Ask HN: I'm being stiffed by a client. What are my options?

Stop working, move on immediately to other work. If the amount merits legal action, go for it, if it's too small — just forget about it and move on.

Moving on is the most important thing: don't get fixated on this situation and its negativity. Every hour you spend thinking about this is an hour wasted.

In the future, monitor the amount of outstanding unpaid work closely. It seems you were doing that, which is great — you should always be aware of what that amount is. Don't let it grow, because once it grows too large, the client gains power over you. As long as it's small, you can always move on, and it seems it's what you should do in this case.

Consider working in the future on a pre-paid basis. I have had great success by charging clients [especially new ones] for "blocks" of hours. If your rate per hour is $100, consider selling your client a 5 hour block for, say, $450 - or 10h for $925. When you receive the check and it clears then get to work and keep going at your own pace till their "hours balance" goes to zero. Then ask for another check if they want you to continue on the project. They can buy more at any time. I keep track of time to the 1/10 hour. Tell them they can direct your efforts however they desire within the scope of what you are offering for a given rate. Offer greater discounts for larger block sizes. Unused hours expire or are fractionally reduced after 18 months... progress reports generated every 10 days or 10 hours used... generate your own policies.

Start with the cash. Saves many a headache billing/invoicing/etc.

I have sold weeks at a time. Accept credit cards.

Here's what I would do, and have done in similar circumstances.

Stop working.

Write a clear letter saying that you're disappointed that they are not holding up what you thought was the agreement, especially since they obviously also thought it was the agreement because they had paid the first few invoices.

Issue a final invoice, and say that you look forward to receiving payment and having a discussion resulting in a signed agreement as to how to go forwards.

Be professional. No agreement is worth anything except to be a clear statement as to what's expected. The exception to that is if you are prepared to go legal, and that's an entirely different ball game.

Look at your possible outcomes, and consider what actions you must take to achieve the best possible, given that you cannot control what the client does.

Would you really go legal? Would it be worth it? Unless you are owed many thousands, it won't be. Getting a lawyer to write your letter is one way to increase the chances of getting paid, but up the stakes if they continue to refuse.

It's game theory - draw an explicit decision tree with probability estimates and expected payoffs. It's what I did when I participated in a semi-hostile management take-over.

I have been stiffed by a number of clients and theres already some great advice in here. Here are some things to keep in mind:

- as unthinkable as it is, some indididuals will contract you for work they never intended to oay for from the start

- usually a client who stiffs you is also VERY good at playing the victim, do not do or say anything mean that gives credibility to their charade

- be firm and professional, not angry or making personal appeals

Its not a hard equation: 'You do the work, you get paid'

Also, the 'F You Pay Me' video can help show you how to be forceful in a proper way.

Ive definitely gone through all of the feelings and doubts and auestions youre having. I really hope you can find better clientd, good work should be a win/win for both of you.

I lost 2 grand this way when I was 17. I chalked it up to an (at the time) expensive life lesson. In retrospect it was cheap. I wonder how many other people learn the verbal contract lesson the hard way, probably way more than admit it.

If you are in the USA and the amounts aren't huge (see: http://www.nolo.com/legal-encyclopedia/small-claims-suits-ho...), then go to small claims court in your state to collect. But you should be sure to show (a) you were paid previously (b) what you are charging is justified, and (c)you have some proof that you tried to get the payments made (certified letter, etc.)

Have you phoned them? People find it a lot harder to ignore phone calls than emails.

I've known companies (and larger companies are often actually worse for this) who practically have a policy of stalling all payments unless it actually causes problems.

Also, in a company of any size the people who pay you in their finance team ("accounts payable") will probably be completely separate to the people who you are working for - see if someone internal can apply pressure to the finance folks.

Get a lawyer to explain how the worst-case scenario works. Obviously if you send the client a lawyer letter don't expect him to want to work with you again.

