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My client doesn't want to pay for going over budget stating that I was unclear... was I?

Prior to beginning a specific design project I submitted a proposal to my client for her review and approval. It clearly specified the projected budget and terms. "Three concepts of the logo will be supplied to the client with-in 7-14 business days upon agreement of the design brief and receipt of 50% deposit. The intent is to narrow the concepts down to one with minor changes. If the client does not see what they like, and additional concept will be supplied based on their feedback. Client may request additional concepts beyond this. Please note that additional concepts and changes will incur an hourly fee of ..." When they used up their concepts and prior to beginning additional work, I let them know that they have gone outside the scope of the design brief. They said ok. I went through one more round of changes and they again requested more. At that point I mentioned that they already have gone 3 hours past their budget and asked how many hours did they feel comfortable going outside their budget. I didn't want any surprises. My client said that they didn't think that they went over their budget and that I wasn't clear about that and should have been. They asked me to give them a break since I wasn't clear. How should I handle this since I thought I was very clear? And how could I have been clearer so that I could avoid something like this in the future?

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12

AS a small business owner, I have dealt with this situation many times in the past - unfortunately, this will lead to only one of two conclusions: 1) the client will agree that you were clear and pay for the overage or 2) you will end up having to take them to small claims court.

The first thing to do in this situation is to document all of your communications with your client. Send them a letter clearly outlining all of your communications and if you have any of it in email, include copies of the emails with the relevant texts highlighted. Then, include a copy of your original contract/proposal to the client. BTW, did you have the client sign anything agreeing to your terms? If you end up in small claims court, having their signature on a document really helps your case.

Once you have presented the chronology to your client, stop doing any work until they either agree to pay the overage fees, or the situation is otherwise resolved. Also, DO NOT provide them with any of your additional work. If you do, they have no incentive to pay you for the work you have already done.

If the client does not agree to the overages, then you really won't have any choice but to take them to small claims court if you wish to be paid. Fortunately, if you've documented all of your communications with your client, then you'll already have all the documents you need to present to the judge at court.

Good luck!

10

I agree with Mark, Ed and Mark. For the most part you were clear, but I believe you could have been clearer.

A. By using Mark Fackrell's advice of providing a follow up email or client report document.

B. By using a client approval form which requires a signature and date stating they accept as is or request modifications.

C. Don't make any changes or modifications without a signed "Change Order Request Form." It documents all the changes they are requesting to be made with a signature and date. Furthermore, don't do any new work until you estimate the number of hours it will take to perform (and make the changes). The estimate needs to be signed and dated along with a deposit.

Additionally, I believe your contract needs to read that the balance of the contract has to be paid in full upon presenting the 1st round of concepts to the client.

Handling this current situation, since they are playing hard ball, is to not supply them with any files whatsoever and immediately file for copyright. You have 3 months to file for copyright. If you don't do it in that time frame you are left unprotected with respect of the client using your work as their own and having no recourse.

Agreed. When a change occurs with an agreement and they confirm by email or phone, always send an email to clarify they are agreeing. When there is any question later, you can simply forward the email as a reminder of their understanding and confirmation.

Hi i agree with Mark Macy Mark Fackrell that the quite attentive to this matter from the start but his suggestions add considerable impact to the steps you have already employed.when you have the kind of conversations you indicated that you should follow up with a short email to the client detailing what you told them.

9

From what I have read your contract was quite clear. The client either 1) does not agree, 2) did not read the contract well or 3) does not wish to pay the fee. It's up to you to decide if you want to "give them a break" based upon the criteria that you feel are important. As far as what to do in the future I would go with Mark's advice. It seems you were quite attentive to this matter from the start but his suggestions add considerable impact to the steps you have already employed. The key is 'discussion' versus the terms that are provided in your agreement.

6

I would encourage you to always have the a casual discussion about the "Triple Constraint" prior to entering any formal agreement. Refer to http://project-management-knowledge.com/definitions/t/triple-constraint/ for details if not acquainted. Also, discuss frequency of project status. Discussing these up front with nothing on the table allows you all to work thru potential pitfalls. Importantly, it allows you to get to know your client. And always document this discussion as a future reference for all parties. Getting started on the right foot is key to any success. Else, the client always plays "they didn't know role" until you close the loop. Hope that helps.

6

It also seems clear to me that they rightfully owe you the money. How hard you want to pursue that is up to you.

