A company we have been working with has a big debt (take into account that I am from South America) with us and with other freelancers from all around the globe. They have not answered for months and I have helped them hire other devs that won’t probably be paid. My biggest issue is that they don’t answer and I think that is a really bad attitude to have during this type of situations. They know we are a small company and we are far away from the US. They have only answered after our lawyer sent a demand letter. To start the legal process with NYC attorneys costs 15k. I will decide this week how to advance, my lawyer is waiting for my decision.
Schwartz, a trader, said in an interview: “It didn’t matter that I had been totally ethical and exonerated. People don’t want to get involved with any controversy, even if it wasn’t of your own making”.
I am asking what would you do in my situation since in general controversy in business is always a bad idea even if you are the injured party. At the same time I would not want to shut up only for my own interest. It would be really sad that other devs give up their jobs to work for a company that is not paying.
Questions:
- Would you tell the community so that other devs don’t have to go through the same problem?
- Have you filled a legal complaint against a company before?
- Have you used a debt collection agency?
Please share your experience. I am sure it will be useful to me and to others.
EDIT: I forgot to write that we do have a contract, they accepted that the debt exists. They never had an issue with the work we performed. I have no problem at all to be completely transparent, the situation is pretty simple and straightfoward from my side. My company is not the only one with this problem. The client is a startup that is about to do an IPO. Apparently they got money from a new investor but they did not pay us yet. However they are trying to hire more devs. Some of their investors have a relationship with a very well known and established business magazine. I am not sure they aware of this. Since they stopped paying everything has been really unprofessional. I completely understand that a startup can have financial problems. What I can’t stand is how they managed the issue.
I have not filed a legal complaint or used a debt collection agency, it hasn’t come to that for me.
Do you believe the customer is insolvent? Are they a big established company or a startup? How is their credit? What are their assets?
Debt collection and legal fees are inevitably going to be large, and may be for naught if the company is in bad shape. I faced these circumstances in the past and settled directly with the customer for 50% of the debt wire transferred that day, and moved on, with no regrets to this day.
For 1099 contract work, non-payment for time invoiced is one of the two largest financial risks you have to take. The other being exposure to a bidding process as part of getting a contract in the first place. In both cases you have tools available to minimize risk. NetD terms in the case of non-payment of invoices. (@gkop in this thread goes in to detail on how to use this tool.)
It is clear by your post you are considering this option. I would recommend you be prepared to be fully transparent should you decide to do this: A complete timeline sufficient for falsification, not merely justification. Here you’ve given us an attorney’s quote (15k USD), but not quantified your outstanding AR nor your lifetime revenue from this customer. Further, you’ve made an accusation that could be interpreted as a smear (“I think that is a really bad attitude to have during this type of situation.”) when you’re capable of making a material complaint: You’ve invoiced a company for work performed and that invoice is now overdue.
In 2017 I had an incident with one of my vendors that was criminal in nature. Before contacting them about it I performed the full discovery process, reconstructing a timeline of the event and falsifying every possible alternative explanation we thought of. I then provided all of this documentation along with my statement demonstrating what I had done to conclude a criminal act had occurred. Within 2 business days I had had a productive conversation with the relevant C-suite officer which resulted in a manifest, positive policy change. In that call I stated that any and all possible resolutions, from them as a vendor and me as a customer, were on the table. Over the following weeks we systematically worked through every possible mitigation and I am confident an event of this nature will not happen to us again. This vendor also answered every question that I could not answer from my own discovery process. There was no need to file a legal complaint–In fact it would have been counter-productive.
In 2014 I had a vendor call reporting an unpaid invoice. The work on the invoice had been performed before I was responsible for the department / team / group in question. I got statements from both the vendor and my own manager. Given the challenge of reconstructing what work had been performed and the nature of the complaint if any, I verified that the invoice did represent existentially possible work (i.e., it was not prima facae fraudulent). I asked them to submit a revised invoice for the same work at a discount, and then made sure it was paid that week. That was a better outcome for both of us than dealing with a legal complaint.
If you’re going to go to the trouble of filing a legal complaint, exhaust all other options. You’ll need the paperwork you collect in exhausting those options to be successful with your complaint anyhow. This is doubly true if you’re going to make a public statement on the matter.
I have no experience here.
I’m sorry to hear you’re dealing with this.
I would find out which company is helping them do the IPO and talk to them I might find a commercial debt collection agency which is willing to take my case, then contact as many trade journalists and investors I can to explain that they’re really raising money to prepare for a lawsuit against creditors.
