How to propose a new payment arrangement w/a client (as a freelancer)?

Miscellaneous and Personal Stuff I Must Share
1

For the past three years, I’ve had a good freelance gig as an external proofreader/copyeditor for a Very Large Bank (VLB). They have a few internal proofreaders, but sometimes there’s more work than the on-site team can handle.

This happens irregularly: sometimes they’ll just send me their incredibly lengthy documents once or twice a month; some months there’s nothing; and three or four times a year, they know in advance that their proofers are on vacation or will be overloaded due to a large project, in which case they ask me to reserve anything from two days to two weeks so I can be on call.

(This means I often spend entire days waiting around for assignments starting at 9AM… assignments that may or may not arrive. And I get paid either way. Pretty sweet for me, right? There are downsides too, but overall it’s a good gig.)

Anyway, enough background. Now to the crux of the issue: I invoice for each job separately, using codes they send me that I guess determine which department/budget line is charged for my services. Despite being a very very VLB, for some reason beyond my ken, the payment process takes an average of six weeks (and there have been delays as long as four months). And I usually have to follow-up with my contacts there, and am often told that oops, they need to re-submit the invoice for reasons that are never clear to me, and so on. In short, this very very VLB sucks at moving money around.

I really hate the waiting, as it wreaks havoc with my budgeting. So I am considering asking for a change.

Here’s my proposal: I’d like to ask for a flat, monthly rate–which would represent a discount in my regular hourly rate. Basically, a retainer, I guess. Let’s say the amount is $750 (not the real number). I pick this number because it represents 1/12th of the annual figure they usually pay me.

To me, this seems like a win-win. For some months where there’s little or no work, I do make out well. But for months where they ask me to be on call for two weeks, the VLB has a very good deal indeed, because what would have cost them $3,600 is still costing them the same $750.

It may seem weird that I’d be willing to give up that much extra money, but I figure the whole thing will work out evenly by the end of the year. Also, I’d rather have regular monthly payments than wait and wait for three or four months, and often having to email my contact asking for an update on the check, and being told “oh sorry we have to resubmit it,” and so on.

Sorry for the length, I swear I’m a better editor of other people’s work than my own posts! Anyway. Opinions, please?

  • Is this a reasonable or a strange request?

  • Is it something that a large company (a very very large company) might agree to?

  • For those who think this is a reasonable request, can you help me come up with a draft of what language to use in this proposal?

Thanks for any help you can provide!

2

Your solution could lead to you being on call a lot more, since there is basically no incentive not to have you on call if I’m reading you right. It also decouples your incentive to be on call from payment, which could be a demotivator. Work morale typically collapses if one feels taken advantage of.

I would tend to raise my rates, perhaps offer a discount for paying on time or for on time payments (so that discount is removable if they simply ignore it and pay the discounted rate late)

3

I am not convinced that a regular monthly payment would be processed any better than a variable one. I don’t have any very very large anything clients, but I have some hefty monthly bills I send out and I still have to send them to the contact who submits them and they are paid whenever the fuck they feel like paying. This has been true for all my clients, except for like, one small business.

Who do you submit invoices to? You should talk to them and be like “would it help if I could switch to a retainer-like payment schedule?” Get their take on your idea.

4

I have been where you are. Here’s some advice born of experience.

You’re asking to get screwed here. A “retainer” with an annual cap on total work to be done under the retainer? Sure. But with no cap? Dumb idea IMO.

You actually have two different payment problems. One is that they deliberately pay slowly for internal reasons. It is now standard US corporate practice to pay every bill as late as the vendor will permit. The smaller the vendor, the later the payment.

The other is that they often foul up their own process and you’d wait forever for a lost payment. And obviously the first problem often camoflages an instance of the second.

These two different problems have two different solutions.
The fix for the first problem depends entirely on your bargaining leverage. You have no pull with VLB as a unit; VLB Headquarters Accounts Payable (HQAP) doesn’t care if you live, die, or declare bankruptcy before they bother paying your pitiful invoice. But you *may *have a lot of pull with the units you do the work for. Or not. Only you know how much pull you really have.

Assuming you do have some pull the answer is: “I’m sorry. I can’t work on this new assignment until I receive payment for the work from <2 months ago>. VLB has exceeded its credit limit with me and I won’t be accepting more work until HQAP pays it down some. If this assignment’s deadline is a problem for your department, please lean on HQAP to clear their backlog on my unpaid invoices.”

The key is twofold: 1) You must have some pull, where your customer department actually wants you, not just any warm body w/ a blue pencil. And 2) you need to make it very clear that you just love your customer department and all the people in it. You’re horribly disappointed at not being able to jump right in and save their bacon from yet another missed deadline and all the pain that causes them internally.

It’s just those meanies at HQ Accts Payable (AP) that are stymying your limitless desire to help your beloved and deeply deserving customer.

