I wrote this post up for a friend who told me he’d pay me $75 for a blog submission.
But I did it before doing any kind of SOW….
Keeping Cash Flow Positive when Contracting
“Full-time, home-based freelancers and independent contractors in the U.S. are expected to increase by 200,000 workers to 11 million by the end of 2009, says Ray Boggs, a vice president of IDC, Framingham, Mass., a market-research firm; he sees another 200,000-worker increase in 2010.”
– “The Five-Second Commute,” The Wall Street Journal, November 29, 2009
The life of a freelancer has its pros and cons. One not often cited, however, is getting paid in a timely fashion. Small businesses often have their invoices put aside or ignored because they do not enjoy the support of legal or collections departments, or (and) service other small clients with their own cash flow problems.
One way to address this is to include very clear deliverables in the Statement of Work (SOW). Clear milestones, and using phases for the work, help clients and providers spread out the work and payments, and be on the same page with respect to deliverables and expectations.
An SOW should list out:
- Clear work deliverables
- Milestones/due dates for these work deliverables
- Process for iterating / accepting the deliverables
- Payment terms (e.g. hourly, or how much is to be paid for the retainer at which milestone, etc.)
Setting expectations clearly up front not just about the work but about the payment helps you meet your cash flow obligations and build a solid foundation for growing your business.