Then I might call the PR office that these articles are coming, and that I want to make sure that this wasn’t all some “honest mistake” on their part. Obviously they need to pay the full invoice immediately plus any expenses I incurred in this process, but it’ll also be good if they compensate me for any stress I had to endure.
If you need help with this, reach out to me privately.
Yes. In general, they’re worth as much as you pay them, but except for the above I wouldn’t bother with them since it doesn’t sound like this company is unaware of their debt with you, but is being wilful.
It doesn’t sound useful in this case, but if I’m really worried someone is going to go bankrupt I get on DeBN. I might do that anyway since it’s easy. If they file for bankruptcy simply prepare a proof of claim and deliver it to the clerk. Only then do I engage a commercial debt collection agency. If they’re quiet and there’s no bankruptcy, I’ll keep adding interest until it becomes worth my time (to hire a lawyer).
I’ve served notice to companies, and that’s generally all it takes. Companies keep the registered agent information up-to-date in a way they neglect for the accounts payable department.
Suing for unpaid debt in the USA is actually very easy:
Between travel, filing, and so on: $15k sounds extremely reasonable for your situation. I’ve never had to finish a court case I’ve started – I have however been sued and won, so I still have some idea what the entire process looks like.
Learning how to talk to lawyers and use them effectively is a very useful skill. It can easily mean the difference between spending $20k and $200k. A key thing is that they cannot tell you what to do. They can give you your options and point you to the most immediate one, but they won’t tell you to go nuclear early, and because you’re outside the US this might be your best move: You will have to tell them that you want to do it.
Giving them a sob is also a good way to spend a lot of money. If you say “here’s my invoice, I want to collect it” it’ll be much cheaper than what you tell them everything you told us.
THANKS! I will reach you via private message.
Which company is it so we can avoid the same fate?
If you’re going to name a company asking people to avoid them you have to make a case as to why. Otherwise you’re naming and shaming. Unless you can show your complaint has merit it’s equally likely that the fate we’re trying to avoid is working with you, not your customer.
Asking for names without additional, event substantial detail about this conflict is incitement to mudslinging. If you want to avoid this “same fate” we need to better understand what it is.
Fair points! I read this bit and it seemed enough to be validate the question:
I’m more charitable in assuming the company is at fault than the contractors, though Lord knows I’ve seen contractors drop the ball (and hard).
That said, part of the reason we have problems in this industry is that the people doing the work are hesitant to mention issues that could impact others–it’s basically an issue of informed consent.
Naming and shaming is not as big a problem for big companies as it is for people or small contractors…there was a time where everybody knew for example that Arthur Anderson consulting were bozos on projects and ending up on projects with Androids was a recipe for a headache, and yet they kept getting contracts.
If we want things to get better, we have to look out for each other.
Highlighting questions raised by the statement from @unbalancedparentheses you quoted:
How much, and how overdue? For full transparency, what is the total contract size and length, and what other contracts have been signed with this client that you could similarly report on?
For each of these cases there may be relevant, material facts that make each event a unique circumstance. We’ve got a group (other freelancers) that can be enumerated, not lumped together like a cluster of NPCs.
When did it start, what communication mediums were used, and what is the entire dated set of communication that demonstrates your complaint is being ignored?
If this is relevant, and it certainly has not been shown to be irrelevant, it both can be enumerated (at least counted!) and includes speculation: we know neither who they are nor even whether they have or will be paid. It’s the quality of window dressing.
None of these statements are going to survive a test of membership in to the “problems in this industry” set you allude to. I doubt anyone would disagree with “want[ing] things to get better,” but picking sides in a potential, possible, we’re not even sure if meritorious civil complaint is putting the cart before the horse: We can decide on the facts, and we can measure, mitigate, and minimize risk without having to consult a counterparty.
There is not enough information here to know what we can improve.
Again, very good questions, and if @unbalancedparentheses can answer them that’d be awesome.
Just to be clear: I’m not looking to pick sides in a conflict I don’t have a direct personal stake in here. I do do consulting and contracting work on occasion, and a datapoint of “so-and-so was complained about” is still useful.
Like, let’s Pascal’s wager this, assigning values of good (+1), neutral (0), and bad (-1). Assuming that they’re either in the wrong (W) or not (R), that we know if they’re in the wrong (K) or not (I), and that we know their name (N) or not (A):
Partitioning by knowledge of name, we see +1 versus 0 when we don’t know it. The outcomes seem strictly better when the company is named.
EDIT:
For completeness’ sake, outcomes by if they’re actually in the wrong or not have a -2 vs. +3, and by if we know they’re in the wrong or not a +1 vs. 0.
