In our article about customer support at BioCard we highlighted the importance of establishing a mutual understanding between BioCard and our clients. We would not be fully transparent, however, if we failed to discuss the financial side of project development. In this article we will discuss payment agreements, invoicing, and account management.
Before signing a contract, it’s crucial to determine what type of payment agreement would be most suitable for a) our client, b) BioCard, and, of course, c) the project. The following are our payment agreement options. The best option for a given project will be dependent on the scale and complexity of the task at hand.
- Prepayment agreement. The client pays a fixed price in advance for each sprint, or pays in advance for particular features or components whose implementation extends beyond the duration of a single sprint. The sum to be pre-paid is a factor of the developer-hours contained within a given time interval. For example, for a regular two-week iteration the cost would be 70 hours multiplied by the rate for each team member involved in that iteration.
- Retainer agreement.For larger projects BioCard requests a retainer agreement. The client pays in advance for thelast 70 hours of each person’s engagement in the project (i.e. the final iteration). The rest of the work is paid for after each iteration is completed. When a project comes to an end, we do not bill our client for the final iteration, because the retainer payment that we received at the start of the project has already covered it.
The cost of a retainer will vary depending on the number of people involved in the final stages of the development process. For example, a retainer rarely includes bills for design, since UI and UX design services are usually provided before actual iOS or Android app development.
We introduced retainer agreements into our work practice due to concerns surrounding the nature of remote collaboration. It serves as an assurance that a client won’t leave us halfway through project development. However, for small-scale projects, prepayment, not a retainer, would be the best option.
Once our engagement manager agrees on the payment agreement with a client, we are ready to sign the contract. The contract is sent in PDF format, and needs to be printed out and signed by the client. From this point, all financial operations for a project are managed by our account manager.
Account management and invoicing
We use Wave’s free invoicing software for billing. The account manager sends invoices at the appointed time – usually after each iteration – with screenshots of the project’s progress, documented in Jira, attached to the invoice.
Invoices should be paid within five working days from the date they are submitted. All payments must be made by wire transfer.
In the event that an invoice remains unpaid for a considerable length of time, or in the event that payment delays become a recurrent issue, development may be suspended until the client fulfills the terms specified in the contract.
Account managers compose financial reports, sent together with invoices, that include:
- estimated overall hours
- estimated hours and funds spent for each service
- estimated hours and funds remaining
- rates for each service
- a summary of sent invoices
- initial high-case and low-case estimationsso that a client can understand how their budget is being used.
We do our best not to exceed high-case estimates, and save our client’s money by maintaining spending closer to the low-case estimate. If funds are used effectively, and the project ends with a surplus, we return the surplus funds upon completion of product development. On the other hand, if a client decides to revise some parts of a product, the re-estimation is likely to exceed the budget initially determined. In this case, more funds will be required in order to successfully complete product development.
In order to eliminate any misunderstandings and uncertainties, the account manager is always ready to answer any questions a client might have concerning invoices, financial reports, and the project’s overall progress.
After the project is completed and the final report is sent, the account manager contacts the clientand asks for their impressions on the final product. The account manager will also request permission to mention the project in BioCard’s case studies.
We also offer a separate contract for post-production support services available for a period determined by the client. Support services include approximately 20-35 hours of a developer’s activities per week and pertain to bug fixing, product improvements, product redesign, and updates. Support contracts are available only on prepayment terms. This may be a prepayment made for the whole support period, for six months, or for a quarter of the support period.