Pay First, Argue Later?

When services are used the question often arises; should the services be completed before payment or should payment be received before services are supplied?

Pay upfront and services shall be received. This is most common for offline services supplied to individuals. And this would probably be the best possible result for anyone who is providing the services. But online it’s a different situation. People are increasingly distrustful of paying upfront online for services. There is no guarantee that the services will be provided and it is also very difficult to chase money where there is no physical location. Where trust and confidence is everything upfront payment may just scare off some potential customers.

The other option is to provide the services then request payment. However the shoe is now on the other foot. There is no guarantee that payment will be received after the work has been completed. Whilst the service provider may receive more customers it doesn’t help if none of them end up paying you.

So is there are way that is fair for both parties? Short answer is not really but here are a few ways to help resolve the issue:

  • If possible remove the services. Generally I will provide services upfront to create a better client transaction. However I have access to the hosting and domain of sites I build and whilst it has never been necessary I can remove the services I have provided. I still lose but hopefully the added incentive may persuade the client to pay
  • Half now, half later. Many Designers use this method. Essentially it reduces the risk to 50% but now both parties are at risk and you have still created a barrier for a potential customer to use your services.
  • Escrow Payment. provide escrow payments at a nominal fee. Essentially the buyer will place the cost of services in a third party account. The buyer cannot cancel payment without sellers permission and seller cant receive funds until buyer is satisfied. If a dispute occurs a third party will decide where the funds go.
  • Stages – Another preferred method for web designers. Essentially a contract (or agreement) is made before a project begins. When the service provider reaches agreed upon stages of completion funds are then transferred. If a contract is involved there are legal cost otherwise it is just risk management as buyer and seller can pull out anytime leaving one stage unfulfilled.

Hopefully I provided a few extra options for your next project. In the end there is no easy, sure-fire way to make a safe transaction. But as they say “life is a gamble” and at least you can minimize risk.