For Developers
Dec 18, 2019

When To Stop Work For Non-Payment

I recently got a question asking, “When should you put in a stop work order for nonpayment?” 

I’ve talked before about how dealing with clients and collecting payments can be a pain. I really support everyone moving to prepay as much as possible.

Net 30 is still standard in our industry and people are hesitant to ask for payment upfront. But I’m always hearing success stories from people who moved to prepay. 

Unfortunately, if you’re not on that system, at some point you may have to deal with this. One of the agencies I know of that runs a pretty tight ship stops work after five days of nonpayment. That seems reasonable to me. I wouldn’t let it go farther than that.

If your status quo is net 30 or net 60, changing that is probably going to be tough. If clients are used to that, that’s what they’re going to ask for. That puts you in a negotiation position.

It’s always better to negotiate if you are in a position where you can walk away. Ideally, you’ll be able to say, “Listen, this is our new policy, and if you can’t do that, we understand.” 

Hopefully you’ll be able to move to the prepaid retainer method as soon as possible. Otherwise, you’re essentially micro-financing your clients for the invoicing period. 

You have enough problems to solve without solving cash flow and financing. Take that out of the equation if at all possible. Shift to prepay, and if you can’t, keep very small windows before stopping work for nonpayment.

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