Sending a bill without delivering a product

Question

I got a question about sending a bill, without actually delivering a product.

I have made a complete new website for a client and it is almost ready, but now the client is very busy with a fusion of 2 companies. So they don't have time for the website. Even when the website is already complete, it only needs a double check from the client and it can be placed on the web.

Now my question is, because of the client the website has a delay of getting online, and we have put in a lot of time in it to make the product (website).

Is it reasonable to send a bill/invoice? For the time we have spend to make the product as it is? Even if it's not online yet? Because they want to resume with this product in August and I started in October last year. (So that's a lot of time.)

I really hope somebody can give me some advice.

Answer 1

This depends on your agreement / contract. I will explain what you can do now, after I've said what you should do when making up the agreement.

• Ask for partial prepayment. Request half of the amount at start and half of it at the deadline. Split the amount in more parts if it's a large sum. This way, you always have something when the client can't pay (or doesn't want to, for whatever reason) at the deadline.

• Put fixed pay-dates in the contract. If you agreed on it, you can make the client pay, even if he can't use the product yet.

• Keep in touch. For clients it's hard to get to you if they see problems coming. You can make this easier for them if you have contact anyway. They can easily mention it when there's a conversation going on anyway.

Okay, now what can you do in this specific case?

If you agreed on sending a software packet (i.e. not put the website online), you can just send him it. Send an invoice as well, because you did send him the product. He has two weeks (in the Netherlands that's the period) to pay, that's enough, also when busy with a fusion.

If you agreed on some more services, for which you need the client, you have a problem.

If your contract lists a specific date or period for the deadline, tell him and say you can't help him after that time because you have other jobs to do as well. Subtract something from the price, because you don't give him all the services you agreed on, but make this a symbolic amount. It's his fault, in the end.

If your contract doesn't list a specific deadline, you'll just have to wait. The only thing you can do is ask for a payment of the part you could and did do already, and ask him if you can make an appointment soon.

Answer 2

It depends on what reads in your contract.

If you haven't made a written contract, or the contract doesn't mention the procedure in this kind of situation, you should discuss it with the client. Usually they are ok with sending the bill when the delay is caused by them. Especially in the case of a merger they might even want to handle all the invocies because they then don't need to move the contract to the new company or handle it specifically in their accounting after the merger.

You could also see if the contract has something that could be leveraged as an implied billing date. For example, if you have agreed on a deadline you could argue that you have held the deadline and that the deadline is also the implied billing date.

In any case you shouldn't send the invoice out of the blue without discussing with the client first.

Moral of the story:

• Always make a written contract
• Always make sure the contract lets you bill the client for work done so far if they cancel or postpone the project
• Always make sure your right to bill for the project isn't dependable on client's actions. In this case the contract could read that the invoice is sent after the product is delivered and the client has approved it, and the client must approve the product no later than X weeks after delivery.
• Make deadlines binding for both the contractor and the client.

Answer 3

A good approach is to include a Fee Schedule in your contract. The Fee Schedule should state that you will invoice the client after Completion Criteria are met. (The Fee Schedule may also include other times to invoice, depending on the project.)

The Completion Criteria should include the client's acceptance of your deliverable materials without unreasonable objections, and indicate that no response from Client within some time frame (e.g. 10 business days) is deemed acceptance.

This will make it clear when to invoice. If you don't have a contract in place, you'll have to do the best you can informally to substitute. Work with the client as soon as possible to put a time frame in place. A client is most likely to agree when their review deadline still feels like it's a long way off.

Answer 4

Ok, this is going to echo Juhaha's "depends on what is in the contract" but there is an addition I want to talk about some complexity of what can go on here. If the customer is able to make it go live themselves, there are no problems with invoicing accounting-wise. Now if this is not something planned for in the contract, approach your customer about this and ask what they are willing to do.

The question is what sort of obligations you still have. If you have significant obligations, you need to track this as "unearned income" which is owed to the customer (then you move this to income when the obligations are fulfilled). If it really is "we are moving this to support" then I don't see anything major wrong with invoicing as income though technically you should estimate further obligations (talk with your accountant if you are worried about this).

This is also important for taxes (usually!) because it is not income until it is realized and if you haven't finished the milestone or project it may not be realized.