Re: FN-FORUM: Advice on payment agreement.

date posted 20th July 2005 09:26

Hi,

I would agree with Julian as to the payment splits and the absolute
requirement to walk away if he won't do that or won't pay.

40% up front
50% on delivery (before the site goes live)
10% 30 days later as a "bug fixing period, where a bug is something clearly
defined in the written spec that is returning errors or is absent"

Create a written spec before the job starts and ensure he has signed off on
this before you start the work, otherwise he'll be changing his mind every 5
minutes and refusing to pay anything to waste your time.

So the entire procedure should be, and this worked for me when I freelanced
and it works for the company I work FT for now:

1. Agree rough spec and ballpark quote
2. You produce a written spec outlining what's going to happen and for how
much. Do not produce this until the client has agreed in writing that you
are going to be doing the job, otherwise he can take it to [much cheaper
non-UK developer] and just ask them to do it for less.
3. The spec goes between you and the client until he agrees with it. If he
can't pay what the spec will charge, remove stuff from the spec - don't do
it for less.
4. Client signs off on the spec, signs something to agree with the spec and
the payment terms, pays you 40% up front, development begins.
5. Show client stuff during development so he knows work is proceeding
according to schedule and that you haven't done a runner with his 40%. If at
any stage he says "ooh, can we have this?" or "oh, can we change that?" make
a judgement call - if it isn't in the spec, you can charge for it as an
enhancement as it isn't something he's agreed to pay for.
6. When the project is ready, tell the client. Move the project to "live"
only when the 50% payment has been received. Issue an invoice for the final
10% payment with a 30 day payment window.
7. Support the project for the agreed 30 day period, bug-fixing etc as
required. After 30 days, if the client has not paid the 10%, turn the site
off until he has.

This works. If the client won't do any of that, move on, tell them to come
back when they will. There are a few common-sense things to include along
the way (eg. don't develop the site on their server, ensure their server can
do what your development site can do etc), but it's basically sound.

Good luck.

Iain