How to handle a client who won't pay

[Orlander]

Hey,

 

Ok, i am at my wit's end here. I did some freelance web development work a couple of months ago and I still haven't gotten paid for it. I've done work for this guy in the past and gotten paid but hee keeps telling me he doesn't have the money to pay me for these recent projects because he hasn't gotten paid by either of the companies I did work for through him.

 

It's been 2 months for one project and 3 months for the other since I have been expecting to get paid. He keeps saying "I'll have the money soon." and even went so far as to tell me he would have "some" money to give me two weeks ago, but I haven't seen a dime even though I have constantly asked him where the money is.

 

I have been nice, polite and patient, but this guy owes me nearly $5,000. I would like to know what my options are. I am out of patience. This guy is a friend of a friend of mine and came highly recommended. Since I have no ETA on when he will pay me I have been thinking about demanding the money by a certain time and threatening to take legal action if he does not meet my demands. Also, I was thinking about issuing him a statement that he cannot use the work I created and also contacting the two companies directly to inform them of this guy's business ethics. I can also damage his reputation around town too and make it difficult for him to maintain his professional relationships.

 

I don't want to do any of this, but I am running out of options. Anyone have any advice??

 

 

Orlander

[annie24]

small claims court. I think in most places you can sue for up to 5000. contact your county or look up online what it takes to file. there should be a filing fee. make sure that you have all your documents in order as proof. good luck!

[AwdreeHpburn]

Hey Orlander -

 

Sorry to hear about your situation. UNfortunatley, there isn't a lot you can do.

 

Too many companies write this stuff off as "bad debt" or debt they'll never collect.

 

Truth is, unless its in your contract that they'll pay for legal fees in this instance OR you have really good grounds for why they should, you may not even re-coup the cost of court fees.

 

And even if you were to WIN the case all you'll have is a judge's order telling them they must pay you - and they still might not pay you.

 

I think you SHOULD try the idea you have of asking him to agree to not use the product until he's paid for it. Damaging his reputation by bad-mouthing him doesn't really work the way you think it would, unless you find a way to slip it in that doesn't sound like that's what you're trying to do.

 

Cos out right bashing him will make YOU look like the bad guy.

 

Maybe you should have a line in future contracts (if you don't already) that holds them accountable for any leagal and court fees that may occur as a result of their breach of contract. Then if it happens again, you can take them to court with less worry about who picks up the tab.....

 

This time....you may be just SOL.

[annie24]

the fees for small claims are not so bad though. $150 is nothing compared to 5000. i think just the threat of being taken to court might make him pay. I think that would scare a lot of people and they would start paying the debt. i would say, 'look, i hate to do this, but i performed a service for you and you haven't paid. If I don't get the money within the next 2 weeks I will start the small claims process.'

[RayKay]

Small claims definitely, depending on where you are they can be from $5,000-25,000 limits....make sure you have all your records of the entire deal and correspondence with the client.

 

Fees to go to small claims are not that bad, relative to getting the money back. A couple hundred maybe? Most people self represent and the court mediates the claim.

 

And if you had a contract for him to pay you for the work, and you did the work, you have a VERY strong claim as he is the one breaching the agreement.

 

Many times he may have to pay a bond to the court and the award would come from that, so don't fret about "not getting" the money, he will have to work something out with the court if he does not pay it.

[AwdreeHpburn]

the fees for small claims are not so bad though. $150 is nothing compared to 5000. i think just the threat of being taken to court might make him pay. I think that would scare a lot of people and they would start paying the debt. i would say, 'look, i hate to do this, but i performed a service for you and you haven't paid. If I don't get the money within the next 2 weeks I will start the small claims process.'

 

true enough.... I just don't know if that'd be enough to scare him. Cos really, loads of people go to court and are ordered to pay and still don't. If this guy has no issues stiffing someone, I can just imagine he'll have little fear about small claims court.

 

Doesn't hurt to put it out there though, I agree with you there.

[annie24]

true enough.... I just don't know if that'd be enough to scare him. Cos really, loads of people go to court and are ordered to pay and still don't. If this guy has no issues stiffing someone, I can just imagine he'll have little fear about small claims court.

