In particular, I’m talking about instances when a client contracts a vendor who, in turn, sub-contracts part or all of the project to a bunch of freelancers. In all likelyhood freelancers in all niches have their horror stories. Well, I’ll be focusing on what I know best – virtual assistance industry and, more specifically, on working with multi-VA agencies.

But first, a DISCLOSURE – I’m not a lawyer and in no way qualified to provide legal advice. What follows is my honest opinion based on my own experience both as a vendor manager and a sub-contractor.

So, it all starts with a sub-contract agreement. Ok, so it really starts a bit earlier than that, with applying to the agency or answering their inquiry. But the next step is surely signing a multi-page agreement full of legal jargon. The single most-important thing to remember about this agreement is that it is an AGREEMENT – something that satisfies both parties and that is open to negotiation.

This means, if you don’t like some of the terms for one reason or another, you can request making changes to the contract. Most freelancers simply sign on the dotted line, even if some of the terms make them cringe.

Some do it because they hope for the best. To these I say, from my recent experience, hope for the best, but  prepare for the worst. 

Others do it because they think if they don’t agree to all terms and conditions, the agency will simply dump them for a more pliant freelancer. Here’s my two-cents on this (and these come from my experience as a vendor manager) – if you are an average unremarkable easy-to-replace cog, then yes, the agency will go with someone else. If, on the other hand, you bring unique value, they will be more willing to discuss changes to the agreement with you.  

So, what kind of changes am I talking about. A typical services agreement has a few standard sections and clauses that warrant close attention:

Scope of Services (aka Services to Be Performed) -  If the scope of your services will vary over time and from project to project, then make sure to include that such services will be described on separately executed Statements of Work or Work Orders.

Term – Check if there’s a automatic renewal clause or “effective until terminated by either party” clause. If there isn’t, take note of the date the contract will terminate. Some multi-VA agencies, especially the ones that don’t have good vendor management in place will forget to renew contracts or to let you know to stop work (yes, weird, but it does happen).

Termination – IMHO, some contracts are particularly unsavory in this department. How about this example:

The Agreement may be terminated by either party upon fifteen (15) days written notice to the other party. If Independent Virtual Assistant terminates agreement for any reason other than an emergency, the Agency reserves the right to withhold payment of any monies not paid for work performed.

The Agency reserves the right to terminate the Agreement without notice or less than 15 days notice for failing to meet standards of performance and /or non-compliance with any term included in the Agreement. The Agency reserves the right to withhold payment of any monies not paid for work performed.

Notice, that in this case, if a contractor terminates the agreement for any reason (other than emergency) with or without proper notice, the agency has all the rights to not pay the contractor for completed (and delivered) work.

And here’s a caution about standards of performance (non-compliance with which would also prevent a contractor from getting paid) – make sure that these said standards are specified very clearly in the agreement. Otherwise pretty much anything can pass for “failure to comply with standards of performance”, especially if turns out you’re dealing with a unscrupulous agency.

Rates  – clearly specify your rates and whether these are time- or project- based. If time-based, specify your time-increments – 1 minute, 10 minutes, 30 minutes, etc. For project-based rates, I’d suggest simply stating that rates and fees will be specified in the applicable Statements of Work.

Payment Terms – I was once foolish enough to accept, without negotiating, a no-retainer no-downpayment monthly invoicing terms with a very small one-person agency structured as a sole proprietorship. After a few months (call me slow on the uptake), I realized how risky such an arrangement was for me and asked to change the terms to bi-monthly payments. The response was a resounding NO (which swiftly put an end to that relationship, but that’s another story).

Records and Reports – basically, if you do hourly work, then the contract needs to state how your hours are to be tracked and reported, including on invoices.

Work Product Ownership – typically, an agreement specifies that a sub-contractor transfers all ownership to the product produced under the agreement to the agency. This is another area that can be negotiated along with whom to credit for the completed work.

