Supplying physical hardware - how to handle payment

[Durbs]

I normally do development work and stage payments according to the length of the project and how well I know the company/have worked with them before.

Got a job on at the moment where i'm supplying and fitting a load of PC kit to a company that i've not worked with before.

Been many years since i've taken on this kind of job so what is the generally accepted stages of payment that any of you use?

- Full cost of PC kit invoiced and paid for before gear is left on site then installation billed seperately
- Partial payment of say 70% in advance to secure kit
- Small payment of 30% in advance to secure kit then rest on completion
- Other

Say its for 3K's worth of kit + 1K's worth of installation service + sundry OS, Sage and Office licenses, what would you bill and when?

(Obviously easy to say all kit cost upfront before I leave it on site but guess this wouldn't be acceptable to many businesses who'd want the kit on site and verified as working before they shell out a big portion of the cost, I certainly would!).

Ta.

[DaveB]

Give them a formal quote for the job listing hardware, installation and including a plan of work etc. Include your T&C's with it.

Get them to raise a PO against that quote.

Issue an invoice for the full amount once the work is done.

This way you at least have written proof of the intent to purchase based on a formal quotation of costs. Stops them trying to wriggle later.

I'd be very surprised if you can get them to pay for the kit up front. 30 day payment from date of invoice are the usual.

[Wanderer]

- Full cost of PC kit invoiced and paid for before gear is left on site then installation billed seperately

That one. ^

I wouldn't be delivering equipment they haven't paid for up front. To look at it another way, could your company order a pile of kit from a supplier without paying for it up front?

Better still, get the company to order the kit directly themselves so you don't have to handle it.

If you're buying the kit yourself and then selling it on to them then I'd be putting a markup on it to cover your costs and risks.

[Durbs]

Better still, get the company to order the kit directly themselves so you don't have to handle it.

Thats what I used to do when I first started my Ltd and didn't have the cashflow to buy upfront and risk being without the money for 30 days +

Now though, myCo can fund the purchases so its better to do that and get the 20% markup cost on the kit.

Agree with Dave B that i'd be surprised if they pay upfront as I've no prior relationship with this lot but don't know whats a good opening gambit for % upfront?

[lukemg]

Tread VERY carefully. Ex-girlfriends dad was doing great supplying kit (with a bit of markup) alongside other services.
A co he supplied went bump and all the gear was treated as an asset of the business and he got zip for it. He was paying off the debt for years and living in a rough area etc. I personally wouldn't touch this, but I would have no qualms speccing out the kit needed and finding a supplier etc, just step back from the payment part.

[mondraker]

I agree with lukemg! I have a few colleagues that have been stung by "reputable" companies going bump in the night and leaving all sorts of invoices hanging. At least cover the hardware costs and stage pay the "service element"..remember your time has a relatively high margin in comparison to the kit!

Do you have flexi terms with the hardware supplier? Just be careful if you are stumpin' up front for all of the kit on your side of the fence..

Also - as a few have mentioned - make sure the contract/agreement is bulletproof (or as bulletproof as poss) or its battles with a client time

[Durbs]

Thanks all, good advice.

Been to see them and agreed cheque covering cost of kit before I leave site on delivery day then payment for installation service 30 days later, which i'm happy with. Obviously cheques aint cash and theres always the risk of things going bump but seems as fair as i'll get it.

Remembered as I was posting this of a story I heard about someone who did similar and then got a call to say unfortunately theres been a break in and some of your kit has gone.

If this one comes off it'll be a nice little earner but isn't something i'd like to much of due to the hassles people have outlined, easier to ship code than boxes.

[xchaotic]

If this one comes off it'll be a nice little earner but isn't something i'd like to much of due to the hassles people have outlined, easier to ship code than boxes.

First of all it is a niche, that's not easily outsourced far away, I guess the advantages are that even in case the Internet goes down, they can still do their accounting stuff?

Looking from another angle, could you perhaps run Sage in an Amazon Instance or something like that?

[TykeMerc]

I used to supply hardware, installation services and software until dealing with slow payers got on my nerves so badly that I couldn't be bothered any longer. To be fair one bad payer almost bankrupted me when their finance department totally ignored the agreed terms and that really was unpleasant.

[Durbs]

To be fair one bad payer almost bankrupted me

Happened to me when I first started up MyCo many years ago, my first client was a big project that I worked on remotely for several months yet they never paid the bills and I naively carried on churning out the code and handing over deliverables with a deeper sinking feeling after listening to excuse after excuse as to why these invoices weren't being paid (problems with bank, we're waiting for a client to pay us, the cheque was sent out last week, must have been lost, we'll reissue etc etc). Had gone so far though that all I could do was carry on and keep chasing them, didn't have any other clients at that time.

Got so i'd spent all the money i'd saved to start the business and we were dipping into the wifes savings when I got a mail from one of the coders at this company, a nice bloke i'd been dealing with saying he'd not been paid himself for ages and suggesting I cut my losses whilst I could as he was off. He also suggested that I Google the bosses name which I did and it returned news articles about numerous property scams he was implicated in and also that this guy apparently wasn't a pleasant chap at all.

Cut my losses, lost the money and learnt a lesson the hard way, those are always the best lessons.