 

Doesn't hurt to put it out there though, I agree with you there.

 

i was in a financial situation with some family members and they were not taking me seriously at all, completely being disrespectful of me and giving me what i was entitled to or letting me know the situation. (long long story!) as soon as i hired a lawyer who sent them a letter, they shaped up. (yeah, a lot of lame family drama)

 

i think 4/5ths of the time, getting the courts or lawyers involved can really motivate a person to get their act together and live up to their responsibiities.

[Orlander]

Thanks everyone. Unfortunately, all I have is a verbal contract for the work performed. I will have to check my emails at home and see what I have in the way of proof that he owes me the amount of money I say he does.

 

At this point, i think that telling him I need him to remove my work from the sites and I will be processing the paperwork to take him to small claims court if he does not pay me in a month.

 

Can anyone think of anything else to do?

 

 

Orlander

[annie24]

yeah, just collect every piece of evidence that you did a service for him. and in the future, draw up a very tight contract. i think it would be even helpful if you went to a lawyer to help you draft one. at least to get some advice, I know we have a few lawyers around here

[AwdreeHpburn]

You're in the US - right?

 

It does suck when you do things without a contract but - and its gonna cost you - but get a lawyer.

 

Maybe like Annie says, just getting a letter will spur some action from him.

[Beec]

Write a dunning letter, simple friendly, but firm. You owe, pay or I sue. Draft a simple complaint and attach it, saying this is what I am suing for. Send both to him via certified mail, receipt requested. Then if he does not pay within a couple weeks, you have proof that you have asked for the money and he has refused to pay.

[AwdreeHpburn]

Write a dunning letter, simple friendly, but firm. You owe, pay or I sue. Draft a simple complaint and attach it, saying this is what I am suing for. Send both to him via certified mail, receipt requested. Then if he does not pay within a couple weeks, you have proof that you have asked for the money and he has refused to pay.

 

nice...........good advice, this.

[Beec]

Sample dunning letter taken from an online site:

 

Dear _____:

 

According to our records, the current balance you owe me is $______. This amount is more than 30 days past due. Despite your repeated assurances that payment would be coming by or before ____, no payment has been received. We require payment.

 

Since you have paid amount due in the past, I am surprised to see a problem arise at this time. If you are unable to pay the amount due immediately, please contact me so that we can correct the situation or make suitable arrangements for prompt payment of this obligation.

 

Thank you for your attention to this request.

 

Very truly yours,

Orlander

[andyg]

Let him know that you're going to talk to the two companies directly and in the future if you're going to do this sort of work make sure you have a contract written up with specific dates for work completion and payment. This covers your but and his and tends to make payment alot more likely.

[RayKay]

Verbal contracts are still binding, even if harder to prove.

 

It is good you DO have a history of work with this guy, as that shows the court that you do have a working relationship. And keep the correspondence that says he is going to pay you (but can't right now) as that shows he ALSO knew there was an agreement.

[Iwantittoend]

Write a dunning letter, simple friendly, but firm. You owe, pay or I sue. Draft a simple complaint and attach it, saying this is what I am suing for. Send both to him via certified mail, receipt requested. Then if he does not pay within a couple weeks, you have proof that you have asked for the money and he has refused to pay.

 

My father owns a business and this is what he does anytime someone refuses to pay. This is probably the best thing you can do.

[Orlander]

Wow, guys. Thanks for all the advice. Thank you Beec for the sample letter. I'll definitely use it.

 

I called the guy just now and basically got the same run around: "I'm sorry. This has never happened before. All my freelance guys have always gotten paid in the past. Just be patient. I'm on my way right now to a client to try to get paid...blah blah blah". He came highly recommended so it could be legit, but I have waited a substantial amount of time out of the kindness of my heart.

 

I told him to have an ETA on when I will get paid to me by next week. If he has not paid me or has not given me an ETA on when I will get paid (and I wont accept "you will get paid in 6 months") then I am going to tell him to have the clients take down my work immediately and forward him Beec's letter along with whatever proof of the money he owes me and I will tell him I am taking him to court.

