Dealing with non-paying client

Note

This post is a couple years old. I still have no resolution and am waiting for a day in court. If you proceed down this route, be warned that it likely will be slow for you as well.

Also, these sorts of issues will be dealt with at indieconf.com – grab your ticket today :)

Original post

I currently find myself with a client who owes a substantial amount of money (over $8000) and I’m at a bit of a loss over how to approach collecting on this debt.  Emails and phone calls have not worked so far.  This was billed over two invoices, and the first invoice is now five weeks past due.

Interestingly, 3 weeks ago when I sent an initial inquiry (2 weeks over due) I was told that the client had never recieved the first invoice.  Sounded convincing enough, but I had a return email from him on May 22 in which he’d acknowledged receiving the first invoice, with instructions to only email it to him in the future, instead of his CC’ing someone else as well.  So there’s some trail of evidence that this wasn’t completely ‘lost’ or ‘never recieved’.  At the same time, there was *a lot* going on on the project at that time, right before Memorial Day weekend, and we were trying to do a project launch.  Someone else at the client’s company had quit right around that time as well, so I was giving the benefit of the doubt.

I followed up with an email, which inquired about the invoices status.  I was told the client was ‘waiting on some checks to come in. Hopefully late this week, but more likely mid next week’.  I wasn’t sure if he meant that he’d send a payment the middle of the following week, or if he expected those checks in the middle of the following week.  Whichever was intended, I still haven’t seen payment yet.

I’m reviewing options here, and none look pretty.

1.  File a small claims court claim.  There’s a limit of $5000 on this, so already I’m losing out.

2.  Hire a NY attorney to file a larger claim.  This will likely be expensive.  (I’m in NC and the client is in NY, making it more complicated still).

3.  Hire a collections agency – this doesn’t seem like the right option, but it’s on the list.

4.  Forget about it.

#4 is the least attractive, which probably goes without saying.

I’ve considered a ‘name and shame’ approach – naming the particular client in question – but I don’t think at this point that will do anything positive except make me feel good.  I have our original contract which called for payment within 21 days (3 weeks) unless the work was noted to be unsatisfactory.  Bad clause in there, and the whole agreement was very one-sided, but I signed up for it, so I’m stuck with it.  In the 2 months of working with this client, I had no written or verbal indication that my work was unsatisfactory, so I don’t think there’s a leg to stand on there.  I’ve not yet sent a ‘final’ letter via certified mail yet, which I believe would be a good next step to take to document my efforts thus far.

The topic of collections is covered in my book, and was based on some previous experience and that of some colleagues of mine over the years, but I’ve never experienced it this personally before.  I will need to take my own advice next time and require some form of down payment for most future projects of any substantial size.

I’ve been on both sides of this situation – not being able to pay someone, and not being paid.  I’ve never had a client not pay this much though.  The one previous non-payment was for a few hundred dollars, and it was something we worked out over a phone call (not really a big deal).

What would be your advice in this situation?  If you’ve been in this situation before, how did you handle it?

For anyone wondering, this was not something that dragged on for months – this all happened within 2 months, but about 95% of the work was carried out over a 6 week project.  Perhaps invoicing weekly would have helped bring this to a head earlier???


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