I’ve been a Web developer for 15 years. I’ve never had a problem with collections before the economy crashed in 2007. I have had a series of problems since the Great Recession hit, and it seems to slowly be getting worse.

It is common practice in Web development projects to charge a retainer of 50%, so even those clients who fail to pay the final payment after project completion are not complete losses. But more and more are failing to pay, or are being extremely slow to pay. One rather large company has had to work out a payment schedule with me because they apparently do not have the cash on hand to cover the final bill and can’t borrow it. Another truly went bankrupt. Even the owner’s home phone was disconnected by Verizon.

In today’s business environment, what is the best strategy to ensure payment. Should I set up benchmarks and take a smaller percentage as a retainer, but bill at various stages along the way to completion? Should I require an escrow account instead of a retainer? That might seriously crimp sales in a cash starved business climate, because the buyer would have to put up all the funds in advance with the escrow account holder. Should I look into factoring and let the factor house deal with it, or find a finance company who will pay me in full and deal with collections?

I truly don’t have the right temperament to be a collections agency myself, nor do I have the knowledge of how to do that job. I want to stay focused on the ever changing world of Web technology and leave collections issues to those who know how it’s done. But of course, I do want to ensure I get paid a fair wage for the work I do, and I want to do so in the least costly way for the services rendered.

If any Jellies have faced similar problems, or work for businesses that provide a service that might solve this challenge, I’d love to hear your ideas.