Non-compete Clause – make sure that a non-compete clause is both fair and not overly restrictive. Also, it’s worth noting that, at least in the US, many states have their own laws regarding non-compete agreement. Different states might have different limitations on the terms of non-competes as well as geographical areas they apply to.

Ok, this seems to be it. So don’t be in a hurry or feel pressured to accept the terms of the subcontract agreement “as is”. You have the right to negotiate the terms to be more advantageous to you.

Technorati Tags: virtual assistant, outsourcing, subcontractor, services agreement

Don’t Sign That Subcontract Agreement is a post from: 1Click Virtual Assistant

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1. How to Avoid Deadbeat Clients
2. Offshore Virtual Assistants – Myths and Realities – Part 3
3. Offshore virtual assistants – Myths and Realities – Part 1

As freelancers, virtual assistants take a risk on each client they sign up and each project they accept. Part of it is not being 100% sure whether a client is going to pay on time, if at all. And so  an exciting new opportunity for long-term work turns into hundreds of dollars in unpaid invoices, a follow-up headache and a cash-flow nightmare. The only way to avoid this situation for sure – asking for an upfront payment for the entire project – is neither reasonable nor practical. However, there are other ways to minimize your chances of getting screwed.

Let me tell you this – writing about a hypothetical situation is a lot easier than dealing with an actual problem. But I bet you know this already (and now so do I).

I recently found myself in exactly this situation – cash-flow nightmare and all. Except the grand total of the outstanding invoices is a few thousand dollars. How did it get this far? Didn’t I follow my own advice:

Start with conducting some basic research about your prospective client.

I sure did that. Actually, the client came highly recommended by someone who I trusted and still trust. The website looked legit – e-mail, phone number, physical address; The client also had an established affiliate program. Sure, there were several complaints about this client on consumer forums, but that’s why they needed me – to manage their online reputation and address online complaints. I e-mailed the owner and spoke with him on the phone a few times.

ALWAYS sign a contract for any size project. And by always, I mean NO EXCEPTION, NO EXCUSES, ANY and ALL projects, unless of course you don’t care if you get paid. Of course, some projects are too small to warrant a full-blown contract agreement.

We signed an agreement that, among other things, detailed payment terms and conditions. And 6 months later this agreement was reviewed, amended to include my expanding responsibilities, and signed and counter-signed.

To protect yourself against a deadbeat client, consider requesting a downpayment for your work as a percentage of the estimated total amount due.

Here’s where I screwed up. I didn’t ask for any downpayment or a retainer… The truth is, I was absolutely desperate and in terrible financial shape. Things were so bad that my husband and I put our house up for sale (and we LOVE our house). When this client contacted me with a long-term 20 hours per week contract offer, I was too afraid to miss this opportunity. As a result, I didn’t even ask for a retainer…

To make the matters worse, I was to invoice the client at the end of each month and the payment terms were Net30. This, of course, meant that I wouldn’t get my first invoice paid until 60 days after I started working. I asked if it was possible to change invoice frequency and/or change payment terms to Net15. Both requests were declined since “that’s just not how their accounting was set up”.

Sometimes, even with all the contractual safeguards in place, your invoice will go past its due date… If it’s only been 3-5 days, e-mail the client again with a copy of your invoice as a reminder… If you still don’t get paid in another week, fax your client a copy of the invoice along with a reminder note…  Another week goes by and still no check in your mail? Time to call the client… Finally, if your invoice is a month or more past due, send your client a letter (with confirmation of delivery) reminding of their payment obligation and politely promising to take actions against them if the situation is not resolved.

It sure did… Actually, back in December the client informed all vendors that there would be a payment delay for January and possibly February invoices. They also said that the issue will be resolved by end of February and everything was going to be back on track by March. And so I waited patiently… and waited… and waited some more… All the while I kept putting in 20 hours a week of billable time and submitting all DELIVERABLES! February came and went and so did March. Sometime in April I got partial payment against the January invoice.

