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Net zero terms only works for a few types of non-retail "businesses".
--a cash-based laborer who mows your lawn (could be your neighbors teenager, or pickup labor from Home Depot)
--copy machine / printer repair
--in-home/in-office massage (not workout trainer)
The immediate demand for money (usually cash) is because the service provider is not likely to return. Meaning, no contract, no ongoing business relationship. And, there is high occurrence of refusal to pay.
I don't know what kind of services you provide. But, if they are IT-related, there should be no argument of net 15 for small projects. Keep in mind that even small companies have a process for handling bills.
Take this case:
--buyer/signer presents bill to accounting(could be delayed 1-2 days)
--A/P enters bill (1-2 days)
--cash requirements evaluated against terms...schedule payments for the week (1-2 more days)
--payment approved; checks cut (1 day)
So, even if each step took 1 day, you're looking at 4 days before a check can be ready at the front desk for you to pick up.
If it must be expedited because of terms, overdue status, executive decision, this requires processing one A/P outside of the normal cycle, then more human interaction to walk the bill for approval & signature.
All for $86? Unless you were a personal friend in great need...I would balk at the demand. But...if you were a great friend, I would have expected some warning ahead of time (or in private conversation) that you really need the money fast. Instead, you e-mailed a demand (the technical term for your stating that a bill is immediately due and payable).
Were you a jerk? No. Inconsiderate? Depends on the type of service.
If you were an IT vendor, yes. Rude.
If you were a freelance artists...maybe not. Bad form to send a demand along with the bill.
I think it was a good effort to reply that hand delivery was not necessary. It was not the best-worded. Still sounded like you expect immediate payment for your services.
My 2 cents. Take it or leave it.
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As a freelancer, I know that sometimes your budget is based on a week-to-week basis. There is not much in the way of long-term budgeting going on because there is just no way to see that far. We don't have crystal balls!
And while he's probably trying not to stiff you over, most contractors and freelance workers have their reasons for asking for money how and when they do. They've either been screwed in the past or have a family to feed. A lot of the time its both.
Just try to think of your budget and how it could be worked into a different pay period schedule. If that seems impossible, it's your prerogative. Once you complete the task at hand, they are the ones indebted to you, not the other way around.
Good luck!
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Beware of offering terms, many businesses are using the current economic climate to stretch their vendors. 30 days can easily become 60 days, if you need the money then don't offer terms.
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If anything all the "I appreciate the opportunity to work with you and will do absolutely anything I can to make you happy" stuff comes over like you are someone that is desperate for work and can be walked all over.
If other people pay up promptly as you want, and you really need that to happen, then you're probably best of letting him know that you can't do business on the terms he proposes.
However, maybe you also want to look at your own cashflow management. Because if getting $80 now or in a few weeks time makes the difference being able to pay the bills or not, that is precarious, and a situation that is best avoided in the first place.
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Here is the the thing that I have an issue with. He expected you to drop everything to do emergency work over the weekend on something he hadn't paid for yet, but is not willing to pay for that "rush" work because it is too much of an inconvenience for him write a check. I have a long term relationship with my plumber, but if I call him to come on a Saturday night, he is expecting a check or CC before he leaves.
Next time I would make it clear that "rush" work requires a deposit, especially if I am understanding that he was having you make modifications to something you already did and he hadn't paid for.
I am on both sides of the coin. I handle the AP for a company and the AR as well as freelance on my own. We have several accounts with Net30 and our policy is to pay them EVERY WEEK. We want our money so we pay when we owe.
On the flip side I have people who I have done work for and am making changes for them and they haven't paid me yet. I told them 1/2 upfront but b/c it was a brother of a friend of a friend I didn't enforce it and now out of an sense of decency I still make the updates with no money in my pocket. My lesson is don't start work without getting something down. If they don't like it then they probably would not have been a good customer. I know its tough to turn away business, but in a sense you still worked for free.
Sorry if this sort of rambles...bottom line you were polite and professional.
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Before you begin working with someone, do you have a contractual agreement that you have them sign? If so, in this agreement does it list the terms? If you don't have an agreement stating when you will be paid (at the time the work is completed) then perhaps you should look into implementing that as well.
I don't think you are being difficult with the client. I guess use this as a learning experience. Perhaps settle on biweekly with him, but going forward, make certain the terms are clear (with a contract).
