Considering how many clients I've acquired over the last 1.5 years, I
guess two deadbeats isn't too bad.  But those two have really stung
me, so here are my tales of woe:

 Incident #1: An aqcuaintance tells me the law firm she works for
needs some computer help.  I tell her my fee is x per hour, with
reimbursement for one hour's travel and parking.  She asks if that's
OK, and they agree (verbally).
 I show up on time, and work steadily and quickly throughout the day -
always at the request of an attorney - in other words, none of the
work I did was of my own initiative.  I tried to leave at three
o'clock, but the attorneys kept "tugging at my sleeve" and asking me
to do one last thing, so I left at 5:00.
 I send them a bill for everything, and hear nothing back.  I call
about six weeks later, and they send only 60% payment.  When I ask why
they said, "they've never gotten such a big bill for computer work
before."  But she leaves me with the impression that maybe they'll pay
the rest down the road.
 I call this woman occasionally to collect the rest - she always
sheepishly apologizes, says I'll get paid.
 I finally have to write a severe letter, return receipt required to
get someone to call me back.
 One of the senior partners calls me, reiterating that same stupid
argument.  I tried to tell him that all of the work was driven by
their requests, that I tried to leave but couldn't and that I charge
less than most consultants do.  All of this fell on deaf ears.  He was
willing to pay some of the remainder, so I took what he offered.
 
 I thought I learned how to handle this.  I decided that whenever I
did a job and didn't get paid right away, I'd have a person with
financial authority sign off on a pro forma invoice.
  
 Incident #2 - I'm called to fix a computer in NYC that can't send
Outlook emails.  I get there, and play with the settings for a few
minutes.  I suspect a corrupted .pst file, so I use the Inbox Repair
tool - it takes over an hour to run, and doesn't work.  The person
using the PC had to use it a couple of times and kick me off, so that
burned up some time. Then, I hit upon the idea of making a new .pst
file, but I didn't want to make any changes until I made a "safety
copy" of the drive.  Ghost took an usually long time, over an hour to
copy the drive.  Setting up the new file only took about 20 mins,
including copying emails to the new one.
  I create a pro forma invoice and have the office manager sign off. 
I kept the original.  He was surprised at the high amount (Charged for
three hours' work and only .5 hrs travel), but signed anyway.

  So I sent an invoice as a PDF to their HQ.  I also sent a copy of
the signed pro forma.
   
 *It still wasn't enough!*  They told me they'd only pay part of the
bill because they claimed I took too long to do the job! Although they
never supplied proof, they said they spoke to an "independent
consultant" they knew and this person said that I took too long to do
the job. I told them why it did, and reminded them that someone who
was financially responsible signed off, but those counter arguments
failed!  We finally settled on a reduced bill.
 
 I'm not even sure of how I can protect myself from this kind of crap
in the future.  I guess even having an office manager approve a pro
forma isn't good enough.

 The only thing I can think of is to do a pro forma with everything in
writing and have someone who's *really* responsible for check
disbursement approve it.
Problem is when I'm called in at the last minute and there's little or
no time to get such an approval.

---

Clarification of Question by pcventures-ga on 19 Mar 2004 05:43 PST

aht-ga: I believe you've been sufficiently helpful to warrant your
comments to be classified as an answer, which I'd like to rate and pay
for.

pc-ventures:

Thank you for the opportunity post this Answer to your question.

As noted in my comment below, generally you are already doing a good
job of communicating costs and time requirements to your clients. The
issue appears to be when the client receiving the service is not the
person who has to authorize the payment, as you yourself have already
observed. Stressed-mum's comment is quite topical, as there will
indeed be customers out there who try to squeeze their service
providers for additional discounts simply because they think they can
get away with it (either because there are lots of other providers
they can use, or because the service provider has little leverage once
the service has been rendered, unlike a supplier who can simply
repossess the goods).

My recommendation to you is to start creating a more-comprehensive
paper-trail for your work estimates and actual invoices. For example,
this computer repair service uses the following claim on their
website:

http://www.infinityok.com/computerrepairs.html

"We give you a repair estimate before we start to work. If the problem
is more extensive, we'll call you with a revised estimate before we go
any further. Our labor rate is $60 per hour."

In your case, it would be best to provide a verbal estimate over the
phone, and follow it up with a written version of the estimate that
you present upon arrival, requiring the signature of an authorized
person before you actually start the work (similar to how car
mechanics operate). If the situation changes once you get 'under the
hood', so to speak, you can then issue a revised work estimate (you'll
probably want to carry a folder full of preprinted two-part NCR forms
for this), that states exactly why the additional charges will be
necessary, and again have it signed off. This way, when it comes time
to discuss full payment with a difficult client, you will have the
necessary paper trail to prove that the client is not honoring their
part of the written agreement as stated on the estimate form.

