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Freelancing with Companies in Other Countries? 24

Posted by Cliff from the working-overseas dept.
A user asks: "I've been doing PHP web development for a few years now, including a few small jobs for a client in the UK (I'm currently in the US). The jobs have been so small I've never worried about a contract or anything. I was recently offered to do some long-term projects (about 6 months of full-time work). Does anyone have experience doing freelance work for another country, and if so, how did you handle contractual issues? Basically, I'm looking to minimize the risk of me being ripped off, and second, eliminate problems caused by miscommunication due to the lack of a written agreement."
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Freelancing with Companies in Other Countries? More

Freelancing with Companies in Other Countries?

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  • Retainer (Score:3, Informative)

    by reinard ( 105934 ) on Wednesday December 11, 2002 @03:18PM (#4864430)
    The way our small company does it, depending on project size we either divide the total estimate costs by 2, and ask for the first part at contract signing and the rest on completion, or split in 3 parts and ask for the first part at contract signing, the next part at about halfway through the project and the rest on completion. That splits the risk about evenly between yourself and your customer.

    By the way contracts with oversee partners are virtually impossible to enforce (unless you have huge financial resources), so don't waste too much money on it, and make it just simple and clear. They're more intended to point out some rules between the two parties and point out copyright issues etc, but I highly doubt you'd be able to enforce anything with it.

  • Give this site a try (Score:2, Informative)

    by Itsik ( 191227 )
    Hi,
    I would recommend using www.guru.com.
    Register there (It's free) and you will find quite a bit of information regarding what you're looking for.
    Hope this helps
    Good Luck

  • Living in Germany... (Score:2, Informative)

    by 216pi ( 461752 )
    ... near the border to the Netherlands, I often see craftsman working here. They even seem to shuttle between the two countries.

    I know, it's not the same. But I (working as a PHP-Dev, too) also worked for a company in Spain and once for one in Australia. Both projects were longer than 4 months.

    We used IM to cummunicate and sent the protocols by email to each other (to have it written down). In the time of digital delivery, when you don't need to transport hard good to your customer, it's going easy and fast.

    But I allways (even to customers in Germany) send a CD with the final version together with the bill (printed out) to my customers. It just feels better having something in your hand.
  • --don't know about IT contracting, but in construction we just do a pay as you build deal. You set a level of completetion on the project, you get paid to that point, and so on. It works out OK then. Also make sure to get finite details of what is actually required in advance written down and that the client understands that changes and additions will cost substantially more. I'd say ion your case that bi-weekly payment plateaus would be probably safe enough if it really is this multiple-month project, but that really depends on how much money you could stand to lose if the foreign company just decided to not pay you or whatever.

    I habe a basic rule of thumb I use just generally speaking, try to spec a job as accurately as possible, then add 15% to the bid figure, this I call the stupid factor, or you could term it the murphy's law factor, it seems it's quite common for there to be the possibility of changes, slowdowns, customer changes, hard to find materials or increased unexpected cost of materials, etc, etc, "whatevers" that seem to creep into larger projects. That 15% comes in handy sometimes, tell ya whut! I bet this is similar in IT contracting.
  • Basically, I'm looking to minimize the risk of me being ripped off, and second, eliminate problems caused by miscommunication due to the lack of a written agreement.

    I don't know anything about contract work, but I don't see why you can't have a written agreement. If it's something that worries you, just have them fedex you a contract, you sign it, save a copy, and send it back.
    • I don't know anything about contract work, but I don't see why you can't have a written agreement. If it's something that worries you, just have them fedex you a contract, you sign it, save a copy, and send it back.
      He can, should, and probably will have a written contract. The problem is, contract or no, if the client is intent on ripping him off he'll be in a situation where he has to pursue legal action overseas, under laws and in courts that frequently aren't enthusiastic about upholding rights of non-citizens. Far better to negotiate a payment schedule that minimizes the chance of being screwed this way.
      • Do what EULA's do, and have a clause in the contract defining which country's laws govern the contract.

        That way, if he gets screwed, he has a (relatively) friendly judicial system to back him up.

        • yeah, but you would still need a lawyer, and unless it is a very long term contract that you are disputing, a lawyer can eat up your disputed earnings pretty quickly.
          And how do you know the client would be willing to sign a contract governed by foreign (to them) law?
  • I get ~half my income from overseas contracts. (Contracting on Squid development, living in Australia).

    I always use a written contract - on the simple basis that if the work isn't long enough to need a clear statement of who,what,where,when and for how much, it ain't worth doing for money.

    Once the contract is signed, you still have to communicate often, and clearly. All contracts do is set the goal posts - it's up to you to keep your customer happy while you approach them.

  • Hedge your FX risk (Score:5, Interesting)

    by b_pretender ( 105284 ) on Wednesday December 11, 2002 @04:24PM (#4865107)
    You may want to give some thought to hedging any foreign exchange rate risk.