Try to decide whether the client is just very busy or actively trying to stiff you. How do you know the person, since you're doing everything by word of mouth? Do you know other people at the company who can remind them to pay you? I've worked with a freelancer once where we forgot to pay and he asked me to ask our business guy. Sent the money the same day.

If you decide he's actively trying to stiff you, down tools. Tell him you need an income and there's people who will pay you for your work.

That sucks. Move on.

That means making a decision about whether it's worth the hassel of trying to get paid by a deadbeat. If so, that means taking legal action. In my experience sometimes it's worth suing a deadbeat, sometimes it isn't. The high order bit on when it isn't worth it is when the deadbeat has gone broke. The high order bit on when it is is a relationship that has devolved into "Fuck you, Pay me." It's rare that the emotional value of getting paid is worth the emotional cost and financial risk of suing. There are opportunity costs for a small business when resources are devoted to chasing deadbeats instead of new work.

Personally, I always use written contracts with clear payment and termination terms. Typically I require a meaningful retainer. The retainer gets applied against final invoice and is large enough that I shouldn't have to go upside down where the client owes me money. This puts it in their interest to tell me explicitly if the project dies rather than implicitly via unpaid invoices. Whenever a client doesn't pay an invoice without a heads up, I stop work and call.

Here's the thing: good clients are clients who intend to pay, and good clients are never offended by written contracts. The times when things need to be loose with good clients is when speed is critical and there's an established working relationship, and when speed is critical then all it takes is a check to get started. A client who balks at a contract or writing a retainer check is a red flag. If they can't write a retainer, then they haven't allocated the funds for my work. That's not a good omen.

Good luck.

Previous discussion about nearly identical topic:

https://news.ycombinator.com/item?id=9023327

  diff https://news.ycombinator.com/item?id=9023327 \
       https://news.ycombinator.com/item?id=10203102

  @@ -1,5 +1,5 @@
   Did development work.
  -Had written contract.
  +Had verbal contract.
   Got paid for while.
   Then didn't paid.
   What to do?

For future reference (F*ck You. Pay Me):https://vimeo.com/22053820

(Not a lawyer, but…) Definitely stop working. Do announce to them why you are stopping, so nobody can claim you abandoned the project.

While a call is useful, always follow it up with an email summarizing the call (date/time of the call, summary of what was discussed or what you mentioned to them). Useful for the timeline, and in small claims court, or handing the debt to collection services.

If there are any remaining deliverables, provide proof of the deliverable being ready via email, but provide it in an unusable format (e.g. with copyright message, watermark, smaller size) and state that it will not be released until payment is received. It sets up a timeline. Don't fall for the "just send us X and we will pay you".

Tip for the future: If a client exhibits a tendency to pay late, I place key assets (javascript, CSS, images) on my own server and link to them from their site. Once the work is paid for and/or the project completed, I upload stuff to their server on the hand-off. If they don't pay, I have some leverage, e.g. archiving these key assets on my server ("to make room for new projects") will impact their site. Depending on the assets you chose to self-host, it won't be easy to hand off your work to another developer either until they've paid for it.

PS If you need the client as a reference or is a big name that might lead to more business, staying on good terms is sometimes the better decision. Still stop working!

If you do speak to a lawyer, bring up the possibility of getting a debt collector involved.

I've worked with debt collectors before, and lawyers often know some really good ones. It might be in both your best interest and the lawyers best interest for him to pass the work onto the debt collector, take the commission, and to have it done with.

The last time I worked with a debt collector, the client initially wouldn't pay the full price for the work we did for them. The second the debt collector was involved they couldn't wait to pay us. By the end of the day, all sides had their money, and all sides had moved on.

It's a little extreme but I had a friend who had several clients attempt to stiff him on work.

The one thing he taught me was to always have control of your work until the client pays in full. This means setting up a url from a host you control, so when work is done, you can deploy and client can review it as you move through the design / development process.

Client doesn't pay? Take down the site, send a notice saying nothing further gets done until they pay.

Since you own the source code and the client has nothing since you control the domain, they usually pay up. If not, you're out some hours of work, but your work can be used for other clients and the deadbeat gets nothing.

