Net-30, Net-45, Net-60.
If you’ve been working as a freelancer or run your own development shop, you’re familiar with these terms. They are the terms that many businesses leverage for paying invoices. They exist because of Accounts Payable.
What these terms mean is from the day you issue a client an invoice, they will pay it in 30, 45 or 60 days.
Seems normal, right?
For small businesses, one man shops, freelancer… this is hell dressed up as heaven for the client. You get to do the work and sometime in the future they pay you.
As a small business owner, you have much tighter margins than clients who are bigger organizations and let’s be really blunt… the system wasn’t built for you. It was built for them. They hold all the cards and you get to operate at their whim.
Sucky life and a sucky way to build a business, right?
It serves your client’s Accounts Payable department but it’s anti-competitive. Bigger organizations can go “at risk” and eat costs up front. You? You cannot. You have to pay your employees. You have to incur operating costs that should be paid for.
What’s more, many companies won’t pay for code until they receive it… and then Net-30, Net-45, Net-60.
In almost all cases, as an independent, I structure deals with a deposit (another thing other companies don’t want to pay) and with stipulation that code is delivered upon receipt of payment. It’s my insurance policy against clients who would run with my intellectual property (it’s happened quite a bit in the past!).
As an independent, I almost always reject Net-30, Net-45, Net-60 terms. It does not work for me, and if you’re an independent or a small business owner… it probably doesn’t work for you either. So stop playing that game. Just say no. They will stomp their feet. Sometimes you won’t get the business. But when you do get business, you will be paid promptly for the work you did and the playing field will be leveled.