The Dreaded Net30 Monster
We've recently run into the dreaded Net30 monster on a few occasions and the encounters have been less than pleasing to say the least. We know it's the typical deal for most companies and if we want the work, we just have to deal with it. But lately, we've been asking ourselves "Do we really want to deal with it?"
Working for free for 30+ days? With the very real possibility that A.) Being a small business, we may not be at the top of the "people we need to pay right away" list or B.) Net 30 terms or not, sometimes clients are just slow to pay.
Unfortunately with Net terms, the odds are against us in most cases and it has caused us to seriously reconsider our relationships with clients who require them. A typical project for us is going to last anywhere from 30 to 45 days so in cases where the policy is to only pay after the work is completed and then on a 30 day billing cycle, we'd be finished with a project well before we ever receive payment. "Hi here's your brand new, shiny web site... just pay us when you get around to it... we'll even go ahead and make it live for you before you pay us!"
We've been faced with a project in the past that was a Net 45 term, one up front payment and one on completion, for a project that probably wasn't going to take us more than 3 weeks to complete... The only reason we even considered it was because it was a reputable Fortune 500 company and it was a high 5 figure job... but our first payment wasn't even going to come in until over a month after the job was complete. It was one of the few times we weren't disappointed to see a potential project fall through.
We've come to the conclusion we can really only decide on a case by case basis and we are tossing around ideas to help protect ourselves so that if a client wants net terms, we're a little more comfortable with the amount of work we're putting in before we are compensated.
It's a tough choice when you consider turning down projects or not working with a client because they require Net terms. They are typically your high dollar, high profile projects, great for exposure. But there is a choice in the matter and I think overall, that's the best part about it. I'm curious how others handle it... Leave your thoughts, input and ideas in the comments!