All the while, I kept e-mailing the client every couple of weeks asking when will their situation be resolved. The standard answer was “another couple of weeks at the longest”. At some point, the client must’ve gotten tired of my inquiries because they sent me an e-mail saying that even though they are very happy with me, if I keep being so “inflexible”, they will have to replace me with another vendor. BIG RED FLAG!!! And I still kept on working for these guys.

In May I told them that I would have to cut my hours to no more than 10 hours a week until they catch up with the payments. Can you believe this naivete?!

Finally, a few days ago I sent them an e-mail informing that I will not do any further work until they pay up. The response? Yeah, sorry, but we are still having problems and even when we solve them, we’ll have to pay some other guys first.

The next step in my old post was to “politely inform client of the steps you will take to collect on your debt, such as contacting client’s local chamber of commerce, filing a lawsuite (or hiring a lawyer), hiring a debt collector, filing complaint with the local Better Business Bureau.

And this is the stage I’m at now… Unpleasant… But here are some great lessons I learned from this experience:

• NEVER get a client out of desperation!

• Always require a deposit or a retainer payment!

• If contract terms are unfavorable (such as Net30 payment terms, etc) – negotiate, don’t just settle for what’s being offered.

• If client is more than a week or two late paying their invoice, freeze ALL work on the project until they resume (and catch up with) payments.

• If the client expresses dissatisfaction over your payment reminders and hints in any way that you should be “more flexible” – GET PAID and GET OUT!

Have you had a situations like this when your client did not pay on time and/or tried to avoid paying altogether. Did you get your money back? If yes, how did you do it?

UPDATE

I got paid in FULL! Here’s exactly what I did – I stopped being overly accomodating. Since none of my hints, payment reminders or inquiries worked, I sent a short e-mail in which I demanded to be paid by end of day on June 12, 2009. I also made it very clear what would happen if the client didn’t comply with my request:

Unless I receive full payment for all outstanding invoices within 5 business days, I will contact the following agencies:

• Federal Trade Commission
• Better Business Bureau
• Attorney Generals offices in NC (my state of residence) and CA (client’s state)

I will further retain the services of a collection agency to recover the payments.

On Day 3 I got an e-mail informing me that the payment was initiated and on Day 5 – another e-mail letting me know that the money were sent to my account.

Technorati Tags: virtual assistant, outsourcing, freelancer

How to Avoid Deadbeat Clients is a post from: 1Click Virtual Assistant

Related posts:

1. Don’t Sign That Subcontract Agreement
2. Virtual Assistants Add Value to Client’s Business
3. 10 Signs You Need a Virtual Assistant

Lesson Learned  - Always backup! The best way to do it is through automatic backups (let’s say once a week) and manual backups before any major work is being done on a blog.

I’ve been using the WordPress Database Backup plugin. The installation is a breeze – download the .zip file, unzip, upload to your wp-content/plugins folder and activate. Then it takes another minute or so to configure it – just select the tables you’d like to backup (when in doubt, select all), backup frequency, and where to save the backup file (server, your PC, or any e-mail address you specify).

It took me a total of maybe 5 minutes to get this plugin and set it up. Now I know that every Tuesday the backed up databases are delivered straight to my Gmail – one less thing for me to worry about.

And while I’m on the subject of super-useful WordPress plugins. Here’s another one – it’s called WordPress Automatic Upgrade. Easy to install, this plugin does all the hard work of upgrading your WordPress blog to the latest version from inside your blog. It walks you through all the steps and all you have to do is to “CLICK HERE” on each screen. No messing around with your hosting provider’s cPanel anymore!

P.S. I just timed myself as I upgraded from version 6.2 to 7 – 30 seconds (ok, I saved a few seconds by not downloading backups generated during the upgrade since I alreadyhad today’s backups delivered to my e-mail earlier in the day, thanks to the Database Backup plugin).

Technorati Tags: wordpress blog,  great plugin

How To Automatically Back Up and Update a Wordpress Blog is a post from: 1Click Virtual Assistant

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1. Business Blogging Platform – Wordpress or Blogger