Remember, always maintain control of the data until the project is completed. Even if your designer or developer, you should always maintain control of what you do until the client pays in full.

Start by telling the client that it's very important that you get paid. I know this seems obvious but maybe he's just very busy or absent minded. Send these reminders twice a week. Don't be shy or indirect at all.

If this doesn't work, have a collections lawyer send a letter. I once had someone refusing to pay a six figure invoice, and I got paid three days after a letter from a collections lawyer.

But please, communicate super clearly with the client first. Tell them if you don't get paid you can't keep working on the project. If you haven't already spelled this out clearly to them, it's possible that the guy is just disorganized. Maybe he's even here on Hacker News discussing to do lists and tips for overcoming procrastination. Be super clear about your needs.

Prevention is best here. What I do with new or small clients where I'm concerned about this possibility is require them to work off a retainer agreement—they prepay some block of hours or days or weeks, however I'm billing them, and I send them a bill at some frequency <= block of time (e.g. if they prepay for 2 weeks, I send them the bill weekly). The retainer is a clock ticking towards 0, and when the countdown hits zero, I stop working until the bill is paid. If I like them or there's trust building, I'll let it go a little into the red, but never more than I'm comfortable walking away from. I've learned this lesson way too many times and give clients very little rope to hang themselves with here.

The other thing to build into your contracts is that IP transfer is contingent upon payment. There have been a small but very educational number of times where I've been able to suspend a client's license to my code for non-payment. Enforcing it is somewhat more difficult if you don't also retain control of infrastructure (and this should also be spelled out in your contract), but just the understanding that they have no legal rights to the code without the consideration enumerated in the contract is enough to keep them at the table unless they're going out of business anyway (which is a different thing altogether.) And if the amounts are great enough it can be worth going to court for an injunction and you have the tools to do it this way.

I was in a similar situation owed a couple grand by a company I had used to work for but was doing freelance for now. I started cc:ing in people I knew lower and lower down the hierarchy. Never got a response from anyone. A while later I heard they had declared bankruptcy, so I contacted their lawyer who informed me that only debts from the last 6 months were collectable, and at this point I'd been fighting with them for a year and a half. I'm still grumpy about the whole ordeal.

It's not 100% clear from your question whether your client is an agency (doing work for other clients) or an ordinary business whom you are freelancing directly for.

If they are an agency and the work is ultimately for someone else then this route has worked for me before...

In the UK (possibly the same in the US) in the absence of any written agreement (even if you are being paid) then all the intellectual property rights in what you create for your client remains with you.

Remind your client of this fact. And state to them that if they do not pay you, then you will be forced to contact the end-client and tell them that they are using your intellectual property without permission.

Usually just the threat of this will make your client pay up. On one occasion I was working for an agency that still didn't pay me (after I used this threat) so I did contact the CEO of the end-client, I was paid within 24hrs and the end-client fired the agency I was working for.

It might be worth a try.

This happens quite a bit in many other service industries.

Like others said, stop doing any additional work. If you are hosting it right now, take it down. Even the demo.

Legally there isn't much you'll be able to do that won't cost you more than the amount they owe you. You can try small claims court in the county where the offense took place, so where you live. That's usually under $100 to file and have the defendant be served, depending where they live.

Unfortunately, this is part of business. I have seen many times where after 6 months..1 year...even 2 years later, the client comes back and now needs to finish it. This could be for many reasons, maybe the found somebody else and it was a shitty product and now they have to double down on their mistake. Either way, if they come back, get an upfront retainer! Plus all previous invoices they haven't paid of course. If I know a client is sketchy and they pay late or sometimes never, any additional work will always be paid upfront.

You would do well to have an accounting system you use. So If somebody owes you money, that is a balance on your accounts receivables. If they don't pay it, you can write it off as an expense of unpaid earnings. This has tax advantages, depending on your size and all. So possibly look into that. It's a good thing to have. Even if you are a sole freelancer, there are many free apps out there to do this.

