Can we charge "being late" penalties to the client?

Question

I have been in situations like this on several occasions and I would like to hear how the community behaves in such situations. Also if you have handled this situation via the contract, I would appreciate you show me its excerpt that handles this legally.

The situation is like this: There is Client A and Client B, each with his own project. Client A came first and you estimate project will last 1 month (work + buffer) max. You tell client B you will take his project in 1 month (obviously everyone is in rush and you have to take project in work asap).

However, Client A is slow on replying to your messages or other member of his company slowly resolves issues that are preventing you to work on the project and A's project took 2 months, instead of 1.

As a consequence, you cannot start B's project full time as you have to finish A's project.

How do you handle situations like this? When it's 100% not your fault, but client is slow on taking actions.

Do you start B's project after 1 month? If yes, what do you say to A?

Do you delay B's project and give him some discount, but also issue penalties invoice to client A? It's his fault that you are losing money in B's project.

How do you resolve situation like this without impacting B's project (who should not suffer for A's actions), but also finalize A's project in a way that he realizes his actions caused delays and without A breaking business relations with you?

Answer 1

I solve this by never giving 100% of my time to one client at once.

Say, for example, client A comes to me with a project. I quote that project on how long it'll take at 10/20 hours a week (25-50% of my time).

Then, when client B comes along, I allocate to them another proportion of my time (25-50%, depending on when they want it done), and start on it immediately.

No client ever gets more than 50%.

At the moment, I have multiple clients ranging from 5-50%. In total, they add up to 125% (or 50 hours). However, I almost never work that much because very often clients will be slow. I usually find I work 40 hours a week on average this way.

Another advantage is that my rate goes up as I get busier. Hours 0-5% are much cheaper than hours 100-125%.

Answer 2

To be honest, I work on everything simultaneously. But that may just be because my work allows that far more than yours.

If Client A is slow, I start Client B's project when scheduled, then I'll just split my time. When Client A gets back to me, I'll spend a day or so updating their project and a day or two on Client B's project.

I essentially get things alternating. So Client A is proofing while I work on Client Bs project. Client B is proofing while I work on Client As project. I generally have at least 4 things juggling at the same time.

And I plan on all this for delivery dates. You're right that all clients claim their project is urgent. But if you give them a delivery date, 95% of them accept the fact that .. okay, that's the best that's going to happen.

I don't schedule my time wall-to-wall. If I think a project will take 1 month, I plan on at least 6 weeks. And I always assume a client will take a minimum of several days to get back to me at best.

I also give soft deadlines when sending proofs....

"Hi ClientX, Here's a proof for [project]. Please get back to me with any revisions or corrections as soon as feasible. I'd love to be able to move forward on this by [date I want proof back] in order to meet the scheduled delivery date."

This way, if the client doesn't get back to me by the date I've given, there's a written (email) record of it. So, if the client later complains about delays.... well I've got ammo.

In my work, there's no such thing as a "urgent project" that takes more than a few days to complete. Its not a problem for me to occasionally shove everything else aside for a couple days to accommodate an "urgent" project -- but again, may be more to to with the nature of my work compared to yours. And I'm not always opposed to scheduling a 60-80hr week if there's that much work to be had (feast or famine).

To answer the question specifically... no I do not penalize clients for slow responses. I'm here to cater to them.. not the other way around. They can take all the time in the world since it's their project and they are paying me. It's up to me to work around their schedule. They aren't expected to work around mine (other than common courtesy).

Answer 3

It seems that Client A can wait. He is not in a hurry for the project to be completed. It means two things:

• He is not envolved with the project or it's not a project that will impact his business enough to be worried about it
• He is not aware of what his employee (responsible for solving the issues) is doing.

If these affirmatives are true, it's pretty difficult to change. Even if you could show to your client what his employee is doing, there are clients that don't want to see the truth.

You will have to explain to Client A that you have other other projects to work and if this project takes too long you will have to change the project scope. This means, start to charge for extra hours worked on the project including (emails, time to fixes, etc..).

From my experience, when a client is not involved with the project he is not a good client. Sometimes this brings more trouble than benefits.

Answer 4

What does your contract say?

If you don't already have one then you need to get this into a contract, all written down, black and white. Decide what each party's responsibilities are and have penalties if they are not meeting their end of the bargain (and obviously there may well be penalties the other way round too).

It's contracts that will keep both parties safe if anything like this happens, they should be aware that delays on their part are going to have a negative impact on their delivery date. You're a business, so are they, they'll understand.

Watch Mike Monterio's talk below, he discusses how his Design business has had to deal with various scenarios and what is now built into their contracts.

https://www.youtube.com/watch?v=jVkLVRt6c1U

Answer 5

Unless you are an absolute rock star freelancer or the business sector you operate in generally fines late delivery, I would advise against it.

Working in IT (programming), I suspect that even if fines were stipulated in the contract, actually enforcing them would sour the relationship considerably. In addition, I would expect a lot of frustrating back-and-forth discussion on whether they actually are late or not.

As others have stated, having more than one simultaneous client is typically the way to deal with this. The only way one can 'discipline' a client who is always late, but expects immediate service when they suddenly re-appear, is to have other clients and professionally inform them that they have to wait their turn, as you explained X weeks ago.