Stuff & Nonsense. Website designers in North Wales

Pay up

My contribution to The Pastry Box Project this month:

There’s no reason why anyone should have to wait more than 24 hours for the money you owe them, especially people you work with.

So the next time you receive an invoice from a contractor or supplier, pay it right away. Don’t wait a month, a week, a day or even an hour longer than you have to. Better still, find out how to pay them before they start any work. That way you can pay them immediately when you receive their invoice.

They’ll feel good and so will you.

(This post was inspired by the experience of someone I know.)

Getting paid is the most important part of business. It doesn’t matter whether you run a company or you’re a one man freelancing band, everything stops if you don’t get the money you’re owed.

When you’re working with a larger organisation, this can sometimes take weeks. They’ve typically hundreds or thousands of suppliers like you to pay, so they need time to process, approve and then pay your invoice. That’s why, although the ‘cheque run’ is now largely a thing of the past, you’ll typically have to wait 30 days before you see your money.

There’s no reason why you should be made to wait anywhere near that long when you work for a smaller business or an individual. For them, 30 day payment terms are just a throwback, unless of course they need that time to first collect money from someone else before they can pay it to you.

This is especially relevant in the relationship between studios and contractors. Here’ a common story in our industry, one that I hear from my friends all the time:

  • Client hires studio to design or build
  • Studio hires contractor for some or all of the work
  • Contractor submits his or her invoice to the studio
  • Studio submits its invoice to the client
  • Contractor waits weeks or months until studio is paid by client before being paid himself

In this instance, the contractor should be paid when their work is complete. So why is it common for contractors to be made to wait until after the studio has been paid by their client? After-all, what happens between studio and client is outside of a contractor’s control.

I put it down to poor financial management and business ethics.

If you’re a contractor, any agreements or problems between the person or company who hired you and their client is frankly none of your business. It doesn’t matter that they’ve agreed 30, 60 or more days credit with their client, you’ve done your work and it’s time for you to be paid. There can be no excuses and you should never, ever be made to wait.

If you hire a contractor, you should ‘always’ ensure you have the money to pay them in full ‘before’ they start working for you. Use your cash reserves if you have some. You should. (We keep a year’s operating costs in the bank, just in case.) If you took a deposit from a client set that aside so that you can pay all your contractors the moment they invoice you.

If things go badly wrong and for some reason you think you can’t pay a contractor right away, borrow the money from a bank, a relative, or someone else, not them. It’s not their fault you didn’t manage your business properly and they shouldn’t be made to pay for your mistakes.