Another suggestion is anytime you do work, have a client engagement letter. This type of thing is required in many service industries, accounting, law, etc. but it really is a good idea. Legally it may not help you at all, but it makes sure that the terms are more clear to the client and not just an oral agreement. It's a simple way to have something in writing rather than having an entire detailed contract. Which for bog jobs, I would definitely have a contract.

At the end of the day, learn from it, it will happen again, trust me, and move on.

For recurring jobs take 1 month of pay in advance or bill weekly or every other week, whatever you can afford to loose.

For small projects double your price before communicating it to the client and take 50% as advance. Most likely client will pay but you'll have two times as much work as you initially estimated. Sometimes client won't pay, but then you don't need to go extra mile to make him happy so you won't work as much and price will be fair anyways. If your client turns out to be awesome offer discounts at the end of the project. Customer will love you for that as much as you came to love him.

When I used to freelance I'd ask for 50% upfront. This serves to purposes: It reduces your risk of total nonpayment, and it also forces the client to make a psychological commitment to the project and to you.

Can you describe what you mean by getting the run around? Are they giving you feedback that they're unhappy with the result and don't want to pay you? Are they saying/implying that they don't have enough money and can't pay you? Is this your only client? How many months behind are they? Do you have other prospects so that you could walk away from this client today and be okay financially?

With all due respect to the advice posted so far, it's difficult to offer useful advice without a bit more information about your situation.

We can help make sure this doesn't happen again to you. You should check out Domino (www.askdomino.com). We're a community of freelancers and have a lot of collective experience and have made many mistakes in the past. Learn from us!

You can find a bunch of content on the site and you're welcome to join our Slack channel for more detailed Q&A.

A few of our members are lawyers (in the U.S.) in case you want a service contract drafted up to help mitigate these kinds of issues in the future. NB: We don't take a commission.

All very good advice here, and you're not alone in having this problem. In fact, there's a whole site dedicated to it, mostly for entertainment, but also some tidbits of advice here and there:

http://clientsfromhell.net/Deadbeat%20Clients

I lost a good college friend due to this.

Watch the 'F*ck You, Pay Me' video. Get a lawyer and always do contracts. Period.

IMHO, it is important to share such an occurrence about a contracting employer with those in your field who take contract work.

Standard & Poor had that habit in the 90s. It wasn't worth the grief to pursue them, but I did pass along my experiences with them to others in my field.

Make sure you split up any invoices such that no amount is over the max for small claims court. You can then take them to court over each individual invoice.

In big court there are 4 people involved. You, them, their attorney and your attorney. Only 2 of those people are going to win.

Speaking to a lawyer is probably a good place to start. If you are going to escalate you should escalate in the right way, legally speaking.

You also need to bill every 2 weeks to cut down on the cycle. What's your location ?

This happened to a friend of mine. I warned him when he was 2k in the red that he should get out, by 7k I'd absolved responsibility, at 10k when he got out and was subsequently "blamed" when the business failed for not being there to do more work...

Expensive lesson.

Your jurisdiction may vary but in Germany a lawyer explained to me that the lack of contract in this situation isn't as big of a problem as you may think.

You've been working for someone and invoicing them for it, they've paid those invoices. This went on for some time and you've continued to work for them. That means you've had some kind of mutual agreement (an informal contract) on how you should be paid for the work, i.e. they must continue to pay you if you continue to work for them.

Unless they can prove that the relationship was terminated before you started with the work you are invoicing them for, the invoice is valid and outstanding payments have to be completed.

The only problem is that because of the lack of a contract you are in a position where you have to prove that you did the work covered by the unpaid invoices and that you had reasonable grounds to assume the relationship was ongoing at that point (any correspondence with the client or source files might suffice).

So without a contract you're in a weaker position (because the contract would be more difficult to dispute than an informal agreement) but you likely still have a case.

