How long for clients to pay

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  02 February 2013
How long for clients to pay

I just started freelancing and am struggling with how long I should let clients have to pay. I think inside of 30 days is all I should put up with but I don't know what's standard (if anything is).
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  02 February 2013
30 days maximum. Late fees accruing daily after that. Have it in your contract.
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AKIN BILGIC
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CGGallery.com
 
  02 February 2013
It really depends from the field, the standards, the competition, what you can shoulder and how much you are willing to compromise to meet the client if your views differ but you want to keep them (assuming they pay reliably).

Some fields and countries even 120 days could be common/normal, as it's accepted that money trickles through many layers and can take time to reach some people. Some others anything longer than third in advance, third on design approval and third one week from end + 5 business day for the transaction is considered unacceptable.

For a from home contractor in the States I'd say three weeks + bank time, so a four week total at the most, would be reasonable and common enough.
Frontload split and milestone payments are up to you and the fine balance between trusting the client and not making them feel insulted.
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  02 February 2013
"Some fields and countries even 120 days could be common/normal,"

Ha, isn't that a kick in the head, landlords on the other hand expect the rent check by the first of the month, and grocery stores before you leave.
 
  02 February 2013
Originally Posted by badsearcher: "Some fields and countries even 120 days could be common/normal,"

Ha, isn't that a kick in the head, landlords on the other hand expect the rent check by the first of the month, and grocery stores before you leave.

On one hand you have the whole point about your landlord wanting the money on time, and your supermarket stubbornly refusing you pay six months later. When you put it like that, it does sound insane, and in some cases it is both insane, and downright exploitative, especially when unnecessary middle men come into the picture (we'll pay you when the client pays us, yet they offer no additional benefit to either side).

In some other cases though there are healthy microeconomies that over the years have stabilised around that (some even longer, in fact), and while the ones involving individuals and such long waits are rare, they do exist, and might not necessarily be speculation and exploitation on someone's side up the ladder, just how that particular economic cycle moves.

I have a good friend who works by that model (after a 10% frontload and some very small milestone payments) because it ended up enabling his clients to turn a higher profit, and buy more. It works for both, they stick to it to mutual advantage.

At the end of the day, way I see it, the important thing is both sides respect what they agreed on.
If you signed something with no frontloading and payment one year after final delivery, there is nothing bad in the client paying you 365 days after you deliver, you agree to it.

I'd find worse a two weeks agreement that gets pushed to three, because the unforeseen delays and the repeated lies are usually more damaging than an agreed on long term if you're a good manager and agreed to something you could sustain in first place.

We also don't deal much with the debt/credit derivates of virtual money in our fields, so hard cash tends to be king, whenever delivered, but for companies turning around enough commission work, and associated with the right institutions and companies, virtual capital from a gap between credit and debt can mean a lot of money.
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  02 February 2013
Yeah, the whole.thing is a real mess. Sometimes clients with great cash flow actually pay quicker or at least within 2 weeks.

Lack of cash.flow.and getting burned a few times can really crush you if you are not careful.
 
  02 February 2013
Cashflow needs really dictate what you need. You could make the terms, but typically larger companies take 30-120 days. We've even had clients take up to 12 months. Usually the larger the balance, the longer it takes. We try to work on monthly billing cycles with large accounts.

The problem is that most clients are also waiting for clients to pay. So their 30 day wait, turns into your 60 day wait. When I freelanced, I made new clients cash on delivery. Sometimes I tried to get a deposit if possible. After several jobs and when a relationship of trust is fostered, I would move onto 30 days.

Unfortunately, you need cashflow and multiple sources of income to comfortable handle delayed payments. Its is standard practice it seems and may make you less marketable if you don't have that flexibility.

Maybe you could work on attaining quick pay clients first, then develop the longer term clients when you have a solid base of "bread and butter" clients.

Last edited by XLNT-3d : 02 February 2013 at 02:20 AM.
 
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