I hope this helps!
Thanks,
Jen
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Answered Question
M$1
May 14, 2009 11:38 PM
Am I being a jerk? What would you do?
Here's the sitch...
I'm invoicing a client for irregular work. He has 2 (very small) invoices for work that I completed about a week ago.
I sent him an email this morning with the following:
===
Good Morning Jack,
You have 2 invoices currently outstanding with a total of $86.16
I have attached these 2 invoices to this e-mail for your review.
Can I pick a cheque up from you or can we arrange an alternative?
Thank-you,
Rob
===
This evening, he sent me this email in reply:
===
Rob, as always I am happy to pay for your services, but net zero is not on the table. Its a shame that the billing is causing me such grief
I can't pay up to every time you issue an invoice for $15 nor can I run up to your office to deliver it
Lets find a better way, once a month sure, maybe every 2 weeks but not net 0
lets discuss
Jack
===
And my reply:
===
No problem! Every 2 weeks is fine with me.
I'll create the invoice as work is completed so that we don't miss anything, but feel free to take the couple of weeks to issue payment if you need the time.
Also, you don't have to hand deliver payments to my office. There are a wide variety of solutions to this for you. You can leave a check at the front desk in your office, mail a cheque to me, drop a payment off to any {bank name}. I also accept credit cards, Interact and wire transfers, all of which don't require anything other then your information and authorization.
Most folks that I'm working with right now either mail me a cheque or pay with a credit card.
Above all else Jack, I appreciate the opportunity to work with you and will do absolutely anything I can to make you happy with with my work. If there is anything else that I can change to make this easier for you, please don't hesitate to let me know.
===
I really can't afford to run terms with this business. I complete work, give it to the client, they use it, THEN I invoice it. This is an industry president that I can't change. However, I'm hesitant to offer full Net30 terms because I can't afford it. I need the money as soon as I complete the work to pay the bills.
So, what would you do? Should I suck it up and run Net30 to make the customer happy? Am I handling this right? What would you do?
I'm invoicing a client for irregular work. He has 2 (very small) invoices for work that I completed about a week ago.
I sent him an email this morning with the following:
===
Good Morning Jack,
You have 2 invoices currently outstanding with a total of $86.16
I have attached these 2 invoices to this e-mail for your review.
Can I pick a cheque up from you or can we arrange an alternative?
Thank-you,
Rob
===
This evening, he sent me this email in reply:
===
Rob, as always I am happy to pay for your services, but net zero is not on the table. Its a shame that the billing is causing me such grief
I can't pay up to every time you issue an invoice for $15 nor can I run up to your office to deliver it
Lets find a better way, once a month sure, maybe every 2 weeks but not net 0
lets discuss
Jack
===
And my reply:
===
No problem! Every 2 weeks is fine with me.
I'll create the invoice as work is completed so that we don't miss anything, but feel free to take the couple of weeks to issue payment if you need the time.
Also, you don't have to hand deliver payments to my office. There are a wide variety of solutions to this for you. You can leave a check at the front desk in your office, mail a cheque to me, drop a payment off to any {bank name}. I also accept credit cards, Interact and wire transfers, all of which don't require anything other then your information and authorization.
Most folks that I'm working with right now either mail me a cheque or pay with a credit card.
Above all else Jack, I appreciate the opportunity to work with you and will do absolutely anything I can to make you happy with with my work. If there is anything else that I can change to make this easier for you, please don't hesitate to let me know.
===
I really can't afford to run terms with this business. I complete work, give it to the client, they use it, THEN I invoice it. This is an industry president that I can't change. However, I'm hesitant to offer full Net30 terms because I can't afford it. I need the money as soon as I complete the work to pay the bills.
So, what would you do? Should I suck it up and run Net30 to make the customer happy? Am I handling this right? What would you do?
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| May 15, 2009 12:22 AM |
--a cash-based laborer who mows your lawn (could be your neighbors teenager, or pickup labor from Home Depot)
--copy machine / printer repair
--in-home/in-office massage (not workout trainer)
The immediate demand for money (usually cash) is because the service provider is not likely to return. Meaning, no contract, no ongoing business relationship. And, there is high occurrence of refusal to pay.
I don't know what kind of services you provide. But, if they are IT-related, there should be no argument of net 15 for small projects. Keep in mind that even small companies have a process for handling bills.
