
Ask HN: What to do if client ghosts and won't pay? - az123zaz
I operate as a US based, LLC and have a UK based client. We have a pretty robust master services agreement in place with clear term and termination terms. The client stopped talking to me or replying in anyway with a large bill (1 FTW, ~2 months). What should I do?
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chrisbennet
Never loan a client more than 1 or 2 weeks pay. My current client has gave me
a large retainer up front but usually I try to work for more than one client
so no single client owes me more than 40 hours pay.

Technical competence is only 1 of the 3 things you need to be good at to make
it in this business; the other two are (a) getting paid (b) finding new work

~~~
casion
I would say that technical competence is not one of the 2 things you need to
make it in the business.

You only need to find work and get paid.

Technical competence is just a bonus that may improve longevity, sometimes.

~~~
chrisbennet
You could be right. I jokingly tell my friends that I get contract because
people know my reputation - and yet they hire me anyway. :-)

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brudgers
Random advice from the internet:

The most useful thing you can do is a "mission debrief".

\+ Identify what were the warning signs of non-payment. Sometimes they will be
there from the start and the client never intended to pay. In longer
relationships, non-payment is part of changing behaviors and often due to
other financial stresses (this is how it tends to play out in economic
downturns).

\+ Identify the reasons you accepted this particular job/client. It is one
thing if this job/client looked like other previous jobs/clients. It is
another if the job/client was accepted due to ambition (expanding
internationally) or desperation (just need the work) or greed (terms more
lucrative than normal).

\+ Identify why the client chose you. Maybe you have a rare special expertise
(though by definition, this is rarely applicable). But if your services are
somewhat fungible (much more common), it is worth examining why you and not
another similar service...or to put it another way, a web developer might
think about "what happened to this potential client's last developer?" Was the
lead outbound or inbound? Was it a warm introduction or a cold call?

In the end, the best likely outcome is a better intuition about potential
clients and which one's should be avoided and a greater willingness to stop
work quickly over payment and eventually a better process for assessing the
financial wherewithal of people and their projects. It is unlikely you will be
paid.

For what it is worth, contracts/terms are somewhat useful for defining project
scope and describing the processes of work delivery and payment. Unless you
are big enough to have attorneys on retainer, they are pretty useless as
something to point at when things go off a reasonably happy path. Client and
project selection are much more valuable.

Good luck.

~~~
muzani
+1 on identifying all the warning signs. I've done a lot of contracts, many
unpaid. All have the same signs.

A major symptom is that many of my worst clients are both impressive and
repulsive. We have decades of experience with people (yes, even us needs) and
whatever your instincts are about someone, it's probably right.

------
contingencies
UK small claims courts.

[https://www.gov.uk/make-court-claim-for-money](https://www.gov.uk/make-court-
claim-for-money)

You can file your claim online if it's under GBP$100k (~USD$130k). There is a
faster/simpler claims process if the amount is under GBP$10k (~USD$13k).

Usually this is enough, however if it gets to the point where they have a
court hearing and your presence is required (unlikely), then give someone
right of attorney to represent you (eg. friend, lawyer, etc.).

~~~
rahimnathwani
This might be hard if OP is outside the UK. If the client responds to the
claim disagreeing (i.e. saying they don't owe money), then the next step will
be a court hearing. The amount in questions is likely less than the time+money
it would cost OP to go to the UK to attend such a hearing.

"You might have to go to a court hearing if the other person or business (the
‘defendant’) denies owing the money and you disagree with their response."

~~~
az123zaz
I ended up filing with a debt collection agency in the UK. As an international
client I lose 35% of whatever they collect but it still is worth it to me. The
nice thing is that there are no other fees.

Funnily enough the client became very responsive after they found out we had
legal representation in the UK. Still have not seen any money in the door yet.

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mooreds
I had a client ghost on me in this way. My contact at the company left and I
had an outstanding invoice for four figures.

I sent them the late invoice every two weeks for four or five months (while I
went on with other work). I always was courteous and asked if hey had any
questions or concerns about the invoice. I also reminded them it was past due.

I did send them a Christmas gift (box of chocolates) and I think that is what
finally pushed them over the edge.

They paid me.

It was a hassle and I wish I'd gotten a deposit upfront.

