I guess I just don't understand this. Do these people continue to work out of desperation or is their another factor. I work on a net 30 after a retainer fee. So the client has 30 days after the work is performed to pay me. If it runs past 45 their work goes on hold, I start work for another client and theirs does not resume till a) I get paid and b) the work that I have begun for another client is done. I have only had this happen with 1 or 2 clients and it only happened once. I just don't see how someone gets months and months in the hole with someone. If I am not paid in full, no work progresses until I am I don't understand why someone would continue to do work for someone who has an issue paying for the work that is already done. I mean if they are having money trouble now, your next bill is just going to compound their troubles. Which reduces the odds of you getting paid for the latter work even more.
I don't know if it will help you understand, but most of the time it comes down to trust. It's the rare client that will come out and say "I can't pay you because my cashflow is off this month, and I don't know if it's ever coming back".
Instead there's weeks, and then months of putting off, half-truths, lies, and the like. Most people new to freelancing trust that it's just some bureaucratic hold up, and the worst offenders develop entire personalities that are based on exploiting people's natural tendencies to trust other human beings. It usually takes getting burned a few times to learn that "the check is in the mail" translates to "I'm never going to pay you because the amount is small enough that involving a lawyer doesn't make financial sense".
The real antidote to that is to network constantly. If you know the local market, you probably know someone who has worked with the person you are considering working for. It's good to know if one of your buddies was owed $12,000 and had to go to court to get paid anything.
The problem is it is not an all or nothing situation most of the time. Usually you get paid part of it and they have some convincing explanation of why they can't pay the rest. Suppose they paid all your wages but not your travel expenses - pending verification of some receipt or something. They paid all your regular time, but not your overtime charges, claiming that payment had to be approved by someone higher-up. I've had both of these happen to me (both were legitimate situations and I did eventually get paid hassle-free) - but how do you know it is legitimate until after you are paid? You can stop working until you get paid entirely, but if you have bills due, it can be better to get some money than none at all. There is also the whole issue of the relationship - if it is just a legitimate hiccup you might not want to sour a good long-term opportunity, so you make a judgement call - he's a good guy and would never screw me - and next thing you know you next months check is missing too and you are down thousands of dollars.
It is always easy in hindsight to say it should never have happened but that does not make it anyone's fault other than the people who agreed to pay them and didn't.
There is also the whole issue of the relationship - if it is just a legitimate hiccup you might not want to sour a good long-term opportunity
I have this really bad habit of trying to trim my post to get them down to more digestible bits. In saying that, I did not make it clear that I was talking about clients in which the worker has a new arrangements with no or little payment history, or worse yet one that has a chronic track record of short or late payment. I have good clients that have the typical red tape issues with money. But I have a long term history with them and I know it is coming. In that case sure, I have let them go well past 30, but their was a proven track record of paying.
This in particular has tripped me up. I had a relationship with a client that took 45 - 60 days to pay, but they always paid. Things were great for over a year and a half, they had tons of work for me and I made good money. Then all of a sudden 60 days became 90 days. At that point you have already filed a few invoices before you sense a problem and cease work (I was sending them in every 30 days). Basically they went Chapter 11 owing me over $10k - of which I was only able to recover 30% after being very, very persistent with their lawyers.
Sure, I am sure if it ever happens to me I will feel different. All of my client now have been with me 3 to 5 years. I have never had one run past 60. I am not saying that it could not and is not going to happen, but I feel pretty comfortable with my clientele. Most are fortune 500 public companies so money troubles would be in the news long before they where set to implode.
It's called a market. In the situation you describe, you have other offers of work, so you can be strict. How would you behave if you had no other offers? Sure, you can complain all you want about the invoice not getting paid.