You may also wish to incorporate a version of the following term in your form:

http://www.broadcastrepair.com/policy/terms-conditions.htm

"An estimate will be provided if the repair costs will exceed the
pre-authorized amount stated on the work order. If at anytime during
the repair process the customer decides not to have the equipment
repaired, the customer will be charged and agrees to pay an
evaluation/diagnostic fee of two hours at the appropriate, currently
posted rates. It is impossible to always estimate the extent of, or
the precise cost of the required repairs on an initial evaluation
estimate; therefore it may be necessary to revise previous estimates
during the repair process if other problems are discovered. If it is
expected that the final cost of repair will exceed the most recent
estimate by more than ten percent, a revised estimate will be
submitted to the customer for approval."

It serves two purposes; it provides for a diagnostic charge (to cover
your parking/travel costs) if the customer decides not to proceed, and
it gives you a 10% buffer between your final invoice and the estimate
before you have to issue a new estimate.

I hope that this is of help.

Regards,

aht-ga
Google Answers Researcher

Thanks!

As a self employed person, I too have experienced the frustration of
working hard and invoicing fairly yet having my integrity questioned
and an invoice only partially paid.

Thankfully, it doesn't happen often, but when you know you've given
your best in delivering an excellent job, that really grates --
particularly coming from critical vowels ;) I don't have any sure fire
solutions for you other than to suggest that you continue to explain
meticulously what you're doing as you're doing it. Maybe have an
hourly time sheet and for each new hour that you're required to stay
on, get that signed and approved.

Bear in mind also that many company accounts department make this sort
of thing a common practice. I used to work for a multinational network
marketing company and one colleague's task was to contact every
supplier, whether it was a one-person design company through to the
stationery shop and haggle with their invoice totals. She got an
extremely good strike rate and was frequently congratulated at staff
meetings for saving the company money. I was mortified to be
associated with them, as I was the one who sourced and accepted many
quotes, and I would be the one dealing with, say, an angry designer
who had basically been shafted. I ended up advising her to add an
extra 10-20% to her quotes and use that to bargain with.

The other thing is to hire a debt recovery service. I am in a union
that, amongst other useful things, provides a very effective debt
recovery to freelancers. I don't know if there's a similar one for
computer gurus but look into it because, in Australia at least, it's
tax deductible and a great source of industry updates and professional
development.

aht-ga - could you repost your last one or two comments?
I want to address your point as to whether you're answering my question.
Thanks.

pcventures-ga:

My apologies, but I normally do not keep copies of the comments I post
as usually comments are retained by the system. In this case, it seems
that the editorial response to your request that the inappropriate
comments be removed, has also resulted in any comment referencing or
responding to those comments also being removed.

If I recall correctly, the gist of my comments was to suggest that a
paper trail would be useful in cases (like those mentioned by
stressedmum-ga) where the person approving/requesting the work, is not
the person responsible for paying the work.

From your responses to my previous comments, it is clear that you are
already doing a good job of communicating with your clients what your
hourly rate is, and providing some indication to them of how long a
problem should take to fix. The additional input I provided was to
reiterate the usefulness of making sure that communication is in
writing, ideally with a written estimate signed off by the authorized
person requesting the work prior to you beginning the work, so that
you have a paper trail in case a situation should ever arise where you
need to go to small claims court to receive compensation for your
work.

I then asked how you would like for your question to be addressed in
the form of an Answer, so that a Researcher can provide you with value
for your list price. If you can provide some form of guideline for
this, then hopefully we can effectively address this question!

Regards,

aht-ga
Google Answers Researcher

3-9-2004

Congratulations on having a valuable service to market.

Perhaps in addition to just getting an office manager's signature for
approval, you ABSOLUTELY NEED TO ask for the president's/CEO's
(whoever the top person is) signature approval as well.  Inquire at
future clients whether or not they use a purchase order system in
their accounting cycle, and perhaps you would submit a purchase order
(offering a reasonable estimate of the total anticipated cost of your
services) to them for their approval in advance and then when it comes
time for payment you submit your invoice along with the purchase order
and it speeds up payment.

Everything you have done so far is correct--it's those irreponsible
clients who are at fault.  With incident 1, where the client only
partially paid 60%, send the company president/CEO an immediate
letter/demand for the overdue amount (send a copy to the office
manager) and mention that if it is unpaid for more than a week you
will have no choice but to pursue collecting the unpaid amount in
small claims court.  You have all the documentation you need to prove
your case, and they will probably go ahead and pay without the time
and aggravation they would have to be submitted to to defend
themselves in court.

With incident #2, the client has no right to get a second opinion
about your services AFTER they have agreed to the price you quoted. 
Speak to a business law attorney and get yourself an simple, 1-page
ironclad contract/fee agreement where the fee you quote when you first
appear on the job is what the client signs and there will be no doubt
or negotiations needed in the future about what they agreed to.  You
have every right to demand a premium price for your much-in-demand
services and you are worth every penny (but I'm sure you already know
that).

SINCERELY,

KEITH (Accountant)