The Client Nightmare, Part 1

Be wary of flexible payment plans.

When I first started my company, we had to go to the ends of the Earth (or sometimes Baltimore, as you’ll soon find out) when it came to getting paid.  This meant working at discounted rates, allowing clients more than 30 or 45 days to pay…whatever was needed. 

We were thrilled to have clients, which at this point, we had two.  One locally, and a small software startup in Baltimore.  We got that one through a referral, and, since our firm was working with a very meager (read: bare bones) amount of capital, having this full-paying account was awesome.  The future of our company, my non-human baby,  was dependent on our successful relationship with this client.

In writing our contract, we arranged a 45-day payment schedule.  At their request.  And we negotiated several other flexible terms. 

At their request. 

This wasn’t and ideal situation, particularly when you are a new company in need of money.  But in our greenness, we had to be a little more loose than I might have liked.

We were happy to have our first employee placements for the client in the beginning of June that year (let’s call it 2002 because I’m drawing a blank and don’t feel like checking the books right now). When mid-July came, they contacted us to say they needed another 45 days to pay.

Because they were our only full-paying client, we thought we had no other choice than to agree to an extension.  So we obliged to their request. 

Forty-five days later, still no payment.  I’ll explain the next steps in tomorrow’s post, but needless to say, this was not business that was finalized over a phone call.

Tell us a bedtime story.  What kinds of terms have to given to clients when you start your business?