I started Upstatement more than five years ago with my friends and partners. In addition to leading our WordPress development work, I’ve also lead our invoicing to make sure we’re paid.
Over the years I’ve learned a lot (mostly, the hard way) about the best way to get properly paid. Here are some of my favorite strategies to making sure you’re paid for the hard work you put in.
1. “How much do you want to spend?”
Be upfront of what the value of your services and spur an honest conversation with your client about what they want to pay for. On early calls I never ask “what’s your budget?”
Instead, I like to ask “how much do you want to spend?” This gives me the answer, but puts the client in control of providing a clear indication of how much they really want to commit. It sets the tone for a collaborative process where we can both benefit.
2. Get a billing contact
Once things are ready to go, I always make sure to get the name of the person who works in accounting or accounts payable who actually processes the payments. If there’s a late payment, this lets us avoid going through the main project contact and directly to the person who signs the checks.
3. Create an email address just for invoices
When sending invoices I always make sure to do it from a nameless email: something like billing@upstatement or sales@upstatement. Why? Once agreed to, invoices are non-negotiable. When a bill comes from “Jared” it’s vulnerable to everything a person is vulnerable to: excuses, delays, apologies, etc. Sending it from a machine helps reinforce the idea that there’s only one thing that can satisfy the beast: paying your bill.
4. Use an invoicing webapp
Whether it’s Harvest (my favorite), FreshBooks, Xero or one of the others (there are dozens). These services are well worth the cost. You can do it for free through sending PDFs and tracking via Google Docs and Excel. But you’re an awesome WordPress developer, remember? Save your time to work on the next great theme or plugin.
5. Work == Payment
Philosophically you want to link the work product with payment. If a client wants to hold 50% of the payment until 100% of the work is complete, that puts you in an unfair position. If a client is dead set on holding out a large portion until the end, I’ll still insist on getting at least 90% of the payment at the 90% point. That way, if there’s a small piece they are giving me a hard time about, there’s only 10% of the project cost outstanding.
6. Payment == Work
Similarly, there are dangers to demanding a large up-front payment. By doing so, you’re removing a powerful tool from your client’s hands. What’s so bad about that? When people feel disempowered it threatens trust. And when you’re building someone’s website or app it requires a great deal of trust to make a project succeed. In short: if you think you’re getting too good of a deal, you just might be.
7. Save time for the important stuff
Too often I’ve seen clients blow their hours on early phases of a project and then get upset because they need to re-budget for later phases.
To avoid this, we make sure estimates separately “bucket” hours in different phases. Can’t come to an agreement on wireframes? That’s fine. But the hours for design or development are protected and can’t be used except for those activities. Additionally, we sometimes create an “overflow” bucket at the beginning of the project that can be used for any phase that takes longer than expected. If it’s unused? Great! We’re happy to refund it.
8. Avoid Sticker Shock
“How much time did you use up!?!?!!!” If you’re selling time, it’s important for the client to know how much they’ve consumed. Taxi cabs have meters, right? So when you get to the airport you can’t be surprised that it cost $40.
You want to keep the client apprised of the costs at every turn. Get into the habit of sending out hour reports with how much time has been used or remains every single week.
Don’t make it a matter of subjectivity (“well, things are tense right now so I don’t want to bother them…”). If it’s a predictable pattern: like every Friday at 4pm, it can help set expectations when things are going both good and bad.
9. Late Fees are a tool, not a business model
I’m always careful to establish a late fee in the contract. I’m not out to make money (there’s never been a successful business built around punishing your customers—remember Blockbuster’s late fees?), I’m just out to get paid for our work.
In Massachusetts the legal limit is 1.5% per month. That’s a negligible amount, but it’s a valuable tool in getting on-time payment.
After a bill is a few days late, I always give a call to the client lead or billing contact to let them know that they’re overdue and there’s a small late fee applied. I usually hear “oh no, I can’t go back to my boss and ask for extra money—what if I FedEx you the check overnight? can you waive the late fee?” And of course, that’s what I wanted all along.
10. Be Annoying
If you still haven’t gotten paid, don’t be afraid to be annoying—very annoying. If a company is having trouble paying its debts, the people who work in the billing department have a huge motivation to get the most annoying people off their backs. Waiting patiently can sometimes feel like the “right” thing to do, but those people will lose out to the loudest voices clamoring for their fair share.
Any other valuable tips? Share in the comments.
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