My friend and business partner in absentia taught me healthy payment terms:
- Never start any work without a signed contract
- Never start any work without being paid at least 1/3 of the project price up front. Only that way can you know that the client is serious and willing to put his money where the mouth is
- Require 1/3 of the payment up front, 1/3 upon the mock-up, and 1/3 upon delivery and sign off of the final product
I agree with her. However, in reality I don’t have the confidence to dictate the terms because I need the work too much, and the clients don’t need me enough.
The online store project
For example, back in May I agreed with a local importer, Max (fake name, obviously) to set up and manage an online shop for him as a partnership. The goods are also sold through a physical outlet which he manages. I will be paid commission of the online product sales and am responsible for managing the online shop and payment processing. I will also be paid an hourly rate for my time spent setting up the store and writing the website content. We have a signed contract (supplied by me) that outlines the conditions, and I didn’t commence the work before it was signed. So far so good.
The deadline for setting up the online shop was 1 June, so the work has all been done. However, the arrival of the goods was then delayed repeatedly, now till late August. There are just a few products in the online store for now and there haven’t been any sales. (more…)