace 5mo ago
It's worth keeping in mind that the only practical "saving" for the OP will result in not doing the job at all, since this client most likely doesn't actually have the money and never will. It should be, oh, short-term rush job in a foreign country for a sketchy client? That is most definitely cash up front time. Oh, you can't afford that? Sucks to be you, not going to do it.

fmx 5mo ago

> Ironically, the good clients pay within 2-3 days normally, and the difficult ones are very “long tail”. Why ironically? Isn't that exactly what you'd expect?

anonymars 5mo ago
The ironic part is that the clients that don't need the looser payment terms (more time to pay the invoice) are the ones that get them Kind of mirrors "it's expensive to be poor"
- joshvm 5mo ago
  This is the sort of economics that small companies face when working with large companies, particularly when physical things/CAPEX are involved. Large companies expect net 30/60 terms to pay you. That's much simpler for their accounting/purchasing department. This bureaucracy occasionally necessitates nudging, especially if the intermediary you're dealing with didn't set up the invoice request on time in whichever SAP/Salesforce/Oracle system they use. This is usually the same the other way; many vendors will give business clients net 30. That's nice if you're a small company and need to plan ahead. But occasionally, because you're considered small (liability), some vendors will want the money up-front. So unless you're very careful with cashflow, you end up in situations where your main sources of income (big contracts) are coming in after you need to spend money on a widget to fulfill deliverables. Depending on the situation, the contract can demand the client purchase/ship things and work doesn't start until you have them in hand. This is usually the best route as you now have an out, and it's not an unreasonable request, but it doesn't always pan out that way!
moron4hire 5mo ago
I took "good client" to mean, "is easy to work with/communicates well/knows what they want", not just "pays on time". The inverse being, the ones who don't pay on time were already a pain in the ass to work with.

veunes 5mo ago

I think the hidden advantage here isn't even enforcement, it's filtering

shermantanktop 5mo ago
That's almost always the case. Bad actors go find an easier target.

k2enemy 5mo ago

> - Late payment shall incur interest at 8% above the BoE base rate and a late fee of 100 GBP as per the UK Late Payment Legislation. Partial payments on invoices shall apply to late fees, interest, and then principal, in that order. Do you mean 8 percent, or 8 percentage points?

eckesicle 5mo ago
The exact wording in our contracts and the government guidance is “8% plus the Bank of England base rate”. They mean “percentage points”. https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt https://www.gov.uk/late-commercial-payments-interest-debt-re... As I understand it, from our lawyer, is that this exact wording is automatically enforceable in UK courts and easiest in the event of a dispute. It’s also generally internationally accepted.
- hananova 5mo ago
  I've always wondered, in cases like this where 8%+2% (for example) can either mean 10% or 8.16%, why doesn't the contract just give a fictional example of how the maths would work out?