5

I'm a 1099 contractor to a full-time client in another state. They need me to meet with one of their customers (in another state) in order to try and drum up more work but they are requiring that I pay for my flight, hotel, food, etc... Is this normal? Or should they pay because I'm going on their behalf to drum up more work?

My client said....

You should bill us what you expect our client to pay; We can not pay for any expenses or charges from a vendor (you) which cannot be billed to our client.  All ‘internal’ non-billable hours become a cost of doing business.  So I’d pay my own way for any of my own expenses or those of my employees.  As a fellow business owner, I am your customer so the burden of running your own business and all of the costs associated with that are your burden and not mine. I can’t reimburse or pay for a rental car, hotel, food, snacks, entertainment or other on your behalf.

I'm thinking that he's asking me to go represent his company, so he should reimburse me for travel. Is he off-base or am I? Am I expecting too much?

closed as off-topic by Chris E, user8365, gnat, Michael Grubey, Mister Positive Jul 6 '17 at 13:25

This question appears to be off-topic. The users who voted to close gave this specific reason:

  • "Questions seeking advice on company-specific regulations, agreements, or policies should be directed to your manager or HR department. Questions that address only a specific company or position are of limited use to future visitors. Questions seeking legal advice should be directed to legal professionals. For more information, click here." – Community, gnat, Michael Grubey, Mister Positive
If this question can be reworded to fit the rules in the help center, please edit the question.

  • 2
    You could always counter that since this is developing your business using your money, you should be the one who gets a cut of the revenue if you successfully bring the client in. – Kaz Jul 5 '17 at 20:10
  • So you are going as a sub-contractor to try and get new business? If you choose not to go, you are essentially saying that you don't want to be involved in bidding on the new project, and so do not need to work on it. – David K Jul 5 '17 at 20:10
  • 11
    You're getting screwed. You most certainly can bill a client for travel expenses and they know it. You're representing them, not yourself. If you pay for your own travel then they should expect you to negotiate on your own behalf and hand out your own business cards. – Chris E Jul 5 '17 at 20:20
  • 1
    as they say "Run, don't walk" – Fattie Jul 5 '17 at 20:23
  • 2
    @WebDevGuy - if it wasn't clear: DON'T DO THIS, AND ALSO NEVER WORK FOR THAT JOKER AGAIN. Any company with that attitude is a joke. Walk away. If you look back, you will turn in to a pillar of salt. – Fattie Jul 5 '17 at 22:52
7

I'm not sure I understand the confusion. If he won't reimburse your travel then you simply charge him for it. This is why you should have various rates based on the work clients expect from you. If you bill X$ an hour for the work you currently do for this client remotely, then you simply bill X+Y$ an hour where you calculate Y based on your expected costs with a generous surcharge for the time you lose while travelling and the general inconvenience. This is standard practice so you shouldn't get any push-back when you quote a different rate for this kind of work, but your client's response isn't the most reasonable so who knows. Regardless, this is what you say:

I'm happy to take on this work but if you don't want the hassle of handling my expenses on this trip I'll of course have to adjust my rate. I charge a flat fee of X$ for all out-of-state work and a per diem of Y$. If that's okay with you I can draw up a quick contract and send it to you by the afternoon?

That's just one way to do it. Some contractors simply quote a fixed price for a time-limited gig like this. Some apply a higher hourly rate and those should include some kind of minimum billed hours. If you travel down and a book a hotel for a week but the client changes his mind after day one then you still need to be able to bill him to at least cover your costs. And that's also why you need a contract for these things.

If your client is just getting hung up on semantics and a general lack of understanding of how billing stuff works then there shouldn't be a problem. But the phrase that makes me think your client might be an idiot is "the costs associated with that are your burden and not mine". That's certainly true to some extent but odds are that he's forgetting that as a business owner you also get to dictate the cost of your product and that clients don't get to dictate prices or demand a sale.

If your client is a fool and balks when people have the nerve to ask to be paid for their work then simply repeat the following ad nauseam:

I'm sorry, but if we can't agree on a reasonable price for my services then I'm not able to take this on.

5

This part:

You should bill us what you expect our client to pay; We can not pay for any expenses or charges from a vendor (you) which cannot be billed to our client

This means that if you go, you accept the risk that the client doesn't pay ANYTHING. The client might choose another vendor altogether! Accepting this condition would be very unwise on your part. Whoever wrote this to you is full of it.

