Collecting from Clients / Best Way 1

[jimoo]

I have a cleint, which is a local business, that owes me over $8,000.00 for changes I made to their software. They requested these changes ASAP because their sales force was submitting incorrect proposals and this change would save them a lot of money. They are very happy with the changes.

I have submitted 1st, 2nd, and final invoices but have not heard back. I met with them, but still have not recieved payment.

What are your suggestions?

I don't want to take them to court, but that is where we are heading.

Should I file a credit report on them first?

Advice is welcome.




Jim Osieczonek
Delta Business Group, LLC

http://www.deltabg.com

 

[Rougy]

That would be a nightmare to me.

Looks like you're going to have to take them to court.

As programmers and designers, we should code our programs to "self destruct" after a certain period of time unless a certain code is entered, sort of like the way shareware stops working after a given period of time unless you give it the magic word.

-----
The death of dogma is the birth of reason.

 

[sleipnir214]

Before taking them to court, see if you can't find a lawyer that will send them a registered letter on the cheap. A lot of people tend to react more strongly to a letter from a lawyer.



I would not resort to self-destructing code without talking to an intellectual property attorney first. Ownership of code written to fulfill a contract resides with the client, not the programmer, but I don't know whether that ownership is predicated on the client's paying up for the programming service.

If ownership resides with the client even if they do not pay, then I could see a client suing you for having sabotaged software they own.

I suppose that writing the self-destruct stipulation into the contract could smooth over some of this. Just keep in mind some of your potential clients may balk at this.


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[Stevehewitt]

IP - regarding ownership.

If you have on the invoice that the program is the property of the programmer until invoice is paid in full then its your until the invoice is paid - no question about that.

Otherwise.... [ insert grey object here! ]

You say that you have spoken with them. What do they say?

Steve.

 

[jimoo]

All good comments thanks.

Rougy - I was actually warned from my referral that this client always tried to low-ball everything. Oddly enough, I ate a lot free time learning their system. Yes, I thought about a "stop-work" mechanism, but ethically could not do it.

sleipnir214 - I like the lawyer advice. Taking them to court virtually destroys the relationship.

Stevehewitt - I finally met with them after following-up my 2nd invoice with a phone call. They made an offer of 45 cents to the dollar. As I mentioned (Rougy), I did a lot of work for free so reducing the hours was not an option. Also, the rate I gave them was an introductory rate well below my normal rate. So in the meeting I ask the client, "Who's code is it?" He said an argument can be made both ways. I said it was mine and the next time it is recompiled its back to where it was when I started.

The best part of this is that I had to track down the original developer in another state to get the original code. The client does not even have that. Therefore, I suspect I will get my money, but it is just a matter of time.





Jim Osieczonek
Delta Business Group, LLC

http://www.deltabg.com

 

[chiph]

I would go with the letter from the lawyer.

Of course, a big concern is if this will poison your relationship with them (maybe you don't care!) Do you depend on this client to act as a reference?

Chip H.


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[dgillz]

I had a very effective collection letter (I still do somewhere) that says in effect if you do not pay me, I am going to write this debt off. It further cites the IRS code where forgiveness of debt is taxable income, and explained that I will be sending them a 1099 for this forgiven debt. Finally, it mentioned that this type of 1099 is the single most audited IRS document (which is a bold lie).

I only used this about 3 times, but I am batting 1000%



Software Sales, Training, Implementation and Support for Exact Macola, eSynergy, and Crystal Reports

http://www.trianglepartners.com

 

[cian]

I'd go with another face-to-face meeting first, followed by the solicitors letter.
If that doesn't do it then you have no choice but to bring them to court.

Don't worry about losing them as clients, if this is how they treat you then you'd really don't want them ,do you?
I know it's money, but it's stress too!




- É -

http://www.ssi-developer.net/

 

[Zelandakh]

Send a final invoice requesting payment by return. Ensure that the invoice says that property of all goods remains the ownership of "your company" until payment has been received. By stating this, non payment means they are acting illegally by keeping something they have not paid for - you can therefore have it removed (anti piracy bodies can be useful!).

Include a covering letter detailing the forgiven debt and you should avoid any further unpleasantness.

You could even say that they have 7 days to send payment before you refer the matter to a solicitor...

 

[jimoo]

Thanks again. Let me ponder that advice. It's all good.

As for losing them as a client, I have already decided that is in my best interest, unless they can miraculously convince me otherwise. They are my lowest billable client and I am spending most of my time collecting from them. It is kind of like having a bad employee, the one you spend all day with and he/she is the least effective, you eventually need to cut your losses and focus on productivity.

Jim Osieczonek
Delta Business Group, LLC

http://www.deltabg.com

 

[Rougy]

I can't see how they can possibly claim ownership if they have not paid you, except that the original code was done by another contractor.

Good luck.

I agree with the Lawyer angle.

One face-to-face is enough.

Better respected than liked.

-----
The death of dogma is the birth of reason.

 

[sleipnir214]

Rougy:
It may well be that under the law, the creation of the product under contract and the payment of the contract could be separate issues.

If so, then copyright goes to the client immediately and they own the software, regardless of how much they owe the programmer.


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[willir]

Having been burned in the past, my take on this issue is...

Basically, the sale of your expertize is a contractural agreement -- you agree to do the work; they agree to pay. Unless you have a proven and reliable customer, in the future protect your self...

-- Get a Purchase Order number from them. The PO is their agreement to pay you for their services. This is your proof that they have agreed to do the work.

-- Issue them a Work Order number stating exactly what you are going to do. There are those out there with less scruples that will claim they are not paying you becasue you did not do the work.

-- Get the customer to sign the work order.

-- Document that the program is an evaluation copy only, valid for 30 days lets say, subject to payment. After the evaluation period, use of the program is null and void type of thing. This is a mechanism that may allow you to disable the program in a more ethical manner.

-- When the work is complete, get the customer to sign off on the work order indicating that services have been delivered as requested.

Now you have...
- An agreement to pay you
- An agreement to do the work
- Proof that the work was done

The aforementioned process and supporting documentation should be reviewed under go a legal review. Laws and bylaws will differ depending on the country and state or provence.

And for your existing deilema, yes, go the lawyer route first for trying to receive payment before going through small claims. Cheaper, and will help your cause if and when you go to court. "I did this, this and this". Whereas, the customer, if they decide to show for the court appearance, may look a little silly if they have no supporting documentation.

As I understand it, one of the biggest problems with small claims court is that one of the parties does not show, and ignores subsequent action.

You may also consider releasing your claim to a creditor. They get a hefty cut, but then the vender will get black marked as a credit risk if they do not pay. This may haunt them later if they try to secure a loan, or if supplier runs a credit check.

 

[jimoo]

willir

Ironically, I now create a "statement of work" that both parties sign prior to beginning the project. It lists what is going to be done, estimated time, allows me to adjust the estimate early if I get into code and realize it is going to take longer - sometimes it's hard to estimate. It also allows the company to void the work if the estimate is higher than originally stated. The client is responsible for a few hours of time to determine the estimate was actually hire.

I did not have that statement in place for this company, but what helps me is that I did a prior small job for them and they paid it. That clearly documents the hourly rate.

You're 100 percent correct on small claims. The hardest part is getting them to pay once you won the verdict. There are only 2 types of debts you can go to jail for 1) child support and 2) income taxes.

Also, I am not going to small claims (may not be able to anyway because of the amount) because I want the option to appeal if the judgment is against me. If I win, and I suspect I will, and they fail to pay - I will look at IRS collection procedures or a 3rd party company.




Jim Osieczonek
Delta Business Group, LLC

http://www.deltabg.com