That was a poor assumption on my part, thank you for correcting it.
For the wrong (W) case you are not performing full accounting, and therefor externalizing a cost: their unjustly damaged reputation (or conversely your reputation should you be shown to have lied).
From my point of view your answer would make sense if I would have given the name of the company. I did not. For the same reason there are a few things I can’t answer until I get some information from my attorney.
Instead of discussing the validity of my reclaim, let’s rephrase my question: Let’s suppose that a happy customer with whom you are working for stopped paying. After not getting the promised payments for a few months, What would you do? What have you done in the past? What would you do if you know that other people had the same problem? Would you tell about your problem to the new hires you helped interview? Would you tell the community about this so that nobody else has the same issue?
I am not saying that the questions you have asked are useless. However I can assure you that my case is pretty simple. We don’t need to go off at a tangent. I want to know and learn about what you have done with non paying customers.
The minimum necessary effort:
I would offer to submit a revised invoice with new “discount” line item (somewhere in the 10-25% range, but whatever you think will work. Anything you can recover is better than zero: 50% was reported here as a successful resolution in an unrelated dispute.) and contingent on payment consider the matter settled. I really do mean settled: be happy with that outcome, even when asked about this client (reporting on this event) in the future.
I’d then focus on systematically eliminating any errors I had made that brought me to that condition, but I would not bother this client with that effort. It’s your work, not theirs.
The good-faith, maximum effort short of litigation:
Write but do not yet publish a blog post or other long-form statement describing the event in as much detail as possible. Do not cherry-pick, do not avoid facts that make you look bad / incompetent / wrong, do not hide any detail that could possibly weaken the completeness of your testimony. Every shred of evidence: Who, what, when, where, why, how. The truth, the whole truth, and nothing but the truth. Make a calculable claim as to what you have lost based on the evidence (e.g., invoices, timesheets, contracts) presented in your testimony.
If other people or organizations are also involved, ask for the same from them -or- ask them to sign (i.e., attach their name to) your statement. Ignore them if you get neither: Bandwagoning doesn’t help your case. Don’t bother employees in contract disputes. (“Would you tell about your problem to the new hires you helped interview?”) it is by definition not their problem. Don’t conflate their contracts with yours.
Send your not-yet-published, factual, fully-informed, material testimony to the CFO of the organization you have a contract with. Offer to settle the matter via payment of the calculable claim you are making, post-discount. Alternatively, in lieu of payment, offer to include any statement they would care to make: you will include it in full along with publishing your own testimony. State also that if they have a superior resolution to either of your proposed outcomes you will do that instead. If the matter is not resolved via payment of what you are owed, publish on whatever deadline you have set for yourself and given them. Be happy with either (any) outcome, even when asked about this client in the future. You will have said all you need to say on the matter.
I frankly cannot imagine having to resort the later approach, but you have asked after it.
Do they owe enough to make legal proceedings worth it? Odds are the court will easily judge in your favour (the other side often doesn’t even bother to show up in such cases IME, they don’t want to pay a lawyer themselves). Then, if you suspect they have some or all of your money, it gives you the legal authority to have the money seized from the accounts, etc (details will vary by jurisdiction)
A team of developers was working with them, that is why it makes it worth it. I am sure they have the money, but probably not enough money to pay debts and to finish the development before a new investor or the IPO goes through.
A team of developers was working with them, that is why it makes it worth it. I am sure they have the money, but probably not enough money to pay debts and to finish the development before a new investor or the IPO goes through.
Litigate the hell out of them. Other than that good luck! I would not tell right now anyone as you may be bounded in litigation to not disclose anything, common law is different that the rest of the world.
Would you share your experience of “litigating the hell out of them” with the rest of us? I don’t understand how you have enough information to make that decision here, and would be helped if I understood any prior experience you had that informs your statement.
To answer the question in the title, I started doing smaller amounts of work in a shorter time for clients. That way if they didn’t pay, I hadn’t lost as much money, and if they wanted another chunk of work done, they had to pay for the previous chunk. If they were late paying for the previous chunk of work, they had to pre-pay for the next chunk as well.
I thought about calling this ‘agile’ but really it was just removing the buffer bloat from my income stream.
I was a self-employed programmer for seven years, by the end I was out thousands of euro that I gave up on, but I also had extremely good relationships with a few clients who were amazing.
Exactly this: it’s all about upfront deposit, payments on each pre-defined milestone and payment before the final submission.
This way you really only lose a very little part and if they totally disappear, either finish it and make it yours or clean it up and opensource it!
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