[MisterOctober]

No doubt about it. An effect of the behavior set I describe above [and I was only describing them -- I've been on both ends of that phone call over the years] is that in these relationships, the established payment terms are kind of irrelevant to the way things actually play out.

[subhobroto]

You are getting me really curious now.

I have tackled this issue (late payers) in two ways:

1. My cashflow from other investments ensure I did not run out of money. This is a bad design where I am effectively extending a 0% APR loan to the client with a term of their choosing

2. When I have ARs large enough to entice "parties that handle payments", I choose to let them handle the invoices on my behalf for a cut. A pretty large cut but 80% is better than 0%.

I am effectively looking for a way to optimize the later but happy to hear alternative solutions, specially when the ARs are not large enough to outsource.

For a bootstrapped business, this cashflow can be critical.

[tptacek]

I mean, if you're careful about who you work with, 0% isn't really a meaningful risk. Bank of America (or, for that matter, Airbnb) isn't going to default on you; the pain the ass you could generate if they did would cost more than the invoice.

[subhobroto]

Agreed with a caveat. Having actually worked with BofA, the amount of overhead for a contract could have put me out of business if I was not a BIG5 employee.

The big boys are not even going to consider me unless I am a safe choice (they really don't care if I am a kickass programmer who can solve their problems - they want to do business only if I am a known quantity so that they don't get fired if a deal with me go sideways).

I am really lucky to have positive cashflow because I can be picky about clients but a lot of friends ask me how to get started and my experience with cashflow is that a fantastic business with client set A can absolutely fail compared to the exact same business with client set B just because of cashflow issues.

Maybe I am too old and jaded but now I always ask people to include and test for cashflow in addition to the efficacy of their business ideas vis. market fit.

Honestly though, this becomes too demanding of entrepreneurs who are already overworked with lead gen, product design and development as is.

You should definitely write a few articles about cashflow. People don't write about it enough.

[tixocloud]

Entrepreneurs should absolutely be thinking about cash flow because it’s essential for survival. Demanding yes but necessary to become a successful startup.

Too many startups riding high on how much revenue they bring in without controlling the costs. If you spend to get revenue, it really isn’t a business (or at least a solid one anyway)

[kenneth]

You can always ask for a retainer, too.

[subhobroto]

Bingo. One of my favorite gotos. Any more ideas?

I size the prices with the retainers. Bigger the retainer, higher their priority and less the per project prices.