That said, pursuing legal action should be the last resort. I would recommend the following step-by-step escalation:

0. Stop all work for that client immediately. No pay, no work. Any additional work you do now is work that may end up remaining unpaid (e.g. if the client is not paying because they are secretly bankrupt). Try to find other client work so you can afford legal costs. Don't expect that you will see your invoices fully paid and all your costs covered -- your client hasn't paid, so your current situation is that you have no money and the client is at an advantage (whether they can make any use of it or not), you're only seeking to re-balance this, nothing more.

1. Try to talk to them, preferably in person. While e-mails are good ammunition if you need to take this to court, personal interaction tends to be more direct and more difficult to ignore. Remember to stay calm and orderly -- for all you know they're just unintentionally careless and mean you no harm.

2. Send them payment reminders. Make sure to mention the due date and the current date. If possible, make sure the post office sends you a signed delivery confirmation (yes, this means sending actual letters).

3. Repeat step 2, but inform them that failure to respond will result in late fees (if your jurisdiction allows for them -- in Germany there's a fixed percentage you are generally allowed to charge per day over due but YMMV).

4. Repeat step 2, but now add any late fees as well as a notice that a further delay will result in more fees and possible legal action.

5. If you haven't yet talked to a lawyer (it's a good idea to talk to one before this, if only to make sure you know your exact rights), now it's a requirement. Have your lawyer send them another copy of the invoice with a cover letter informing them that they must pay. Make sure your lawyer has all the relevant information (e.g. any relevant correspondence).

6. Everything after this point can and should be handled by your lawyer. Most people want to avoid taking this kind of thing to court, so you may suddenly hear from your client and if they're unwilling to pay they may at least make an offer.

7. If the client still isn't showing any signs of paying, the lawyer will at this point likely ask for your permission to take this to court. Depending on your jurisdiction this is the start of a long, slow (and maybe expensive) process.

8. Early into the trial, the client may want to make you an offer via their lawyer. It may be worth taking even if the sum offered doesn't fully recoup your losses: the exact values on the invoices are purely philosophical at this point, your goal is to come out of this with some kind of positive result and if you only get enough to pay the legal costs, that may be good enough for you.

9. You win. Or maybe you don't, in which case you have to bite the bullet and pay any additional legal fees you incurred. If your lawyer is any good and you gave them all the relevant information, the outcome shouldn't be too surprising. Even so, it can be a bit of a gamble.

I've actually only had to take an unpaid invoice (two months, actually, plus some short change on previous invoices) to court once and it was painful as hell. We didn't part amicably so the client threatened to sue me for work he claimed I would owe him (which I didn't) and refused to pay the invoices until I did so (which would have cost me about another month of work, unpaid of course).

In the end my lawyer suggested I take his offer because he offered a deal that practically meant he would pay the invoices in full (sans legal costs and late fees) if I signed a statement that I had destroyed or handed over any confidential project files I had left (which I had already done anyway). The alternative would have been a prolonged trial that could go both ways because most of our correspondence had been in person without witnesses. Needless to say the entire ordeal pretty much burned the bridge and neither of us will ever want to do business with each other again. In the end it was pretty much a zero sum game for me, but the reason I took it to court was mostly to make a point for him: I inconvenienced him and in the end he had to make an offer that pretty much reimbursed me for the money I originally asked for without doing any of the work he had initially demanded in return.

To summarize:

1. Stop working and talk to them, preferably in person. Don't plan on getting the money, don't rely on it in any financial decisions.

2. Remain professional and respectful, assume stupidity rather than malice.

3. Collect evidence, document their refusal to pay and your attempts to remind them.

4. Lawyer up. A lawyer's letter head is often enough to make someone talk to you.

5. If you have to take them to court, expect bridges to be burnt. Your business relationship has failed and the trust it is based on (i.e. the expectation that both ends hold up their part of the agreement) is gone.

Ask a lawyer.

Hit him hard on the nose. Always satisfying :)

n00b. check it: - http://youtube.com/watch?v=jVkLVRt6c1U

The proposal and invoicing process isn't fun. Check out some tools that may make this task less painful in the future? something like BidSketch comes to mind.