I just completed a one month software engineering contract. Halfway through, I sent an invoice for half (specified in the contract), and it was viewed but not acknowledged. Yesterday, the last day of the contract, I rolled it into a full invoice. The CEO apologized for being late, and said the admin side of the company was hectic since they were busy closing a funding round this week, and that he was "fixing this." However, there is currently no payment sent so I'm not sure what to make of this response and what to do next. Normally I would just be patient and wait a few business days, but the fact that the halfway payment also hasn't been sent is making me feel uneasy.
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7What are the payment terms as specified in the contract? Payment Due Upon Receipt? Net 15? Net 30? What?– joeqwertyAug 7, 2021 at 23:45
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1Just that "the Company will pay Consultant upon delivery by the Consultant and acceptance by the Company of the deliverables, as described in Section 2 above" and that "every two weeks, Consultant shall submit to the Company a written invoice for Services and expenses, and such statement shall be subject to the approval of the contact person listed above or other designated agent of the Company." I suppose "upon delivery" means upon receipt? Based on what they've said, the team is definitely happy about the deliverables and they have no reservations about performance.– JakoryAug 8, 2021 at 1:14
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5Just tell them, assuming you have upcoming work left to do, hey I need payment by this date or I will need to stop working. Then, in future contracts, demand a line that payment will be received within x many days of when invoiced, even if it means you turn away work if they don't cave. You'll be amazed how often "we can't change our standard contract" changes to "we've updated the agreement, attached" when actually tested / bluff called– schizoid04Aug 8, 2021 at 1:20
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3Also recognize that businesses are 100% of the time, 30-60 days late on paying invoices.like clockwork. If you're not being paid as an employee, expect 30 days before your invoice is due, and likely 60 days of bull spit excuses before magically getting paid on day 90.– schizoid04Aug 8, 2021 at 1:22
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3One way to get prompt payment is to incude a discount for early payment. Of course, bump the price up so you don’t loose out. Worked well for a friend.– Solar MikeAug 8, 2021 at 6:46
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1 Answer
Unfortunately this kind of thing is getting worse. It's not just startups either - huge corps are outsourcing their accounts payable operations to whereever saves them money, relying on the magic of big integrated software like SAP to connect the dots ... woeful results.
With a startup, dealing directly with CEO, there isn't a fat bureaucracy to blame. They may be relying on the fundraising round to meet operating expenses. (not optimal......)
Check in periodically, ask how that fundraising is coming along. You may not be the only person the CEO owes $$ to, and they are probably stressing about it too. If you need them for a reference for future work, they might really appreciate your "flexibility" etc. in this position. Let them know you are sympathetic and willing to work with them. But don't be fooled, it might not go well (might not raise as much money as planned etc), so time to look for other opportunities.
If they get their investment, and they don't promptly pay up, that's the time to push harder.
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Thanks for the response. Since there is no payment, I think I'll ask the CEO how that fundraising is since he mentioned it was "closing this week" on Friday. Should I ask if this late contract payment is dependent on the fundraising round? Like you said, that would not be ideal to say the least, and the possibility is making me seriously consider if further contracts with them are worth it. I'm not sure how to phrase talking about this in a sympathetic manner without also being a pushover.– JakoryAug 9, 2021 at 6:39
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1If your work is important (it should be if the early stage startup is competently run), they at least owe you the courtesy of a 10 minute conversation. Then again a 1 person-month budget item is probably loose change, so maybe a lower level person is appropriate. Speaking by voice or video, ask friendly questions about the future of company development, ways it depends on fundraising. Remind that you also have bills to pay, and you would appreciate being in the loop on fundraising progress, it would make it easier for you to work with them to find a solution that works for everyone, etc...– Pete WAug 9, 2021 at 23:12