I would suggest in the future, when you have the kind of conversations you indicated that you should follow up with a short email to the client detailing what you told them. This serves 2 purposes 1) it documents what you told them so that you if this comes up again you can just show them a copy of the email and 2) it truly does clarify the conversation, so if they heard something different than you did there is an opportunity to correct it at that time.

5

Victtria, I agree with what Ed, Jeff, Fred, Corey and both Marks said, although I don’t insist on having a written outline of the initial discussion signed by the client. The client should see the outline, however, and be invited to comment on it or suggest changes. I wish to add that whether you sever the relationship with your client and take steps to protect your intellectual property rights or write off the three hours’ worth of fees will depend on how valuable their business can ultimately be to you as opposed to the value of your logo design and copyright. If you explain that you're willing to forego billing for three hours but that future understandings involving billing will need to be documented (and perhaps signed by both parties), your client may willingly agree. That will establish a better relationship and for you to be paid for all the time you spend on providing service to the client from now on.

I didn't used to make it a practice to document discussions with clients, but I started doing it with a new client recently. I sent her a signed letter, similar to a proposal but without stating specific charges for services I’d provide, that summarized what we initially discussed, point by point, and clearly described what most of my services are and how much I'd bill for each service. I was concerned that this would turn her off, but during our conversation she had stated her desire to switch to using me as her accountant rather than continuing to engage her present accountant. Thus I saw this approach as serving only to improve my posture with the client rather than detracting from it.

The client must approve our agreement as to the terms of our engagement, which will be in the form of an engagement letter, to be signed by her and me. This is a recommended practice for accountants. The client hasn't responded to the proposal letter but she had told me she'd be very busy this month. I'll follow up with her again early next month.

Incidentally, when I visited a dental school yesterday to discuss possible dental treatment with a student dentist, he gave me an electronic signature pad to sign my name on after explaining to me some of the school's policies like a 48-hour cancellation requirement. I didn’t mind signing my name as there was no financial commitment. That’s why I don’t require that a new client sign an outline prior to an agreement: it can be intimidating and may scare away the client.

Gary, my only comment to your first comments is - this has to be used as a huge red flag that this customer will be challenging to work with, though she could introduce new processes and procedures for sign off, etc... the customer feels like someone that will find holes and games in anything she does. Use it as a big RED FLAG regardless of future work opportunity.

4

Make sure to outline everything in a document and have them sign it before moving forward. This way, when there are issues, you can reference the information. Always leave a paper trail to reference when there are issues. You will always have clients that want to save money by acting like you did something wrong. That is normal. My advice would be to ask yourself how important this relationship is with this specific customer. Can they leave bad reviews about you or your company if you make them pay more. It seems you have made it clear to them but if they are adamant about not paying more, then you will have to compromise or not give them their product until they pay more. If you feel like your reputation depends on keeping this person happy, even a little, then I would suck it up, take the loss and make sure to document everything up front prior to performing any services in the future.

Anonymous User
4

Victtria, in this case, you can deal with your client a set of hours to additional features. Furthermore in the future, this set of hours for additional features can be included in the proposal and/or when the client ask for additional feature you can say ok, we will spend X hours, so please pay now because this is not in the scope of the project.

4

Have everything documented as you go along. Get their signature on the items that state changes will incur additional hourly fee. Getting signatures on important milestones and notices is a great way to "make it clear to them" such that they can not say that you didn't tell them.
Another recommendation is to ask them to paraphrase exactly what you just told them. Having them state the information in their own words shows you what they think they heard. This gives you an opportunity to correct their understanding. Having the listener restate what you just said is the only way to verify that what you said is what they heard.

3

Above and beyond the initial scope of work and projections, we recommend that each step of a project be tracked. This includes actual costs against projections, etc. When a client makes changes, outside of the scope of work, we issue a "change order," in writing in which we detail the directed changes as well as any new costs. They must initial/sign the authorization to proceed before new work and resources are committed. We also log all communications, dates, times, etc. Where necessary we will issue a "memorandum to file" as a paper trail.

I recognize that this is both time and detail intensive. After the first two times of being burned and in the rare instances where we have had to go to court, the paper trail with signed change orders will be invaluable.

Thank you Fred. I like the idea of a change order. Even though it is detail oriented it is perfect for my situation. I will use something like this moving forward with all my projects.

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