Even with a contract, some company requirements may cause problems with the billing or your payment. This story from "Once Bitten, Twice Shy" illustrates the perils of bureaucracy:
I decided to take on a job for a friend - mostly as a favor to him, a goodwill gesture, if you will. And I discussed the terms with the company - it was a big company not a fly-by-night operation.
When I told them my hourly rate, they choked - "We only have funds for some of what you're asking" I was told. And I figured that was the end of it. But they really wanted me to work with them. So we finally agreed on a project rate that I would charge for the entire project. We both were comfortable with it - I was confident that I could complete the work within my hourly range and they were confident they could cover the cost.
What I didn't count on was that as a large company they had a whole bunch of bureaucratic red tape that we had to leap through. And apparently part of that red tape was an hourly rate. I had told them that I could allocate no more than 75% time to their project, but in order to get the funds bugeted they wrote down that I'd be working full-time or more on the project - and thus at a SIGNIFICANTLY reduced hourly rate than my normal rate (less than half what I usually charge).
Even this didn't worry me, as I'd agreed to a project rate - not an hourly rate.
But then when time came to bill for the project, they wanted to know the hours I'd worked on the project, so that they could pay me AT THAT LOW HOURLY RATE, even though the contract was for the entire project.
I did eventually get my full project fee, but I don't think I'll be able to work for that company again - especially if they believe that I'll do work for less than half my usual hourly rate.
Be especially careful if your client chokes at your rate - chances are they won't want to pay a reduced rate either. And just because a company is a "big company" as OBTS said, doesn't mean that they won't try to nickel and dime you.
