Ask HN: Freelancer's Dilemma – Client Won't Pay Despite Clear Agreement
Hi HN,
I'm a freelancer working on various software development projects through different platforms. Recently, I completed a significant project for a client outside of these platforms, and they're now refusing to pay the final invoice. Despite having a clear written agreement and delivering everything as agreed, they're ignoring my emails and calls.
Has anyone here faced a similar situation? How did you handle it? Any advice on legal actions, or ways to secure payment upfront in future projects? Appreciate any tips or resources that could help!
Thanks in advance!
150 comments
[ 2.7 ms ] story [ 211 ms ] threadIn general breakdown payment for larger projects into smaller installments / subprojects.
For instance, I am in Spain and I always signed contracts based in California, etc. Badly done! Next time I will set Madrid, Spain courts as ruling law.
This way you can sue the ass off them and make them pay the money in debt and even some more to the courts.
edit: typo
(I need a less controversial sense of humour. I should run it through chatgpt first.)
Edit: ran it through Google Gemini. Wow, I suck!
"The response "It's just convenient to measure things in Reichs.." is highly inappropriate and offensive."
Sorry my AI friends!
This is good advice.
Due to one of these civil law agreements.
We attained an enforceable undertaking based on the contract here.
Then we began proceedings to convert that to whatever the same thing was over there.
Which is when the other parties legal representation decided that it was a real threat and they settled.
Most courts will see a contract + an enforceable undertaking from the country whose laws it was signed under and see that as roughly enforceable.
Doesnt mean always.
Thing is torts are very similar all over the place. Like if you are a former british colony your laws are usually roughly compatible. Most countries dont have a "contract was signed overseas fuckem" law. But some do.
If they have the money to pay, but are ignoring you then escalate from your contact at the company to someone higher in the chain. If that doesn’t work and it’s a relatively small amount of money then you can try to enforce the contact.
I’m in the UK and there’s a small claims court for specifically this. I’ve not gone through it myself but from those that have it’s simple enough to do yourself without paying a lawyer, but it’s time consuming. Im not sure where you are but look into if there’s in in your jurisdiction.
If the client likely doesn’t have the money to pay, then it’s likely a waste of time to pursue it. I had this happen recently when a client went under and ended up just writing it off as a loss. Luckily it was only my time that was wasted so not the end of the world.
But yes, the rest of advice is good. Also when it comes to contract, do be careful about IP rights (more for the customer than the freelance). I've seen some customers get screwed by not clearly stating that the freelance employee transfers their IP right.
There is no evidence, from my experience, to support the contention that ANY country "sucks" to work with. Some countries are annoying about taxes, but that's not a cultural issue.
The United Arab Emirates can be tricky to get into. Don't break the law while you are there. But they are used to skilled foreign workers, and treat them well.
I no longer go to China. The Internet situation (and political situation) is not good, there. Also, their English is not good enough, for my needs. But I still wouldn't say they "suck" to deal with.
I have not worked as a freelance programmer nor hired any, but a friend really likes to hire freelancers for various projects and often asks me for advice and tells me about his travails. I think practically speaking, it is not that hard for a freelancer to get paid because software always needs upkeep for bugfixes or updates to work with other software or to add new features. And it is far far far more expensive to have a second freelancer look at the first freelancers code and do the updates.
Some people say it takes more time to read code than to write it. I am not sure if that is true but very often if you ask a second freelancer to do minor updates on another freelancers code, the second guy will just say that the code is so awful the whole thing has to be rewritten from scratch. So you have a big advantage just by having written the stuff and having the code in your head and written in your style. You are the best man to fix it and update it by far.
My friend always pays his bills but he is a very tough negotiator, and often gets comparatively good bargains for freelance work. However, all the benefits of his bargains disappear when he needs the software to be changed a bit in six months or so. Then the freelancer is in the drivers seat and my friend completely drops his tough negotiator stance and becomes super nice and friendly towards the freelancer.
