If you do that, then you REALLY have to watch your change requests and scope creep.

I have 2 software companies, and I tend to bill both by the hour and by the job, depending on the situation. There are some situations where we do both, as there are portions of the deliverable that are complete unknowns. Of course, we will drastically over-charge on our hourly rate if it's a time/materials job, to ensure that we're making a half decent profit.

The biggest problem I see with projects that fail or have financial issues are that they don't properly or completely scope out their deliverables and user acceptance testing / sign-off procedures.

As to the payment, it depends on the project. Most projects are done with cash up front. If it's a big job, not the whole thing is paid up front, obviosuly, but we never go more than a week into the red. Usually we work out weekly payments, depending on the number of developers on the project and the burn rate. If we don't get that payment at the end of the week, then work stops. Do that once or twice, and the clients gets the message, and it generally stops being a problem. After all, it seems that something all clients have in common is that they want stuff done yesterday, and they are usually behind schedule right from the start of the project.

Also, all of our contracts are written that we 100% own the software that we're writing until such time as both parties have signed off as being happy and both are paid. If they fail to pay, we have the ability to completely shut down their software with 3 days notice. If they fail to, then they have daily penalties/rental on the software that they're using without permission. Mind you, the details all depend on what type of software is being written, how it's deployed, etc.

Of course, there is never a "normal" or "correct" way to do things... it's all a matter of what works for you and the client in your particular situation.

I just find that too many people are too timid or afraid to stand up for themselves and structure things so that they're somewhat protected, all for fear of losing a client.

Once they get over that fear, life gets MUCH better for them.

I was never fortunate enough to be paid anything in advance. Most of the work I did included writing the proposal, usually for a government contract. Small proposals were at my cost, but if we won I got the job, large ones were for a fixed fee. Payment for project due on submission of proposal or shipment of first article. They usually needed continued support so they paid on time.

You really do need to know what your doing otherwise you will lose a lot of money. But consultants know EVERYTHING, and are never wrong, right!