~~~
canttestthis
Thats a long time to wait for the payment. Did you ever consider court?

~~~
mooreds
I did not. Probably should have at least talked to a lawyer, but I didn't.

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pfranz
It's not a direct answer for you, but here's a long (40m), popular, talk that
seems relevant. Mike Monteiro: F*ck You, Pay Me (explicit language). If you're
interested, I'm pretty sure its been posted here a few times with discussion.
It's actually a good video to watch periodically.

[https://creativemornings.com/talks/mike-monteiro--
2/1](https://creativemornings.com/talks/mike-monteiro--2/1)

If you want a specific answer, skip to 11m20s

~~~
az123zaz
This is incredible.

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scotty79
Just move on. If he ever comes back, insist on paying what he owes before
doing any further work. Once he pays apologise and refuse to do any work
because you are busy with other clients (real or imagined).

If he doesn't come back it's not worth it to chase.

On your next jobs double your rate and ask for half up front. If client is
nice offer small discount at the end to keep your clients happy. People you
want to work for rarely care about the price but are as happy about discounts
as anyone.

~~~
convolvatron
I actually have had a client come back and try to arrange further work without
settling the last bill. Either the work was so bad it didn't deserve to be
paid, or they cheated me, but not both. Its amazing that people think they can
'work the system' and extract free labor.

~~~
mooreds
Wow. Did they just ignore the previous invoice, or how did they explain coming
back to you? Did they end up paying?

~~~
convolvatron
they just kind of admitted we had a disagreement that needed to be resolved,
but didn't see why that wouldn't preclude me from taking on new work for them

edit: actually, thinking about it again, I'm pretty sure they implied that
completion of the new work might cause them to reconsider their stance on
paying for the initial work.

~~~
CyberFonic
To me that seems like they were playing you.

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synicalx
Not sure how this works with international clients and/or in your country, but
in the past on two occasions when I've had a client decide not to pay I've
done the following;

1\. Send a final notice letter, indicating that non-payment will result in the
debt being referred to a collections agency.

2\. Sell the debt to the highest bidder, ie a debt collector.

In one instance, I got paid after the letter. And in the other, I made back
~60% of my money + got a VERY entertaining call from an ex-client who'd just
had a debt collector rock up in his lobby and refuse to leave.

I'm a big believer in "F#ck you, pay me" and when I do freelance work I make
sure that my clients share that belief. Generally I also lay out a schedule of
payments based on either milestones (ie 'X is implemented') or on a regular
timed schedule (normally once a fortnight) - if the client misses a payment,
work stops until they pay.

Never let a client threaten you with "bad word of mouth" or any other nonsense
like that - at the very worst they'll deter one of their mates from doing
business with you, and if they're alike at all there's a good chance they
would try and not pay you as well. It's not worth establishing a reputation
that clients can just not pay you and get away with it.

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mattbgates
I've always worked this way: I'll do the work for you because you need it. I
send you an invoice. You pay. I have a client who gets busy and I sometimes I
have to remind her to pay me. Usually, she'll need more work done, and that's
when I remind her that until she pays her invoice, no more work will be done.
She has always paid it. Because to turn to anyone else will require finding
someone who actually knows what they are doing.

If you have any thing running in which they rely on you, suspend it in order
to get their attention until payment is due. If a large bill is due, and they
are having trouble paying it, than offer them to pay X by this date, and
another X by this date. If no payment is made to you, than inform them that if
they don't pay X by a certain date, they will be terminated and any future
work for them will not be considered at all.

If you wish, you can throw in some legal jargon in there that you will be
getting a lawyer or proceeding to small claims court, if you wish to take it
that far.

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helen842000
If it was me, I would call and get straight on to their finance / billing
team. Just chase it until they realise that paying is the easier option. Not
in an angry way, more just stay on the phone until it's sorted, 'let's wrap
this up today' kind of attitude.

It's too easy to ignore your e-mails and then there is such friction with
replying after they have ignored you several times and think they are getting
away with it.

Being based in the UK, I will follow up on your behalf if you want. I like
getting this kind of thing sorted.

