From: ed@titipu.resun.com (Edward Reid)
Newsgroups: misc.jobs.contract
Subject: Re: Method of payment for contract jobs.
Date: Mon, 14 Dec 92 23:40:17 EST(-0500)
Organization: Accuracy, Ltd.
Reply-To: ed@titipu.resun.com (Edward Reid)
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symfourn@napier.uwaterloo.ca (Sharon M. Fournier) writes:
> The main question I have right now is this.  How should I arrange payment?

Make sure you are prepared to send invoices for all payments due.  Doesn't have
to be fancy; letterhead will do.  Number the invoices; the client will usually
reference the invoice number with the payment, which make bookkeeping a little
easier.

> Should I agree to receiving just one cheque for the entire amount of the 
> contract when the work is complete since this is just a three week contract?  

Depends on whether you can stand the float.  I usually have enough float to
invoice monthly; I know others who invoice weekly.  It helps to know how
quickly the client pays -- some write the check in three days, others have
trouble getting it out in 30.  Remember that, unlike employment, you will
normally not get the check at the end of the pay period -- rather you will
submit an invoice at that time, and hope the client pays quickly.  But 30 days
net is standard business practice, and you can't complain about their taking 30
days to pay unless you arrange otherwise in advance.

> Or should I ask for half of the payment at the beginning, and the balance 
> when the job is finished?  Otherwise, I could ask for weekly installments.
> I don't know which option is standard for contractors these days.

Any payment before work starts would be highly unusual.  A lot depends on
whether you are delivering your time (hourly contract) or a product.  If you
are delivering time, invoice for work done on any mutually acceptable schedule.
 If you are delivering a product, invoice on delivery (and acceptance, if
applicable), except for very large products with milestones and partial
payments built into the contract.

> I know what the acceptable rate is (the $salary/1000 rule, and the double your
> usual hourly rate rule).  But does this rate cover expenses such as long-   
> distance phone calls?

Generally that guideline is intended to cover basic office expenses, marketing
time, insurance, self-emplyment tax, vacation, sick time, jury duty, accounting
and legal expenses, and anything else which a full-time employer would normally
cover.  But it's a very rough guideline; that divisor of 1000 might be 1500 or
500, depending on the nature of your particular business.

Quoting from an old posting of mine:

Depending on the nature of your contracts, you will need anywhere from 50% to
200% more per hour than you made at regular employment, for the same usable
pay.  Self-employment tax, health and life insurance, vacation, sick leave,
disability coverage, pension -- you are taking over those responsibilities at a
minimum.  Depending on the situation, you may also have marketing, office space
and equipment, telephone, education time and expense, periodical subscriptions,
professional organization membership.  It's easy to underestimate your
expenses, especially since the rate you quote is going to sound so exorbitant
compared to your previous salary.  Companies that deal with contractors,
though, understand the difference.  If they don't understand, they will be very
difficult to deal with in other ways also.  The low end of the range I gave is
for long-term contracts with reliable clients who provide all office space and
equipment and who expect you to keep up with the field on their time.

Realize that your pay is going to be delayed relative to what you are
accustomed to.  Instead of getting paid for January on 31 Jan, you will submit
an invoice in February for January work, as soon as you get around to it.  If
you are lucky, they will pay in under 30 days without hassle.  Make sure to
include late fees in your terms.  If you afford the float, 1.5% per month is
great interest.  If you can't afford the float, quote a stiff penalty, since it
will cost you more than 1.5% if you must suddenly find ways to cover your
expenses.  These terms are only examples, of course; you can set the terms as
you both wish.  Government agencies will probably insist on 90-120 days to pay.
 In a large company, the person you are dealing with may be very understanding
about the terms yet have no knowledge of how the accounts payable department in
his own company actually operates.

Edward Reid  (8*}>
  eel:   ed@titipu.resun.com  or  nosc.mil!titipu.resun.com!ed
  snail: PO Box 378/Greensboro FL 32330