Dealing with Deadbeats
I must be some kind of lucky, because Prelude Interactive seems to have far fewer issues with overdue or underpaid invoices than other firms. In eight years of intermittent freelancing, as well as more than a year of Prelude, I’ve only had two instances when a client couldn’t pay. These are their stories.
The first case was several years ago – I did some giftshop/online store work for a clay artist in Boston. Online sales didn’t exactly take off like he expected, though, so after a year of “Hopefully?” we worked out an arrangement and he sent me a really amazing set of dishes which I still have. Did I get my dollar-for-dollar value? No, but at the time I had a full time job and didn’t really care.
The second case was more recent. I did some product development and documentation work for a early-stage startup, but funding didn’t come through as they hoped. After three months of weekly “any day now” updates, I received 2/3 of the money owed, but am still waiting for the other third. This time around I grew far more frustrated, as I felt like I was being strung along, and no longer have an employer to fall back on. The guy says he’s broke, and I have no choice but to take his word for it.
As part of our ongoing, ongoing, ongoing communication on the subject, I did threaten to get a lawyer involved, and the client responded that he thought our relationship was worth more than the money outstanding. At that point, having spent almost as much time on getting paid as I spent doing the work, I disagreed. But it got me thinking…how do you handle this? From an email:
There are a lot of different service industries, and a lot of different ways of doing things. On one hand, take a (hypothetical) autoshop. They tend to be exceedingly humorless and unflinching about collecting the money due them. They probably have no qualms holding a car until a bill is paid. On the other hand, a funeral director has to tackle issues of payment as discreetly and gently as possible. People would expect to hear that a mechanic was tough with someone about a bill, but the same widespread talk about a funeral home would damage their business.
In both instances, the client was satisfied with the work, knew they owed money, and felt really guilt about not being able to pay. I googled around, looking for advice from blogs like these:
Here’s a mix of what I found, and the conclusions I came to:
- It’s OK to withhold services, and not send them anything completed, if you are concerned about their ability to pay.
- Each situation is different. Use your gut.
- Lawyers are expensive. It’s really not worth getting them involved for anything under $2,500. Even then, it depends on your state laws – whether or not you can recoup legal fees.
Interestingly, I’ve never had an issue over payment with a nonprofit client. I would be more hesitant to aggressively pursue payment, depending on their cause, but so far it has yet to come up. Maybe they’re run more responsibly? Maybe funding patterns mean that money is present before it can be spent?
I have found that nonprofit clients tend to understand the requirement of budgeting and planning before they commit to having work done. Because they don’t make a profit and never plan to they know that they can only commit to what they know they will have and if they commit to more that can start to tarnish their name. Nonprofits can’t afford to have their name tarnished, there name being clean is what brings in the money they need.
As far as other clients I always make sure that I split the invoices up so they only owe me a small amount at a time. If they miss a payment work stops and at worst I am out only that small amount rather then waiting to the end for a lump sum that never comes.