Travel should be prepaid. You might negotiate a per diem rate, to be prepaid, for your housing and food. You could base it on the GSA's per diem rate calculator, which is the standard for government employees and contractors who travel on gov't business.

Whatever you do, don't be the guy who forks out big money on travelling and who has to come back home and beg your client to reimburse you. Please!

2

As a 1099, they're already off-loading most of their expenses of being a regular (W2) on you anyway. I've been in the same situation. One way to look at this is that you are trying to generate business for yourself, through the original client to which you're a 1099. If they are guaranteeing you that when the new client signs on you will also get more work, then it might be reasonable to pay your own way to woo the new client. But if they're just using you to pad their marketing budget with your free resources, I would politely beg off and tell them to send someone else.

But whatever you decide, the good news is that now you know. The original client is trying to squeeze whatever he can out of you. And you can act accordingly.

  • thanks. Interesting post. I will definitely be the one working on the project but they will benefit financially as well. And I am representing THEM when I go to their client. – WebDevGuy Jul 5 '17 at 20:29
1

So your client says:

the burden of running your own business and all of the costs associated with that are your burden and not mine

While the cost of doing business is certainly something a business should cover internally, that cost is, one way or another, always ultimately paid for by that business's customers (where else would the money come from?).

When you're entering into an agreement to do business where you're providing some goods or a service, you give them a price, taking into account what it costs you to produce those goods or perform the service.

So in your case unless you've agreed up-front that you will be traveling to other locations, you're clearly not budgeting for that & haven't included that cost in whatever you're charging them.

Your business is delivering your service to this client (either at his normal location, or remotely).
Your business is not traveling to his customers.

You should not feel in any way obligated to pay for these travel costs which are not your business expenses.
Don't back down - and in light of the communication you've already received from this client, insist on payment of these costs up-front (or have them book all of the travel & accommodation).

  • 2
    You could negotiate a higher fee for this customer. Your normal fees are premised on you only having to sell to your own customer. If you also have to sell to your customer's customer, a higher rate is definitely appropriate. The costs of acquiring that kind of business are higher and the costs of acquiring business are ultimately paid by the customer. – David Schwartz Jul 5 '17 at 21:08
1

On some level the original business owner is correct, the burden of running your business falls on you. As such the choices are really yours.

Normally he should pay your expenses, however, from what you wrote, I feel like he is struggling. This trip seems like an effort to keep his head above water. So you need to do some analysis about if this is a good deal for you. What is the upside, and what is the down side? Does the reward make the risks worthwhile? How valuable is this contract? Finding 1099 work is not always easy, especially one with good terms.

The bottom line is that one can travel very cheaply. Maybe rent a car, and drive to the client site, and stay in a lower price hotel. Cheap eats can be found in every city. In these cases one could travel and stay a few days, in many cities, for $500. One could also swell the expense report to close to 4K for travel to the same city without trying all that hard.

So you have some questions to answer:

Is this contract worth it?

Is there a reward on the back end for helping close this deal?

Do I want to do business with your "boss" in the future?

If you can answer yes to at least two of those questions, then I would pay for my expenses.

0

Is your client going to benefit financially from the increased business? If you are going to sell a product that you developed for them, and they are going to sell the licencing of the product and what you would be gaining is simply more billable hours, then I can see the point where you expect them to pay for the trip.

If on the other hand, you are the one who is going is going to benefit from selling the product and services entirely, then I can see their point where you be the person who would carry the burden of the expenses. Even though the use of your product may generate more sales for them.

What you may want to consider is some sort of commission arrangement. If you are selling the product for them, then you should get a cut of the rewards. If you are talking about millions of dollars a year in sales even a tiny .1% cut is significant.

The bottom line here though is that you are in business for yourself. You need to make the decision that benefits your business the most. What that is we can not tell you.

  • My client is XYZ. They ask me to go to their client to drum up business. Yes, they will benefit and I will to, because I am doing the work (website app development). – WebDevGuy Jul 5 '17 at 20:25
  • 3
    So ask for a commission from them for doing it. They want you to be a free sales guy – IDrinkandIKnowThings Jul 5 '17 at 20:26
  • great idea. I've been with them for 3 years. – WebDevGuy Jul 5 '17 at 20:31

Not the answer you're looking for? Browse other questions tagged or ask your own question.