How do I collect from a non-paying client?
I recently completed a project for a client, at a reduced rate ($5000 vs $10000) based on a carrot being dangled in front of me. Bad idea to begin with I'm sure. However, despite the fantastic deal they received, and all the items listed in the project scope being completed satisfactorily, they have not paid their bill which is now over a year old. I suspect that they never intended to pay the bill as they have not even looked at it according to my invoicing software! I have even offered to compromise on the price just to get something out of them but they don't even respond to emails or phone calls. I have been told that my only option is small claims court, however there was no contract or PO issued (yep, learned that lesson) and the one person that can substantiate my claims that the project scope was completed and that the client was happy with the end product is no longer willing to put that down in writing (for a good reason).
What can I do? Can I still take them to small claims court? What are my chances when there is no contract, PO, or a witness to support my case?
What a frustrating situation. I can see others have already advised on what precautions to take in the future when working with a new client, so you don't end up in a situation like this again.
Small claims court can be time-consuming and costly, even for a $5,000-$10,000 project fee. However, talking to a lawyer is still a good idea. The lawyer can contact the client on your behalf which may get the attention of the client better than your personal follow up emails and phone calls.
As others suggested, a collection agency could be a good option for you. Business.com published a guide on How to Handle Non-Paying Clients. In the guide, they recommend reputable collection agencies reviewed by their team. You can also ask your network for recommendations. Make sure you find out the agency's track record before making any hiring decisions. Hope this helps!
If you are stuck with the wrong business deal and your want to come out of the situation, then try a batter deal.
If you fail in doing so, the small courts are the best option of arbitration. Does not matter if there is no written contract, at least you can take the chance.
Mr Glen, just think it is a 'bad dream' and forget it. You rather focus on new assignments But, the lessons you have learnt should be your new way of doing business. Florence MacDonald
I understand your pain & fraustration because I also had to deal with same issue. About 4 years ago we were hired to produce high quality video for $7000; we only received $1000 but couldn't collect the rest of it. We sued them in small claims court and judge ruled in our favour but still couldn't collect the money. It has been 4 years and with interest it is at $11.000 and even though I have a judge decision in our favor and we went to the collection agency but still not a single dollar we received. I really hope you can collect your money.
If you have emails to substantiate your claim that you did indeed do the work you might be able to use those in small claims court. I would try contacting them through social media outlets and requesting that they contact you. Nicely at first, then bring up the "please contact me about your bill" in their social channels. Often this will get people motivated to contact you.
Going forward NEVER DO ANYTHING WITHOUT A CONTRACT! Even if it's for a family member, or best friend. You need something to show that you have been hired to do a certain thing.
I had the same thing happen to me with some writing. It was one of my very first jobs, and one of my greatest disappointments. Some people will try to get everything they can without paying for it.
You really have a couple of options here: 1. Bite the bullet and move on.
2. Spend your valuable time and resources to try to make your case and take it to court. (it sounds like you don't have much of a case, so I'd go with #1.) 3. If you did website work for them. TAKE IT ALL DOWN, login, delete your files, and move on.
It stinks, but take this all as a lesson learned. Owning your own business can be hard.
Yes, you can still take action in civil court.
The ( their) acceptance of the project in itself can support a contract to perform the services that are not yet paid for. Collect all emails and texts, records of calls, etc..put together a timeline to show a lawyer.
I would need more information on what you can do to "push" a payment- yet I really would like to remind everyone that when we run into this situation, everyone has dealt with non payment for various reasons, that at the END of it- you can still use it on your taxes! This is key positive in this type of financial situation! You can write off the non payment which will assist your over all tax load and then THEY, non paying client, will have to deal with that/this on their taxes! Speak to your financial person on the best way to claim this on YOUR taxes. This unpaid amount will act as if you DID get paid - in a deduction. I deal with this because I donate hours- and I can use my donated services on my taxes in a write off too. It offsets enough to be of service. Yet I do "donate" a substantial amount of services to my state clients. AS far as a year old non paid bill... you can sell the debt, you can write it off as I suggested earlier, you can turn off an aspect of what you supply- it is an option and yes; you can sue. Speak to an attorney. What ever action(s) you choose please do so with integrity, class and professionalism. Every difficult business situation is an opportunity to shine through the muck and separate yourself from the masses.
Unfortunately, so much time has gone by. You learned a valuable lesson. GET A SIGNED DOCUMENT. You can still take them to small claims court. Do you have any proof of the project being done, e.g., phone records, emails, anything?
I'd call a collection agency. Even if you do win in small claims court I don't believe there is anyway to enforce the judgment.
Small claims court is an excellent alternative. Depending on where you live, the amount you can bring to court differs. Usually the person bringing the claim is looked on more favorably, unless, of course the other party has an attorney. Bring ALL the detail paperwork that you have - contract, invoice, printed copies of ALL emails, and anything else in writing.
In NJ the courts first assign you to an arbitrator who will try to settle the case without going before a judge. It is critical that everything is correct and in your favor.
I was on the receiving end of a small claims action where the programmer did a LOUSY job and then tried to collect. We went to court with all the details I described above and presented it to the arbitrator and said we were going to let this slide because he was a small business. But since he brought the action, we will file a full law suit. The case was dropped.