I will make no illusions to the fact that in my situation, not getting paid will not put me behind a months rent or cause me serious financial harm. But to me working and not getting paid is worse than not, working at all or in my case working on my own projects. I am sure if my financial situation where different, I would still feel the same. To me, wasting my time chasing bad money no matter the prospects of alternatives is just not worth the risk when my time could be applied to productive endeavors. If I am going to risk not getting paid I am going to risk it on my project with far more potential upside than a wage. The way I see it, that client is putting the risk of the project on your shoulder, they are putting you in a pay for performance situation after the fact. That or they are committing outright wage theft.
I am sure if my financial situation where different, I would still feel the same
Don't be so sure. In the last fifteen months, I've gone from being completely broke to having no debt and about a year's salary in the bank. In my experience, it's much easier to make dispassionate and rational decisions when you're not in imminent danger of losing everything.
> I am sure if my financial situation where different, I would still feel the same.
This is based on your current "safe" mindset. I can assure you that if you were in a very different financial situation that your thinking would most likely change.
No it's based on me knowing myself very well through critical analysis of myself. I am an all chips in guy. I have been up and down but through it all, I have always been consistent on my principals, when I was starting out I walked out of a really bad position with nary a weeks pay in the bank. I barely landed something new and made the rent in time. Never the less, I stuck to my principals. I made it really big on an exit, bet it all on investments and start-ups, lost it all, went another round after working some jobs, had two good exits and started playing it safer by switching to consulting, irregardless of all of that my core values and principals never wavered. So I am pretty sure, if my financial situation was different, I would still feel the same.
This still doesn't make sense to me. There's a pretty efficient market in construction and kitchen jobs. There are frictions associated with changing jobs, but they seems a lot smaller than those with most white-collar jobs. So why not look for a different kitchen to work in, or a different foreman to work for?
I guess this works the same as a casino. They are constantly giving you hope, and occasionally you get paid something, so you keep going hoping that in the end they will pay it all.
I got into a bad situation last year, when I was letting my client go 30 days paying me. That is 60 days really: 30 days of work, then I send the invoice, then they have 30 days to pay me. A client can run up a big debt over 60 days. I was working on the mybailiwick.com site and they ran out of money. They owed me $8,000, which I never got paid. After that, I decided, I would never let a client run up a debt beyond about $4,000. It is just too painful to work for several weeks and then not get paid for any of it.
Maybe I'm making a large assumption here, but since you're doing web development you presumably have access to their site. Why not just remove your code from the site until they pay you?
You need to not do that unless you have it in your contract stipulating you can.
In my contracts, it states you will not use the work until we've received payment, and we will unhappily file DMCA takedowns against infringing users who've not paid for work done which isn't theirs yet but they aren't paying yet continue to use. (As we only transfer rights to the work upon final payment).
After a certain (long) period of no payments, we have a forfeiture clause, which removes all right of them to ever use the work without removing the debt for items already performed. This works considerably better than interest.
A TRO is a much cheaper thing to get than a small claims judgement.
For most clients, we additionally do not provide the source code for them until they've paid in full.
Right and you still cannot physically remove the site, you must go through the courts to have it removed. Please guys if you get into this situation do not remove the site, you are bring down a lot of trouble on yourself. I have seen too many people do this and get into a world of trouble, even though morally, I feel you are in your rights the law sees the entry into the companies system as unauthorized access. As such you can be brought up on a host of criminal charges. This is the worst thing that you can possibly do in a payment dispute!!
While that might be true, you cannot simply log into their server and delete your stuff. There are, however, legal routes you can take to get the stuff removed.
IANAL but this isn't as clear as that. A contractor can't come in and take out the new bathroom he installed because you didn't pay him, and I'm guessing similar protections apply to repossessing a website.
"Why not just remove your code from the site until they pay you?"
I thought about that, but one has to be very careful about that, or one stumbles into illegal territory.
Also, it is complicated, there were several programmers working on the site, and none of us owned any portion of the code, by which I mean: each programmer was free to edit any portion of the code (which is an awful idea - the code quality was terrible because no one had any sense of ownership over the code).