 

Can anyone think of anything else to do? One way or another this is getting resolved and having action taken by next Friday.

 

 

Orlander

[Beec]

Send the letter NOW. If you want to add in that if you do not get paid, you will ask that the work be taken down, then do that, it would be fine to do.

 

Add paragraph to the effect of: "If I do not receive payment within one week and your advice on when I can expect to receive payment in writing, then I will contact _____ and _____ (the companies using the work) demand that my work be removed from their sites and commence a lawsuit to collect the amounts due."

[AwdreeHpburn]

The only reservation I have about this dunning letter thing- is that

 

OK well first off, I don't anything abuot this guy or his company, but is he's been around for a while he's gotta know that

 

1.) Certified letter doesn't REALLY offer anything solid. All it proves is that yes, they got SOMETHING in the mail. Can you prove what it was?

 

And 2) What's the difference between me sending a letter like this to say....ENA? Saying that they owe me a million dollars for services rendered and if they don't pay, I will sue them?

 

I'll have documentation of a bill. They obviously won't pay me which means I'll have proof that they are refusing to pay. Then what? Who is the burden of proof on to determine whether or not I actually didn't do work for them that I'm claiming I did?

 

I don't mean to be a pessimist and the - I guess HOPE - here is that just threating these actions would prove more successful and lucrative than actually having to follow thru on them.......

[FortunateOne]

Orlander,

 

What type of business does this man run? Does he need licensing for it? What city or county is he licensed to do business? Does he have assets of any type (real estate, bank accounts, industial equipment, etc.)?

 

The reason for asking is that in my line of work my vendors place notorized voluntary liens (UCC filing ot Trust Deed) on these items as security for services or materials rendered. You need to maintain a positive relationship so you can lien any assets of his without further complicating the situation.

 

This lien needs to be recorded with the local county records so it pops up on his credit rating until released. This is what I do with with the money I lend. Just a thought.

[mgirl]

In the future, you could make it a term and condition of your work that you require a certain amount up front, then another two increments until the work is done. That way, you are not wasting your time doing a complete job you may not be paid for.

 

For example, for new clients, you could ask for 30% for the first stage of development, 30% for the second stage, and then the remaining 40% for delivery of the finished product. You may even want to ask for 30% upfront initially and then 70% for delivery.

 

Of course, once you've worked with clients on several occasions and have built a foundation of trust, then you can relax the rules. But, i think, initially, it is a good idea to have your own terms and conditions.

[Orlander]

Hi all, Thanks again for all your advice. I sent the following letter to the client today:

 

Dear [Client]:

 

According to my records, the current balance you owe me is $4700. This amount is more than 60 days past due. Despite your repeated assurances that payment would be coming soon, no payment has been received. I require payment.

 

Immediate payment is requested. If you are unable to pay the amount due immediately, please contact me so that we can correct the situation or make suitable arrangements for prompt payment of this obligation.

 

Failure to make a satisfactory payment arrangement or render payment within 2 weeks from today (March 1st, 2007) will result in the following actions:

 

- A notice to you and all appropriate parties will be sent requesting that all work for [website1] that represent the work performed for the sections of the project that are outstanding (requires immediate payment) must be taken down.

- A notice to you and all appropriate parties will be sent requesting that all work for [website2] must be taken down.

- My lawyer will begin the paperwork to process the necessary forms to admit this nonpayment for worked rendered into small claims court.

 

 

Thank you for your attention to this request.

 

Very truly yours,

 

Orlander

 

 

I got a call back from the client not more than 5 minutes after i sent the email. He seemed shocked and stated that the didnt think that it had gotten to this point yet. I reminded him that it had been over 90 days on one project and 60 days on another since payment was due. I told him the email outlined that we needed to come to some kind of agreement regarding payment and that I would call him this evening to talk about payment options.

 

Hopefully, this will show him that I mean business and that the time for patience is over. I'll let everyone know what happens. If anyone has any advice on what to do at this point, please feel free to let me know. Thanks

 

 

Orlander