When do I Invoice . . .
Michael Havenga
Embedded Solutions | PCB Layout | PIC Microcontroller Consultant (8BIT) | Software Development
Some more thoughts from business meetings . . .
Doing business in different regions exposes you to different cultures and ways of doing things. With your details out there, you have no control over who calls and the truth is you never know when that game-changing client will call. You answer your phone and with your professional game on, you engage.
Sometime later, you wish you hadn't.
What went wrong?
Expectations
A fair expectation by the caller is service, and when a customer calls and has a question, to answer a question or discuss what they are interested in is not a big deal. These calls are also ways of data mining, you get the opportunity to investigate, if you will what a potential client's need may be and this does help if you are looking for that next big thing.
The slippery danger is the motivation of the customer, and while they may just trying to understand something or have a simple, legitimate question you have your business process to follow.
The challenge is to not fall into the trap of "helping", without the expectation of you needing to invoice.
Understanding the Culture
A colleague of mine was describing his experience in a rural region where a large project was underway, and while he knew the work was worth 100 000k for example with some slippage of about 30%, he started to invoice at 70K, did some of the work and then asked for more money.
While some of us may think that it makes more sense to rather provide a complete scope of work so the client has the full picture, this did not work culturally. If he told them they needed 130 K for the work, he was out of the race. However, starting lower and then asking progressively for more money worked. No, he was not unethical, rather he just understood that there was a problem with paying 130 000 upfront owing to how things worked, but there was no problem asking for some money without discussing the full picture and progressively asking for more until done. So long as he delivered, strangely the extra money was not an issue.
Understanding the culture is important, so what about the people on an individual basis. See below.
The DIY Guy
I haven't personally had too much experience with this type of caller, but they are usually the more interesting type. They have an interesting project, they have already been through the mill with a fly-by-night and the project is some ways along it just has some issues and once they can be overcome there is something viable.
The other variation is someone who wants to do it themselves but they don't have the skill and are not sure what to make of the YouTube video that sort of explains it, but they have questions.
The Guy with the Money, but Issues too
In one particular instance, I was "helping" and it turns out the client had more than enough resources, but he had been dropped by the original developer once most of the fees had been paid over.
The downside was that they wanted me to get it finalized, but felt they had already paid enough into the project. I did try and get the idea across that Embedded Developers don't all work for a guild or an association, and it's not like I would see some of the previous money. I still don't think they understood that concept.
Corporates or SMEs that talk about Paying
Payment policies are a reality and some organizations have a 120-day cycle. What this means is that if you "will" get paid in at least 3 months, you are funding their operations.
The Deposit, and Scope Creep
It's strongly advised that you get a deposit. Also, once you have it you need to be strong and avoid scope creep. This is that unexpected conversation that comes from a meeting called after everything has been decided, and they want a small change. The small change derails your entire architecture and ensures nothing else will work unless you start again.
How much should you ask for? While this varies, you should have structured the project pricing so that the remaining % is not the principal money needed to start, get it finished and to have earned your MacDonald's burgher - at least that is my opinion.
When to invoice . . . or at least discuss the money
About a year ago, I had the unfortunate experience of a pro who got me to do stuff thinking they understood I am not for free and while I did get some money, I lost a serious % of it. It was interesting when reflecting on what happened, that he had the knack of keeping you engaged, offering to help with networking, and alluding to bigger things to come. How did I not see this coming? Bait and Switch, unfortunately. We actually had a much bigger and more valuable project in discussion where everything was in writing, but the side projects were small things that we were asked to do and you think it's okay because the bigger project would mop up the small expense. While I am fully aware that many small companies have got started this way. You worked for free to prove yourself and slowly justified being paid, it's a toxic way of asserting your value - I don't recommend it.
Not being taken for a ride does mean being prepared to walk away:
If you want to grow your consultancy beyond the workroom at home, tempering your eagerness to accept work and engage all clients versus working with the right ones is where you need to be.
The danger in not talking about your invoice and what you want in return for your help is that you can end of setting the expectation you are happy helping ie you are an altruist with nothing better to do every day.
The sooner you find that opportunity, and this is perhaps the first/second meeting, have the frank discussion about the business relationship - the money. If you get the brush off or the subject changes to where you are being steered to think of the long term, that is a red flag.
Leaving this important aspect of value out of your relationship, the longer it drags on the more awkward it becomes over time to have the conversation. You feel this especially when you have weeks or months of expenses that suddenly get submitted and you want to get paid.
Yes, there are people out there who think you are their friend, and that you are an amazing person and you want to help free of charge. It may seem weird that they live in a dream world, but they exist and if they have a nice house, a nice car, and a fancy watch it's most likely they have a success rate of getting their way in business.
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