I signed an agreement with MyBailiwick (Miles Spencer and Todd Carter) which said I owed the copyright on my work until I was paid, so in theory I still own some partial copyright, but my code is mixed in with the code of every other programmer, so it would be tough to enforce my copyright without tripping over someone else's code, which might in fact have been paid for.
More so, I was paid for the first 2 months of work I did for them, it was only the last 6 weeks that I was never paid for. So even among my code, it would tough to say which parts I was paid for and which parts I was not paid for.
The way to get around this if you absolutely want to be able to disable a clients site for none payment is to have the code call out to an authorization server that you control. In which case you can shut down authorization on your own system for non-payment. This is akin to a dongle and is legal.
In saying that upon payment it is a good idea to have a routine that kills the check to your server as an authorization check that fails in production could shoulder you with a good deal of liability.
While I agree with you on some level - I too have a zero-tolerance policy when it comes to late payments - I still get sucked into these situations no matter how wise to it I am.
I've been doing the freelance dance for 10 years and for some reason in the last 4 months I've now fallen into the trap of non-paying clients on huge projects, twice. Its incredibly degrading, especially when I thought that at this stage in my career I had solved this problem.
In Australia you put a debt like this in the hands of a collection agency, who either buy the debt from you, or collect the debt on your behalf and take a %. They use whatever means of coercion (legal means of course) they have to extract the money from the person.
This really hit home for me, as I just woke up to an email today from a client, who owed me the equivalent of a month's salary, to tell me there have been complications with payment. Basically every bill I have to pay now gets managed in the debt shuffle, once again.
I'm really over this, if employers could simply deny wages to FT employees there'd be hell to pay. Some clients deliberately use NET-90+ for freelancers as a way of managing debt, they pay off any debt with hefty finance charges first, and any vendor that doesn't have the teeth to collect or balls to charge and enforce 20% interest gets perpetually shuffled to the bottom of the pile.
I hope in a future where freelance is considered a more socially acceptable method of employment we can establish some more protective legal frameworks for the self-employed. The system as it stands is completely flawed
With a debt collection agency you assign them the debt. They pay you a fraction of the amount due, and if they manage to collect it they keep the balance for themselves.
Selling debt to a collector is giving up. You do it when you decide that the probability of getting paid is too small for you to spend further time on it.
What are the odds of someday independent software developers being able to file liens on companies that stiff them? People who work on your house are able to do it, what's the big difference there? I suppose if you develop somebody software, there may not, necessarily, be anything to put a lien ON...but I suppose that could be something that the contractor could check up on ahead of time.
You do not transfer copyright until you are paid in full. Partial payments do not count. If they have not paid, every system and backup of that system that has your piece of code in it must be taken down, by your own hands if necessary as stated in your work contract. Also make sure everything is tracked with git or something similar so you could even automate removing the parts you have written. If you build on someone else's work, that derivative work would be yours and you can remove it. Thats about the closest equivalent I can think of a software lien.
That's great and all, but wouldn't you have to grab a lawyer to do anything serious? I thought a real lien was as easy as waltzing down to a courthouse and filling out some paperwork. I'm probably totally wrong about that though. I guess what I was wondering was if there was some kind of automated process to claiming what's owed in the court system.
My company is constantly scratching and clawing for invoices to be paid. We're a small company that works with several much larger companies. While we offer a great product that our accounts need, we have little leverage when it comes to 'extracting' payment.
Think of this part of the economy like musical chairs - everyone is OK with the money being "on its way" until the music stops. Now, everyone truly needs the money and there is apparently, not enough to pay everyone in full...
I've noticed this trend lately in business parlance -- an executive or manager or founder will same something like "blah blah blah ... and of course the [developers|UI people|marketers|etc.] want to be paid, so that puts more pressure on the revenue."
"Want to be paid." I hear that a lot now. Want. As if they're asking for a hand-out, begging for something they don't necessarily deserve. They want to be paid. I sense a similar attitude here.
That's what it sounds like it means, but the choice of words implies that they're asking for a favor. They want to be paid. Not need or deserve. Just want.
