Independent Consultant: Billing

ouestque
ouestque used Ask the Experts™
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I had some questions on how you guys handle billing...

Example: When a client calls you for the first time:

1) What do you do to confirm that person is real?
2) If they want to pay by credit card, how do you confirm its not a stolen card etc.,?
3) How do you prevent someone doing charge backs months later, making all that work you did free?
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Don't accept payment by credit card.  That's unusual, to say the least.  Think about it - what legitimate customer would give their credit card number and CVV number to a stranger they found on the internet.
JohnBusiness Consultant (Owner)
Most Valuable Expert 2012
Expert of the Year 2018
Commented:
If you intend to do business with the person:

1. Get the physical street address and look it up on an online map.
2. I do not accept payment by credit card.  Cheque or online payment into my bank.
3. You cannot prevent this. You would need to find out why. Reputable clients will not do this simply to make you work for free.

I have been working for clients for a very long time now and no issues with 95% of them.
David FavorFractional CTO
Distinguished Expert 2018
Commented:
Every old timer will have their own guidelines. Mine...

1) What do you do to confirm that person is real?

I charge a $1000 retainer for any new client.

After they pay, I start work.

2) If they want to pay by credit card, how do you confirm its not a stolen card etc.,?

I force all my clients to use PayPal, so they can pay using a credit card or PayPal balance. This solves many problems.

3) How do you prevent someone doing charge backs months later, making all that work you did free?

Chargebacks are also easier to manage using PayPal, as their process for buyers + vendors (you) is much more fair than most merchant accounts.
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Top Expert 2016
Commented:
Chargebacks happen. It is a fact of life. Same with people that don't pay.  Small Claims is your friend here. For a significant amount you could eat a lot of it and have a collection agency buy the debt from you for pennies on the dollar.

Watch Paypal they almost instituted a policy of not refunding their fees (2.9% of the transaction) on  a chargeback.
$0.30 + 2.9 percent of the transaction. A lot of vendors abandoned paypal and they are now rethinking this policy. If you wish to dispute a chargeback it will cost you $20 non-refundable.

If you issue a refund paypal implemented and then put on hold the policy to not reimburse the 2.9% fee.
Stripe's policy is not to refund the original fee https://stripe.com/docs/refunds
Developer & EE Moderator
Fellow 2018
Most Valuable Expert 2013
Commented:
What do you do to confirm that person is real?
A short 5 minute conversation and you get get a good or bad feeling about somebody.  

If they want to pay by credit card, how do you confirm its not a stolen card etc.,?
This is up to your processor with some caveats.  Essentially you will take a payment. The payment goes through a gateway, hits the purchasers bank card and a result is returned to either process or deny.  That is all you need to worry about.

I say with some caveats because some gateways allow you to control your security parameters.  Do you want to verify by city/state or full address as example.  There are different filters you can select depending on how you are processing.  The more stringent the filter, the more likely for false negatives. You have to balance extreme controls vs ease of use. Also, never take a credit card over the phone if possible.  Either swipe or have the customer do this online on their own.

In short, if you follow the guidelines and procedures for your processor, you are safe.  

How do you prevent someone doing charge backs months later,
This is a real concern and starts with your first question, knowing who you are working with is the best source of prevention. Next is having a contract. .  Outline your scope of work as well as how you determine the work is completed and signed off as satisfactory.  Make sure this is all documented.  If somebody does try and pull a fast one and say the work was not satisfactory or never completed, you should be able to provide documentation that 1) outlines the scope of work that is signed off by the client 2) defines what determines the work is completed and 3) shows that payment is the final step in accepting completion.  If you have those items well documented, you should be safe.  

Your reputation with your bank/processor also comes into play.  If you are new vs have multiple years of steady payments without problems can be a factor.  When I first started with paypal and received a large payment, it was put on hold for a short time.  Now I get access to my payments instantly because of my history.

I use paypal because it is convenient for me. I use the invoice feature that emails an invoice to the client. I don't agree with david that it makes working with chargebacks any easier than other processors. I can say the customer service I have received from paypal to date has been very good. It has also been over 10 years of history.
Top Expert 2016

Commented:
I didn't say it was easier with PayPal I said that PayPal was going to implement not refunding the 2.9% charge that they collect on a refund/chargeback this is inline with Stripes Policy.
i.e. $500 purchase you get 485.20 refund/chargeback you lose $499.70 removed from your account.
David FavorFractional CTO
Distinguished Expert 2018
Commented:
Scott's suggestion... "A short 5 minute conversation and you get get a good or bad feeling about somebody."

Very useful.

I only take on projects where I interview all parties involved.

I've passed on many a project where someone gave off a... questionable vibe...
Scott FellDeveloper & EE Moderator
Fellow 2018
Most Valuable Expert 2013
Commented:
@David Johnson, I was referring to the other David's comment, "I force all my clients to use PayPal... ...This solves many problems."  That may be true for him (and I like using PayPal myself), but it is a little misleading.  

For most processors including PayPal, if you (merchant) have well thought out policies in place that are in public view and thorough documentation of what is being purchased (scope of work/ signed contract), what is being paid for, refund policy, dispute policy, good customer service etc you will have little if any problems.

On the other hand, if you are not using contracts and are  creating payments without good documentation or knowing who you are working with or following your processors procedures this probably means you are sloppy to begin with and will attract disputes and charge backs.  It does not matter if you are using paypal or another processor, if you do not protect yourself to start with, the processor is not going to protect you.  That was my only point.

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Commented:
Thank you everyone!!

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