Within VLB all the workers are already used to considering other departments as the opposition. That’s just the nature of large bureaucracies. It’s not that hard to have them recognize that HQ AP is indeed the obstacle, not you. Remember: You and the customer are real people; HQAP is a faceless and unresponsive they.
The solution to the second problem is for you to gain more insight into VLB’s internal paperwork flow and have a process where you tickle the various clerks along the way from whoever you submit invoices to through to the goon who cuts the check. Once you know what the process is and how long it correctly takes, you can follow along a few days behind to check. The point is for you to promptly detect when the ball gets dropped rather than just waiting two extra months for nothing while wondering the whole time if tomorrow is the day the pig finally pops out the back of the python.

5

Why can’t you use a Net-30 or something similar invoice with an interest penalty?

6

Hah! As a freelancer I can assure you that Very Large Clients consider “Net 30” the same as putting “Very truly yours” at the end of a letter – a business formality totally irrelevant to the matter at hand.

To the OP: I pretty much agree with LSLGuy that you’re only real leverage is the willingness to say no when HQ jerks you around, and your best option is to make friends with the people who handle the money and make yourself indispensible to the people who assign the work.

I’d suggest starting by asking your contact at VLB about a retainer-plus-cap. Don’t be surprised if they tell you it’s not practical because you’re actually working for many different departments who may or may not need you each time blah blah blah.

An off the wall suggestion. If you know VLB regularly works with a contractor/temp service, maybe you can work a deal with them so that you formally work for the contractor, and let the service worry about getting paid. Depending on your and the contractor’s negotiating skills, the contractor might be able to charge more for you, and get their cut off the top without you having to take a cut.

Otherwise, you just need to accept that you’re at the back end of a very large bunch of bills VLB has to pay every month, and if you aren’t satisfied, VLB expects you to go find another client you’ll be happier with.

7

Well, I’ve mainly dealt with government invoicing, and being charged interest because the payment was late is a big no-no, since only the original amount was approved at the beginning.

8

What does this mean? They’re happy to just pay the interest/late fee as well when they finally get around to paying, or they refuse to ever pay more than the original net-30 amount?

9

Meaning they’ll sign a contract for whatever payment terms the freelancer has but when the invoice comes due, they “don’t pay interest penalties” but you’re more than welcome to spend your own time and money to sue them for that 300 dollar late fee if you want.

10

If that’s the case, why would they bother paying the invoice at all?

11

Thank you all so much for your replies and the advice! (And for reading that mess of an OP at all, for that matter.)

kanicbird and ZipperJJ, you’re right, I’m pretty much likely to net less and be taken advantage of more in the scenario I describe. Maybe I could consider having a cap for hours worked–say, 20–after which I’d invoice them for the extra time?

OTOH I definitely see the point that LSL Guy and kunilou bring up. Unless they actually change my status from a contractor to an employee–which I don’t see happening and I don’t think I’d want it unless it were a full-time deal–the “monthly” checks could probably be just as easy to delay. Especially, as kunilou brings up, since while I generally do work for a single department, there are separate “budget codes” and “cost centers” used for each invoice, depending on whom the job is for even within that department.

They do have a single code for “Proofreading, General Purposes” that I’ve noticed they’ve asked me to use more and more, so maybe this is an indication they’re streamlining things a bit. (They keep telling me that they’re working on fixing the Accounts Payable issue, but nothing’s changed in three years, so I doubt I’ll suddenly be able to get, like, instant direct deposit of my fees! Ah, I can only dream.)

I do know that the people for whom I work very clearly value my work, which is one of the not-so-small benefits of the gig–it’s simply nice to be appreciated and receive good feedback. They know I’m outrageously nitpicky and will even check their math in charts and so on. (Figures that are … somewhat scarily… often messed up. Did I mention this is a bank? :D)

Gosh I wish I had the ovaries to give a regretful “No more work until I’m paid” response, LSL Guy. I am notoriously bad at saying no to assignments, since even though I’m valued, I know that there are 200+ proofreaders in NYC (probably on my block alone!) who could do the job, and gladly. They’d probably just move on to the next person on their list, assuming they have one.

Still… I do have a good enough working relationship with the woman who coordinates the proofreading services–and is my main contact over there–that perhaps I can just put the question to her and ask if she has any ideas as to how to work around this problem, if it’s at all possible.

Thanks again, guys. If anyone can think of any other ideas or strategies I might use, I’d be very grateful to hear them!

12

Because at some point the auditors will tell them it’s time to clean up the backlog of miscellaneous invoices and the legal department will note that it’s cheaper to pay the invoice than send one of the lawyers into court to defend. And because VLB is betting the OP may feel like suing for an unpaid invoice is worth it, but suing for that extra 1.5% per month service charge after waiting for 6 months to be paid isn’t worth it.

But that point doesn’t take place in 30 days.

13

Long ago in the last century, I worked in accounts payable at the university I attended. Our policy was to never pay interest. The main issue we had was matching invoices with the departments or labs that had ordered the items. There was a system of purchase order numbers that the university departments were supposed to use, but some people were remarkably uninterested in using the proper purchase order when placing orders, and some vendors didn’t see the need to include the purchase order number with the invoice.

I remember that the total sums involved were fairly sizeable to me, but the university cared so little about it that the task of reconciling months-old wayward invoices was assigned to low-wage, part-time undergraduate college student employees with no training or qualifications.

The main thing I took away from that job (other than not to trust university AP departments) was “We pay on invoice, not on statement.” It’s served me well.