

Ask HN: What would you do? Unpaid invoice - jamesjguthrie

Hey guys<p>My first software development client invoice has went unpaid for a month now. The client does not respond to e-mails or phone calls. I sent a reminder yesterday that it's due.<p>I've had subsequent work from other clients since and those invoices were promptly paid.<p>How long should I keep trying to contact the client before taking him to court?
======
tptacek
A month is not a long time. Even if you had Net-15 terms, clients can be
expected to take longer than a month to pay them.

Large companies, in particular, routinely manage to get invoices held up in
accounting. Invoices can get silently dropped for, for instance, not using the
right P.O. number, or having the P.O. miskeyed into their backend.

------
ActVen
I would just advise to make sure something internal isn't holding up payment
at the customer. If this is a larger company, any number of things could be
causing it. If it is a small company or an individual, then disorganization
could be a cause...or a lack of funds. My companies have faced this issue in
the past with companies from the Fortune 50 to small companies. Very few times
did something actually go unpaid for longer than 90 days. Just be friendly and
persistent.

------
UnoriginalGuy
What is the due date on the invoice?

Typically you would send an initial invoice with a +30 day (ish) due date. The
client would pay as close to the 30 days as they could because it is better
for their cash-flow.

If they failed to pay after 30 days you would send them an "invoice overdue"
letter. When you're comfortable that had arrived you could then call/e-mail
them essentially asking them about payment on the initial invoice.

If this "invoice overdue" notice isn't paid within short order (20~30 days)
then you should send them a "final notice" and this should specifically
indicate that the next step is court/collections.

Everything should have the date of issue, the date it is due (e.g. +30 days,
immediately, etc), and you should not do too much "extra work" beyond sending
out letters and the occasional phone call (as this implicitely costs you
money).

If they still haven't paid after the final notice then you can either hire a
collections agency (who will take a % cut) or attempt to sue them (and hope
they don't declare bankruptcy).

~~~
jamesjguthrie
I'll take your advice by following up with an invoice overdue e-mail next
week, then a final reminder 4 weeks later.

I'm in Scotland. If the invoice remains unpaid after that period I will take
the client to the Small Claims Court. It's very typical that if a case is
submitted to that court, the accused ends up paying the invoice before the
hearing date.

~~~
klearvue
Since you are in Scotland and the invoice is overdue, you can legally add
£40/£70/£100 penalty to your invoice (which one depends on the invoice amount)
+ charge 8.5% annual interest. These do not have to have been specified in
your contract with the client as they come under provisions of the Late
Payment of Commercial Debts Act.

------
jamesjguthrie
Just a little update:

I finally heard from the client, he gave me a story about how his phone broke,
his mother-in-law has been sick, how people who owe him money haven't paid it
and how none of the potential clients for the software have come back to him
yet.

He offered to pay part of the invoice now and part later. I said fine but I
will apply interest to the invoice and he only has a further 30 days until the
issue goes further.

I wait with baited breath for the rest of the payment.

------
brudgers
[Disclaimer: I'm not in software development.]

I require a retainer to be applied against final invoice for all but the best
clients (and I still worry about those).

I don't turn over work until there's a check if I'm upside down, and I try not
to be upside down.

Finally, I don't start a project until I have a signed agreement and a
retainer.

In the past, I have not hesitated to use small claims court when I knew a
client was intending not to pay.

------
jasonkester
There's been a lot of good discussion here about this topic over the years.
Here's what I had to say about it last time it came through:

<http://news.ycombinator.com/item?id=2132299>

That thread is actually pretty good in its entirety:

<http://news.ycombinator.com/item?id=2131978>

------
statictype
How big is your client? I think, in general, the larger the client, the more
time they take in paying up. If your client is large (hint: any contact you
have in their finance department is at least two levels removed from CFO) you
should probably have to wait for more time before worrying (and also, in the
future, raise your prices to factor this in).

------
debacle
1\. If you did not have a lawyer write up your service contract, contact one
now. It will not cost you much to get a boilerplate contract specific to your
state.

2\. Wait at least three months but no longer than six months. I've seen people
wait less than 60 days but in my mind that can send the wrong message.

------
johnrgrace
Not responding at all is VERY bad, it is a very strong sign they aren't paying
you soon per my experence. First, read your contract slowly from end to end.
Second, you need to hunt them down and make sure they are alive; note this
doesn't mean you talk with them. Also get ready to talk with a lawyer.

------
jamesjguthrie
Thanks for all the reply guys. The client is a very small media company in
England - I believe at most 2 people work in this company.

My contact is still not answering messages or returning calls.

The next step after an overdue letter will be the Small Claims Court with
penalties added.

------
Mitchella
Contact the client multiple times via different routes. Email, Phone, In
person. I would give it 60 days at most. The amount of time that you let it
slide should really be determined by your contracts, your business, and
cashflow.

------
devb0x
I'd consider overdue letters with a gentle reminder of the terms of payment.

------
shyn3
Have you provided them with the project? Next time put a backdoor in your code
and remove it after payment. Most people don't check.

~~~
Spoom
A backdoor would very likely get the coder sued, and legitimately so.

~~~
shyn3
You guys do have a point.

I usually pay freelancers to do my stuff and I feel bad if someone is going to
run away after getting their work.

I guess it depends on the scope of work. I think in Canada we have a law where
if you do something criminal then you can't charge the person for stealing.

i.e. If you are selling drugs and I steal your drugs then you can't take me to
court. In this situation if I were to steal your code/work then stealing it
back or making it stop working would suffice.

If it's a .php script maybe make it refer to your web-server for certain parts
of the script so that the full functionality isn't there if the user runs away
with your code. Something like passing back a token for verification as with
serial numbers. A phone-home mechanism of some sort.