Take this case:
--buyer/signer presents bill to accounting(could be delayed 1-2 days)
--A/P enters bill (1-2 days)
--cash requirements evaluated against terms...schedule payments for the week (1-2 more days)
--payment approved; checks cut (1 day)
So, even if each step took 1 day, you're looking at 4 days before a check can be ready at the front desk for you to pick up.
If it must be expedited because of terms, overdue status, executive decision, this requires processing one A/P outside of the normal cycle, then more human interaction to walk the bill for approval & signature.
All for $86? Unless you were a personal friend in great need...I would balk at the demand. But...if you were a great friend, I would have expected some warning ahead of time (or in private conversation) that you really need the money fast. Instead, you e-mailed a demand (the technical term for your stating that a bill is immediately due and payable).
Were you a jerk? No. Inconsiderate? Depends on the type of service.
If you were an IT vendor, yes. Rude.
If you were a freelance artists...maybe not. Bad form to send a demand along with the bill.
I think it was a good effort to reply that hand delivery was not necessary. It was not the best-worded. Still sounded like you expect immediate payment for your services.
My 2 cents. Take it or leave it.
| Asker's Rating: |
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Other Answers (6)
May 14, 2009 11:44 PM
A man's gotta eat and provide. Sometimes, especially in contractual work, there is no way to know what the future holds as far as a budget, so I think it's essential to get what you earned when you need it. Even if you don't run particularly low or can pay all your bills with a little left over, it's understandably money which you need to live the way you live. As a freelancer, I know that sometimes your budget is based on a week-to-week basis. There is not much in the way of long-term budgeting going on because there is just no way to see that far. We don't have crystal balls!
And while he's probably trying not to stiff you over, most contractors and freelance workers have their reasons for asking for money how and when they do. They've either been screwed in the past or have a family to feed. A lot of the time its both.
Just try to think of your budget and how it could be worked into a different pay period schedule. If that seems impossible, it's your prerogative. Once you complete the task at hand, they are the ones indebted to you, not the other way around.
Good luck!
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Reply
May 15, 2009 12:52 AM
"{freelancers have} either been screwed ..."
Yeah see this is what I'm worried about and why I'm thinking Net0 is a good idea.
I complete the work, the customer uses it and then I deliver an invoice to the client.
I understand there's a bit of a risk in any deal... maybe I just need to suck it up and Net30 this.
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Yeah see this is what I'm worried about and why I'm thinking Net0 is a good idea.
I complete the work, the customer uses it and then I deliver an invoice to the client.
I understand there's a bit of a risk in any deal... maybe I just need to suck it up and Net30 this.
May 15, 2009 12:01 AM
It depends on whether you want to keep him as a client or not. Terms are negotiable and should be specified up front, in future before undertaking work make sure clients agree to whatever terms you want with them. For amounts less than $100 I'd suggest you make it COD. Your customer expecting net 30 on invoices less than $100 seems kind of cheap too. Beware of offering terms, many businesses are using the current economic climate to stretch their vendors. 30 days can easily become 60 days, if you need the money then don't offer terms.
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May 15, 2009 12:49 AM
"It depends on whether you want to keep him as a client or not."
Yeah, that's really why I am trying to be very nice and second guessing if I'm being a jerk about this or not.
In the end, I'll do whatever he tells me will work best for him. So far, I've stretched to Net15... still, this is such low volume that the book keeping will be a pain. Oh well.
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Yeah, that's really why I am trying to be very nice and second guessing if I'm being a jerk about this or not.
In the end, I'll do whatever he tells me will work best for him. So far, I've stretched to Net15... still, this is such low volume that the book keeping will be a pain. Oh well.
May 15, 2009 12:22 AM
You're not being a jerk. If anything all the "I appreciate the opportunity to work with you and will do absolutely anything I can to make you happy" stuff comes over like you are someone that is desperate for work and can be walked all over.
If other people pay up promptly as you want, and you really need that to happen, then you're probably best of letting him know that you can't do business on the terms he proposes.
However, maybe you also want to look at your own cashflow management. Because if getting $80 now or in a few weeks time makes the difference being able to pay the bills or not, that is precarious, and a situation that is best avoided in the first place.
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May 15, 2009 12:47 AM
"I appreciate the opportunity to work with you and will do absolutely anything I can to make you happy"
Hmm... good point.
