Getting Paid For Software Development

software development agreement

When you’re developing a mobile app or other software application, you want to get paid for your work. However most developers screw up this important issue in the way they handle payment in their software development agreements with clients.

This is particularly true where there’s unequal bargaining power. For example, a solo app developer contracting to do a project for a large company may need the work to pay this month’s rent.

Yet if you don’t get paid timely, you won’t be in business for long.

And the dirty little secret is that some software developers aren’t in business…they have an expensive hobby because they rarely get paid on time or what they’re worth.

To prevent this from happening, you’ll want the payment terms in your software development to be clear and favor you as the developer.

Ideally, you’ll want to get paid as much up front as possible. This is more doable when the project is for a fixed price instead of on a time-and-materials basis.

And if you offer payment terms, those should be shorter rather than longer. After all, you’re not a bank in the business of lending money to earn interest.

So if a prospective client proposes payment NET 90 from receipt of invoice as the company’s “standard” policy, think seriously about countering with NET 30, NET 14, or even payable upon receipt.

And there should be penalties for late payments. This can include things like accrued interest and suspension of your services until payment is made.

Now one of the biggest weapons you have in your arsenal to ensure getting paid is intellectual property ownership. Because a properly crafted software development contract can specify that the client owns nothing until you’re paid in full.

Of course, one of the things you should do to ensure payment is to do perform due diligence on a prospect before agreeing to any software project. Because nonpayers leave clues.

For instance, you’ll find reviews on Google, Glass Door, and other sites that can reveal if a company has a pattern of cheating or nonpayment of customers, suppliers, workers, and others.

Note that I said “pattern.” Because a single negative review may have been posted by a crazy person or an unethical competitor. Yet a half dozen reviews complaining about the same misconduct is probably a pattern that should be a legitimate red flag.

Now if you need help with an existing software development agreement or getting a new one prepared that you can use for your client projects, it’s probably time to schedule a phone consult with Software Lawyer Mike Young.

Author Mike Young, Esq.

Mike Young has been practicing business and technology law since 1994 and is an angel investor in startups. He's been an entrepreneur since 1988. To get legal help from Attorney Young, click here now or call 214-546-4247 to schedule a phone consultation.

More posts by Mike Young, Esq.