View Full Version : Past Due Balances
01-02-2004, 10:05 PM
So, here's the story. I created a custom web site with graphics, shopping cart compatibility, and even customized a Forum for someone. I was paid for most of my work, but there is a balance that is now 90 days past due - not much, but the idea of being "had" is starting to bother me. I found out that the customer has cancelled their hosting service in late December. They have refused to answer my friendly emails (I swear I have been nothing but nice to this person) and have never contacted me about any problems, etc. I know you're saying "Don't give up the finished product until full payment is received" but I felt different about this one because of this person's family matters. SO....
Since I've never had a client not pay me in full, I don't know how to handle this one. Should I just let it go since their site is no longer up and running? Or, should I try to get the balance due (plus the interest that's accumulated, as mentioned in our agreement) and hold up my company name? I feel that if I don't, my business will not appear to be professional, but again, this is a new venture for me - I've only been in business since March of 2003...
Anyone with more experience in this matter? I need some expert advice. I've been creating my own proposals and invoices, but really don't have much of a clue!
...dumb but creative...
01-03-2004, 02:27 AM
This is something anyone who is self-employed has to face sooner or later, and it's usually something you'd rather not get good at.
What I do is start out with some pleasant reminders about the unpaid debt, as you seem to have done. You're contacting them by email so far - again that's a courteous, nice, pleasant way to remind them. But since they're not answering, you need to escalate a bit.
1. send another email, reminding them that you've sent several reminders of the outstanding balance and had no response - ask them to contact you if there is a problem and to make some arrangements to repay the debt.
2. if there is no response to that within a reasonable time frame, send a letter by regular mail with a request for a rapid response - you can either make this a registered letter ot wait for no response and follow it up with a registered letter.
3. if you still get no response, send a (second) registered letter indicating that if you don't hear from them by such and such a date the account will be sent to a collection agency - remind them that this will have negative implications for their credit rating.
Most people will at least contact you by this point. If not...
4. now you have to make a choice - is it worth chasing them down? you're going to have to give up probably half of what you might collect - maybe the amount of money justifies that or maybe the principle justifies that - if you decide "no", then chalk it up to experience and get the money in advance next time.
Based on my experience only - whatever you do, this part of business is not the fun part.
01-03-2004, 03:20 AM
Cyberious, I cant really advise you on methods to take to recover your money, because your laws are so very different to ours.
However, as you are pretty new to this, I'll give you advice for the next project, so this doesnt happen again.
Most importantly, make sure you are building on your local host, and not on theirs.
1. When you are first contracted for the project, you ask for 25% before you even submit your first draft.
2.. Once you have submitted the draft, you ask for 50% before you go any further.
3. Once you show your final draft, you ask for the remainder before it is uploaded to their host.
This is pretty common practice among freelancers.
On your intitial quote, have these terms set out on the bottom. Provide a section for them to sign, so if it is an offline client, you ask them to sign to accept those conditions. If it is for an online client, have a link included that will register acceptance of terms. This way makes it a lot easier for you and the client, becauese you both know what you are agreeing upon. Also, if it goes to court, you have something in your favour.
I find the 3 step method works best for me.
1. Always give a written quote even if they dont require one.
2. Always have a Work Order for each client to track your progress.
3. Always issue an invoice when the quote is agreed upon, then send statement after each payment transaction.
If the project is pretty complex, and could require more research, always make sure you are covered by including in your quote that it is an estimate only, and there could be unforeseen costs. Usually you will find if you discuss this with your client, they will understand when a task could take more work depending on the situation.
But your best best is to try and cover yourself as best you can to begin with. I know thats no help now, but maybe we can stop it happening again.
Good luck in your endeavour :-)
01-03-2004, 10:59 AM
Thank you both Matauri and Minstrel for your excellent advice on the subject. I do send a written agreement that the customer signs prior to beginning the project, and does mention an interest rate accumulates on balances each month after it is overdue. I normally don't upload to their server until after they are paid in full, but have taken a few chances based on instinct and inexperience. I will be sure to make it a point to get paid in full before submitting completed work from now on.
Thanks again and enjoy the New Year!