I’ve heard the “cash flow” excuse many a time. It’s the same old run around used by many not so nice bosses. I was in your situation a few years ago and had to simply stop working until payment due was made. The larger it snowballs, the less likely you’ll see the money. Sometimes it is a technique to drag it out so large that you’ll be hurting so much you’d accept taking a discount just to get paid something for all that work. It’s the “starving the contractor” trick so that he’ll accept eating crumbs and take the Oliver Twist porridge instead of the full meal he actually earned and deserved.
Now I have instituted a new policy where I only hand over the work upon receipt of payment. If you are working on site then I would simply bill bi-weekly and not continue further work until previous debts are paid. Doing a bi-weekly billing does a couple things. First, it keeps the amount digestable and smaller than waiting a full NET 30 days. Second it minimizes your risk of taking a huge catastrophic loss if they go south and stiff you. At most you’d lose a couple weeks of pay if they turn out to be total jerks. That’s still within small claims court range in terms of amount so you still have that option should you have the time to go that route.
One time I went to their client directly to ask for the money when the consulting firm stiffed me. I figure if it really was a cash flow issue then it would mean the client was not paying the firm. Ofcourse that wasn’t the case. Making the direct end-client aware the firm isn’t paying their consultants is an effective last resort move if all diplomacy fails. It embarrasses the firm and notifies the client what a jerky firm they hired and also gets your name known to the client. Now they know who’s doing the actual work ha-ha. If jerks try to steal hard earned pay from you, steal their clients. Touche tit for tat! I have no sympathy for firms that don’t pay on time or follow agreements. This was my way of salvaging something out of a total loss situation otherwise.
It’s slippery and too risky to kick the can down the road any longer. I don’t really buy the “cash flow” comeback as that is really THEIR problem, not yours. If you went to a restaurant would they let you eat for free if you said you had “cash flow” issues? The more you allow it the more people will abuse your patience and generosity. You have to eat and pay bills too! I’d find a polite way to tell them that. Stopping work is one of the best ways cause that puts a cog in the wheel of their machine and puts pressure on them to capitulate. Why do you think airline workers threaten strike during heavy travel seasons? It’s all about leverage and the value of your work.
I used to also attach an interst % penalty for each month that payment was late.
As a consultant, my best strategy was to withold the critical deliverables until payment was made and cleared. That beats all other methods of getting paid I’ve tried in my career cause it forces their hand. Another instance I asked for an advance PO amount which I billed against in hours like a retainer. When it ran out, I stopped until a new PO was issued. It’s like a haircut. I cut the hair until money runs out. Chances are they will continue to have you finish cutting the hair than walk out of the salon with a half done hairdo.
Good luck and don’t get bullied! There is likely no “cash flow” issue. My guess is they have the money if the lights are still on and people are busy.
Oh yes, in your contracts there should be a clause that they don’t own the work until payment is made in full. This one actually worked for me in one instance where they mulled over 6 months to pay and then finally did cause their lawyers probably said I could potentially sue if work was used and product was sold in the market. That’s huge with punitive damages. Remember, any patents need to list the actual “inventors” so there will be no notary of any assignment until payment is made in full. If they run off, they’re committing fraud on the IP recording if they leave you out cold. You can swallow them whole if they are so wreckless and arrogant as to try getting over this way!
Another one was for a corporate client who’s manager tried to stiff me. They often think we’re freelancing cause we can’t get a job and they throw us a bone thinking we’d be easy push overs. They fail to understand we may be freelancing by choice and we are immune to getting fired. I once spammed the entire client team and kept emailing up the chain of command until my bill was paid. This made for entertaining daily email soap operas in their office where this guy worked. I said we can go to arbitration, which is in my contracts as a way to settle disputes. In arbitration, you are usually awarded “the reasonable value of services” with any legal costs. That means mediators and legal folks go out to some firms and get quotes and use that to determine how much you should be paid. Well if they went and got quotes, it would be way more than my then paltry hourly rate so it scared them enough and the spamming embarrassed the guy enough amognst his peers where he coughed up the dough. He kept saying cash flow and didn’t have enough budget, blah blah to try to get a discount. I said I am talking to his boss and if they don’t pay, take the boss to small claims court. The guy was eventually fired. Serves him right. I think it was his job and he procrastinated so long that he needed an outside guy to put out the fire. I use legal jargon like arbitration to sound like I know what I am doing. Helps to learn some legalease. Even without a contract you can use threatening arbitration as a way to try to get paid. Sure you might be bluffing but at that stage you have nothing to lose.
Be very wary of people who call you on a Friday, expect delivery on a Monday. Usually they try to get you to skip due diligence and necessary precautions with contracts on pseudo hot rush jobs. I’ve learned NOTHING is that rush and I don’t do those kinds of hot rush freelance gigs anymore. Anyone wanting to change your terms, calling you “friend,” or not going by the protective policies you have in place are 99.999% of the time trying to con or cheat y0u out of your pay. When someone asks you to “trust” them, they’re almost always trying to con you. I always reply with the Reagan Gorbachev saying “Trust but Verify.”
Best advice is to not get into the weaker situation in the first place. If you have the work, you have the upper hand. It’s like the antidote to the poison. When they need it you have the upper hand. Once you give it to them they can stiff you after they’re cured. So best is to get a deposit or advance to start work and deliver only after payment of balance in full. That way you will never be wasting time chasing the money and begging to be paid. Add that the rights to the work remain with the designer and is only transferred upon payment of all outstanding fees as a second layer of protection but it won’t be needed if you have the COD terms.
By all means, no matter how much they beg and plead or say they need the work handed over immediately for some kind of presentation or if they say the check is in the mail so you can release teh work, don’t buy it! It doesn’t count until the fat lady sings which means even a check can be stopped payment on. It has to actually clear and get into your account before you are really paid. I once had a guy purposely mess up the date on the check so that by the time the bank returns the check as invalid he’s run off with my work. So make sure payment CLEARS first. Otherwise you can wipe you booty with that piece of paper.
I’m glad there is a forum for us to discuss things like this now cause I learned from getting burned alot in my trusting, naive, younger years and constantly discovering new client tricks. Once I started seeing repeat tricks from different clients, I know I am closer to having “seen it all.” I think I have put just as much time into chasing after my money and thwarting con-artists as I have designing so hopefully you can avoid some of these pitfalls going forward. For some reaon our field attracts a lot of dirt bags cause the value of the work and amounts involved are more than just a cup of coffee. There’s nothing more repulsive than dishonesty, especially when our work is worth so much to them yet they don’t want to even give you basic pay for your talent and ideas. Best of luck to you!