Archive for December 9th, 2010

Pay What You Owe

I’ve recently heard from several colleagues who have been having trouble getting paid from the colleagues who engaged them. I hear from folks like this all throughout the year, but even more so recently for some reason.

Seems to be an epidemic going on. They’re frustrated, not sure what to do and wondered what I think about it. So here are my thoughts on the whole topic…

It’s bad enough when to get stiffed by clients. It’s adding insult to injury that they have to worry about this from their own colleagues.

I think it’s reprehensible and unethical to withhold payment from subcontractors because you are waiting for payment from YOUR client.

YOU engaged your subcontractors, not your client, so PAY THEM fair and square.

And if you don’t have the money, then maybe you shouldn’t be engaging them in the first place.

But subcontractors, you aren’t off the hook either…

Have colleagues who want to engage you sign YOUR contract, and YOU decide what rate you will accept. Just because you subcontract doesn’t mean you have no say-so about how and when and what you get paid—but these things need to be established upfront.

That said, you don’t have any business talking about money or accepting work directly from clients that belong to the colleague you are engaged with.

If you’re going to be ethical about this, then you need to inform any clients who approach you in this manner that they need to go through the proper channels and talk directly with the person whose client they are—and that’s not you. Those clients are not your clients; they belong to the person you are subcontracting for.

This is yet another reason why that whole “team VA’ term is so ridiculously idiotic. Unless you are an actual employee, you are not part of anyone else’s “team.” So stupid.

Never include in your contracts, or sign any contract that has this, any clause that says you don’t get paid until the client pays the colleague you are subbing for. If you do, then you’re stuck waiting or not getting paid if their client doesn’t pay on time or at all.

And if you do sign a contract like that, don’t complain when you don’t get paid. You’re the one who signed it.

From a business standpoint, this is yet another example of why YOU have to be smart in your OWN business.

I get that some folks think this is the experience they need to gain confidence to go out on their own, and sometimes you gotta do what you gotta do to help keep some money flowing in. But never lose sight of the fact that when you are working for others (i.e., subcontracting), you’re building their business, not your own.

You’re paid less, you lose a great degree of control over your circumstances, and you waste time and energy that could be spent growing your own client base and long-term success.

My advice (if you’re still nervous about engaging directly with clients):

Stop with the subcontracting and instead look for colleagues who want to engage you as their own support partner in the same way that any other client would retain your ongoing support. You would charge them your full monthly fee just like any other client and you’re going to learn a lot more about the business, managing it, and what it is to provide ongoing administrative support than you ever will doing piecemeal, nickel and dime subcontracting projects.