------
hoodoof
Depends how much money it is and how important that money is to you.

If it hurts but you'd rather not have the time sink, drama, stress and effort
of pursuing it, then drop it with lesson learned.

The second option, appoint a lawyer in England and if they say you have a case
then let them pursue it for you.

I would warn you not to get too involved. Legal cases are _extremely_
stressful and occupy a huge amount of head space. Try to just hand it to the
lawyers and give minimal thought to it.

I've seen many people become totally obsessed with legal cases and who is
right and who is wrong, and they can't think of anything else and alienate
themselves from everyone around them because they can think of nothing except
the legal fight. Don't do this.

Depending on who the company is, some people choose to make their quest to be
paid public in an effort to shame the company into paying. It might work I
suppose.

It's also worth just calling and calling and calling until you get to speak to
the right people.

I've had clients who intended to pay but were under cashflow pressure and thus
ignored me. My relentless calling twice a day eventually got them on the
phone, at which point I asked to understand what was going on, and having
secured a commitment to pay, I then relentlessly called daily from the day
they said they would pay (they usually don't pay on that day). Start leaving
detailed messages with every single employee of the company that you can get
on the phone saying why you are calling. "Could you please get him to call me
back ASAP regarding the unpaid bill of $X. I've left 30 messages and he has
not called me back." I also explain to them that this is a small company and
this money makes a real and tangible difference to my ability to feed myself
and my family and could they please do their cashflow management with bigger
companies who can absorb the pain.

And, if you want to play hard as a final resort, let them know you'll be very
vocal with their client base and employees with personal phone calls until you
get your money. Become such a thorn in their side that they pay to stop being
annoyed by you.

Public posts on LinkedIn asking them to call you about the unpaid bill are
also an extremely crass but possibly effective mechanism for getting them to
sort it out.

Finally, don't be whiny or strident cause you'll sound like a crackpot. Always
keep the story straight and bring it back to the certainty that you are owed
the money. "We've got clear signed terms here, the work was done, the costs
incurred, payment now 130 days past due, there's no reason this should not be
paid". _Never_ get angry when communicating with them about it because this
will give an excuse to disengage and will lose you the high moral ground...
keep monotonously consistently factual and emotionless with your message.

Another option you have is to sell the debt to an english debt collector. I
know of one debt collector who employed a well-known former world champion
boxer on salary and I have no doubt he made some personal debt collection
visits - there's a fine line there but if these people have effectively stolen
your money then why not spend 50% of it to make it their problem with an
aggressive debt collector.

Is it a small company or large company? Maybe they have gone out of business?
What do you think is the reason they have not paid?

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coretx
If your agreement is as firm as you say it is, continue what you are doing and
/Sell/ the debt. You'll get a guaranteed percentage of the outstanding sum
even if the ghost can't be tracked or prosecuted. The best part: No headaches,
wasted time or bad PR due to dragging a client into a lawsuit.

~~~
csdreamer7
Who would you sell the debt to?

~~~
CyberFonic
I believe the term is "factoring". There are collection and similar companies
that will buy your collectibles. In my experience, they will not buy a single
collectible. Instead, you enter into a contract to sell your on-going
collectibles. One company that I researched wanted 100% of my collectibles or
none at all. It is a good arrangement to help with cash-flow, but in my
experience the terms and conditions are such that you will probably need to
increase your rates by at least 30% to maintain your present revenue levels.

~~~
CodeWriter23
Factoring is a method of financing your business, say to buy raw materials to
produce finished goods for sale. They want access to your receivables to make
sure they are repaid. What the GP is referring to is a collection agency,
where you sell a debt to them for $.10-$.30 on the dollar and they have all
the rights to collect.

~~~
az123zaz
I ended up going with a no fee unless you win agency that keeps 35% of what
they collect. Honestly, that seemed pretty fair to me.

I haven't seen results yet.

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dcminter
I would suggest finding one of the several online solicitors who will send a
payment demand on your behalf - typically threatening the recipient with a
winding up order. The fee when I tried this was very small (£5 I think) and
the client paid up very swiftly. Don't do this unless you're willing to risk
losing the client though.

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cameldrv
Why aren't they paying?

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pidybi
waiting is good advice