I'm certainly not desperate for work. I've turned away 3 clients this month and it's only half way done.
It's not really a cashflow problem either. When I said "I have to pay my bills"... well, these are bills that won't exist for 3-6 months. I'm lucky to be ahead of the cashflow game.
I'm use to being careful with my words... but I HATE being the collections department. Maybe I should outsource this sort of thing or think about hiring a book keeper.
Report
Hmm... good point.
I'm certainly not desperate for work. I've turned away 3 clients this month and it's only half way done.
It's not really a cashflow problem either. When I said "I have to pay my bills"... well, these are bills that won't exist for 3-6 months. I'm lucky to be ahead of the cashflow game.
I'm use to being careful with my words... but I HATE being the collections department. Maybe I should outsource this sort of thing or think about hiring a book keeper.
May 15, 2009 01:43 AM
I do not think you are being a jerk. Especially if terms were stated prior. I think however that you may just need to chalk this up to a "Next time I need a better procedure". Here is the the thing that I have an issue with. He expected you to drop everything to do emergency work over the weekend on something he hadn't paid for yet, but is not willing to pay for that "rush" work because it is too much of an inconvenience for him write a check. I have a long term relationship with my plumber, but if I call him to come on a Saturday night, he is expecting a check or CC before he leaves.
Next time I would make it clear that "rush" work requires a deposit, especially if I am understanding that he was having you make modifications to something you already did and he hadn't paid for.
I am on both sides of the coin. I handle the AP for a company and the AR as well as freelance on my own. We have several accounts with Net30 and our policy is to pay them EVERY WEEK. We want our money so we pay when we owe.
On the flip side I have people who I have done work for and am making changes for them and they haven't paid me yet. I told them 1/2 upfront but b/c it was a brother of a friend of a friend I didn't enforce it and now out of an sense of decency I still make the updates with no money in my pocket. My lesson is don't start work without getting something down. If they don't like it then they probably would not have been a good customer. I know its tough to turn away business, but in a sense you still worked for free.
Sorry if this sort of rambles...bottom line you were polite and professional.
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May 15, 2009 03:23 AM
I think hiring someone to handle matters like this for you would be a smart idea. If you have a lot on your plate, removing the "billing" task would be a good thing... being both time and cost effective. Before you begin working with someone, do you have a contractual agreement that you have them sign? If so, in this agreement does it list the terms? If you don't have an agreement stating when you will be paid (at the time the work is completed) then perhaps you should look into implementing that as well.
I don't think you are being difficult with the client. I guess use this as a learning experience. Perhaps settle on biweekly with him, but going forward, make certain the terms are clear (with a contract).
I hope this helps!
Thanks,
Jen
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Here are a couple of things that I've left out:
I offered the client Net30 if I could swipe (but not charge) his credit card to secure a payment method. The client chose Net0 over a credit card swipe.
Also my "demand" email was prompted in part because the client requested changes on Friday afternoon that he required to be completed over the weekend.
So half of this is that I worked all weekend for an invoice that is outstanding.
Again, it's cool to tell me if I'm being a jerk... it's this back and forth that I need here.
Thank-you.
But if it's normal in your line of work that might be something to make clear beforehand if the client might not understand.
It sounds like in this case you actually agreed the terms beforehand, and he's not meeting them. In general you don't want to be doing business with people that break agreements, so this might well be a client you're better off without.
To me, this sounds like he's a casual customer. Not a "client".
I would never swipe a CC for guarantee of payment. Sounds like a motel...and that's not the type of relationship you want with a true client. If there isn't enough trust that you will get paid reasonably...probably should pass up on the work.
Maybe it's just a difference in expectations. You're wanting cash for the hard work done at the last minute. The customer views it as another business transaction, and would expect a formal invoice and repayment terms.
On-demand is best left to retailers. They truly don't care who you are...they just want the money.
I understand...billing is a headache for some people. I have four invoices and several reimbursements still hanging over my head for the past few months.
It is professional and business-like to treat your clients as clients, and not as cash machines. Nobody likes having the pinch put on them. Especially for small dollar amounts.
If you're willing to do something like monthly billing, net 15, no client in the world would argue. For the small dollar amount, it shouldn't hurt your cashflow too much, as long as this is billing for labor hours, and not expenses.