A guest walks into a restaurant and has a few special requests. A different side dish, a small change to the recipe, and could the head chef please cook everything personally? The kitchen makes it happen. The food is good, the plates come back empty.
Then the bill arrives, with the prices from the menu. You’d expect it to be paid without discussion, maybe with a tip. Instead, the guest says:
“Hold on, a bill? I really didn’t expect that. I don’t even know how much I’ll get paid this month, or when. Let’s wait and see. Then I’ll decide what I can pay for this meal.”
The guest’s salary is his problem, not the kitchen’s. Every business works this way: you answer to your customer and to your supplier. You don’t answer for your supplier’s supplier, and they don’t answer for your customer.
Nobody would get away with this in a restaurant. In software development and consulting, we hear it more often than we’d like.
The Middleman Trap
It usually happens when we work through a partner who resells our services. The partner owns the relationship with the end customer. They ask for our most senior people, add change requests along the way, and get exactly what they ordered. We pay the salaries, carry the overhead and turn down other work. We deliver.
Then we send the invoice, and the story changes: “Our customer hasn’t paid us yet, so we can’t pay you. Let’s see what they pay, and then we’ll talk about your invoice.”
What makes this worse: we were never part of the conversation with that customer. We didn’t negotiate the scope, didn’t see the contract, and had no chance to judge whether the customer would pay. Now we’re asked to carry a risk we had no way to manage.
Risk Runs Downhill
If every link waits for the link above it, the risk doesn’t disappear. It travels down the chain until it lands on whoever is furthest from the customer: the smallest company, with the least information and the least say.
That’s backwards. The link that can best judge the customer is the one that signed with them. That’s where the risk belongs.
Who Should Carry the Risk
The partner who sells to the customer earns a margin, and that’s fair. The margin pays for finding the customer, managing the relationship, negotiating the contract, and carrying the commercial risk of that deal. They picked the customer, they saw the contract, and they get paid for doing so.
If the partner passes the payment risk back to us, what is left that the margin pays for?
In finance, this is called “no free lunch”: you can’t earn a return without taking a risk. A margin without risk is exactly that — a free lunch, paid for by someone else.
Our Rules
Once the work is done, we can’t un-deliver it. The partner keeps the result; we keep the cost. That’s why we stick to three simple rules:
- Our contract is with you. We invoice the partner who hired us, for the work we agreed on. When your customer pays you is not part of that agreement.
- Your customer is your risk. You picked them, you negotiated with them, and you earn the margin on them.
- No risk without a seat at the table. If you really need to tie our payment to your customer’s acceptance or payment, we have to be part of the negotiation, the scoping and the contract. We don’t take on risks we can’t see.
We hold ourselves to the same rules. When we bring in subcontractors, we are their customer, and their invoices are our responsibility. We pay for the work they did according to our agreed payment terms, no matter when our customer pays us.
What We Offer Instead
We like working with partners. Some of our best projects reached customers we never met in person, and we’re happy to keep it that way.
If cash is tight, talk to us before the project starts. Down payments, milestone billing or a smaller first phase are all on the table. What doesn’t work is finding out about the problem after we’ve done the work.
We’re a vendor, not a co-investor. We get paid for our work, not for your deal. If your customer orders more, we work more hours and bill more hours. But your margin on every one of those hours, and the customer relationship that brings in the next order, stay with you. So does the risk when your customer pays late. If you want us to share that risk, let’s agree on it before we start. Clear lines of responsibility let our team focus on what they do best — instead of worrying about someone else’s restaurant bill.