    For example if the company wants to pay you 30k Euros up front and 30k Euros upon completion (in 6 Months), then you should minimize the risk that something will happen to the currency in 6 Months that will make your final payment worthless. Although Euros seem like a stable currency, it is new, and other currencies, such as Rubles or Yen are not as stable. It's cheap and easy to hedge your currency.

    All you have to do is go to the bank and lock in a 6M forward exchange rate. These are cheap instruments and they are easy to obtain. For the Euro example, today the Euro trades at 1.1 Euro to the dollar. It's reasonable that you could walk into a bank and purchase a forward exchange agreement for 1.07 Euro to the dollar in 6 Months. Now you have *locked* in US Dollar amount of your contract for the small price of less than 3%. It's a small price to pay for insurance that your contract isn't worthless in 6M.

    If you are uncomfortable setting up a forward contract through a bank, then you can synthetically create such an agreement via options on interest rates and the inflation index. This is a little too complicated for one Slashdot comment, but feel free to read Hull's Options and Derivatives book if you are interested in more info.

  • GET A WRITTEN CONTRACT (Score:3, Insightful)

    by ptomblin ( 1378 ) <ptomblin@xcski.com> on Wednesday December 11, 2002 @04:28PM (#4865153) Homepage Journal
    I got badly burned by a company whose name rhymes with "Horacle" when I did some work without a written contract. I'd done three things for them, each one taking about a month, and got paid for all of them, and then I did a fourth that took two months, and they refused to pay me. Unfortunately I didn't have anything in writing to prove that they'd promised to pay me for this work.
  • Basically, I'm looking to minimize the risk of me being ripped off, and second, eliminate problems caused by miscommunication due to the lack of a written agreement.

    Where's your sense of adventure?

  • This is a bit offtopic, but not too much.

    I live in the US, but occasionally I do a bit of consulting work in the UK. The place I consult for now wants me to get professional indemnity insurance in the UK. The cost for what I'll need doesn't seem to be too high, about £130-170, but I have no idea what company to use.

    Does anybody have recomendations for a UK insurance company that will right an indemnity policy to a Yank with no UK address and no UK bank account? (The policy only has to cover me for lawsuits in the UK.)
  • Obvious first point: you're a fool if you don't have a contract. UK law is sufficiently similar to US law that you should not have any great difficulty in understanding it (and if it's so legalese that you don't understand it, beware!). If you're not confident that you understand what your obligations and rights are, engage a solicitor (UK version of a lawyer).

    The contract should cover at least:
    - What you need to deliver, and when
    - What you will be paid, and when
    - What happens if you fail to deliver for
    some reason
    - Who owns the work before you have been paid
    - What happens in the event of dispute
    - Who is responsible for failings in the
    software, and to what extent
    - Who is responsible for ensuring that all
    relevant taxes are paid.
    - Jurisdiction of the contract (usually the
    state/country of the client)

    There are basically two types of contract work. In one case, you turn up at the company for whom you are doing the work every day, and get paid an hourly (daily, weekly or whatever) rate. In such a case, the contact will stipulate your holiday rights, what happens if you go sick, and will probably have a fixed duration (renewable, with trial period). This is low risk for you, but you'd obviously need to be in the UK woth valid work permit (or be an EU citizen, ancestral visa holder or whatever). If not, it's probably not an option for you.

    The second type is work on a defined project (e.g. "you will deliver the foomatic e-commerce enabled profit maximiser website").

    The issue with such a project is to get the scope of the work you will do tied down from the start. Issues to think about: who pays if the customer changes the requirements, what consitiutes a "change" anyway. Please be *very* careful here - probably the #1 cause of problems for people doing this kind of work is that the two sides have different expectations.

    If you're not 100% clear about what is being asked for, I'd suggest splitting the contract into two parts: a specification and implementation. Idea is that you get paid for writing a specification, which the customer can change, but once this is agreed, you have a fixed price for delivering what was requested.

    In such a contract, payments are usually phased on demonstrating milestones. One possibility would be (assuming a website):

    1) Milestone payment for agreed specification (~10% of total) - accompanied by an annexe specifying your following milestones and payments.
    2) Milestone payment for delivering interface mock-up (~20%)
    3) Milestone payment for prototype fully functional site on small server (~20%)
    4) Milstone payment for "beta" delivery on production server (~20%)
    5) Final payment on acceptance (~10%)
    6) Bonus (10%) for early completion (maybe a penalty for late completion as well)

    I hope you're good at estimating how long you will take to do this: many software engineers are natural optimists, and will say that they can do something in 3 months which actually takes 6 (and which would kill your profit from this work), and remember that the customer will want 'finished' - i.e. documented, reliable, commercially acceptable - software. If you're not certain that you know how to do this, better work on an hourly basis.

    You would be well advised to work via a limited liability company (these can be purchased off the shelf, for around UKP100), and to have professional indemnity insurance (another UKP160 or so).

    Please bear in mind that if you are on a time and materials basis in the UK, you may see some odd contractual clauses which are concerned with ensuring that your customer cannot be liable for your tax (the so called IR35 rule).

    Good luck, but take care...

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