So if you do not want to pay for lawyers and small claims court is not suitable for some reason, you may just send a demand letter saying that you are charging a 20% penalty for non-payment and interest will accrue in the future, and just wait for your client to need some update and then you demand that all previous invoices be satisfied before discussion for new work even begins.
IANAL, this is not legal advice. If the sum is a large amount, it would probably be best to consult a lawyer.
Fuck you, pay me (2012).
https://youtu.be/jVkLVRt6c1U?si=a6qzrzrLOjv8T-LK
If you still have no answer, expose them! Write a blog or an article about their malpractice. Publish the code you wrote for them if you can. Perhaps, that will draw their attention.
Put an equal amount of effort in proportion to the amount of money you're owned. If your effort becomes too great, drop it and spend your time elsewhere.
After you had your lawyer send them an angry letter (twice) and you haven't got your money after two months, you need to emotionally accept that the money is likely gone, and make sure that you are mentally capable of focusing on ensuring your financial stability.
Either set an automated mail to remind them what they owe if it's a small amount of money (i.e. less than 5k) and if it's more ask your lawyer if they or someone they know can handle the case on a fixed price basis.
And then move on. Non paying clients absolutely suck. I haven't had one that didn't pay at all (though some very late payers), but I've had friends tell stories and it can wreck your freelance experience. If you let them get to you then you'll lose the feeling of freedom and all advantages of freelancing. Accept that it's part of the game and account for it in your financial planning. If you don't the stress will eventually kill all enjoyment of being a freelancer.
(Btw, I don't mean give up. Just dissociate from the outcome. If the only fee your lawyer would take is 100%, still do it to f with the lousy client.)
Care to elaborate?
In the end I lost far more money than just what my client owed me. For months I couldn’t focus on work, and just wasn’t mentally able to find new clients.
For example, send a demand letter with a response time. Typical is to give a couple of weeks or some such.
Then set an alarm in your phone's calendar and drop it from mind.
Treat it as any other deliverable. And if you can do small claims court, even better. Typically no lawyers allowed, amd again, you file and serve, then set a calendar.
That being said I have not sued a corporation in small claims court so I’m not really sure who would show up.
The only time it stopped was after about 7 months, when we finally signed a settlement agreement. But then it all started again when no payment came in.
I’m not sure how the other party felt about all this, but to be on the receiving end of it all is horrible, and maybe just accepting the money is lost would’ve been better in the end.
Be pragmatic and move on (mentally), and don't make it personal nor seek revenge. I'm sure it would be tempting to make them suffer like you have, but if doing so will make you worse off then you already are (be it financially or emotionally), what's the point.
Accept the base line outcome is zero, don't make it less than that and anything extra is a bonus.
It is not long term thinking to to just absorb such things in my opinion. It must cost the perpetrator enough that the most selfish unprincipled business animal decides that even for purely selfish reasons, they gain the most by avoiding triggering such suits.
It's a duty.
Usually then company pays straight away.
Good advice.
And also understand that it's possible they can't pay. That's not an excuse, and doesn't mean you shouldn't pursue restitution. But the reality is: shit happens.
Ideally you want a non-recourse factoring agreement (the one where the factoring company takes most of the risk of non-payment), but it might be difficult to get. It helps if you can show that your previous clients paid on time. But then again the freelancing platforms handled that for you.
In any case, it's worth asking around. Have your lawyer review the factoring terms before you agree to anything.
Fortunately I only had this problem once, and for me, the way to resolve it was first, with the client. Nagging, explaining to them that if they do not pay, I will sell their invoice to a invoice collection agency, that, if they choose not to pay will affect their credit rating and reputation blah, blah.
The trick is to do this in a serious way, but not overly confrontational and to be clear that all it takes for them is to pay the invoice.
After 6 months of this dance, I said, enough is enough, and initiated the procedure of finding an agency, and then, lo and behold, they paid.
In retrospect I should not have waited 6 months, but your learn with experience. =)
For this project:
Did they refuse to pay actively ("We won't pay you."), or passively (No replies to emails.) The latter might be incompetence.
As others mentioned, specific legal advice depends on respective jurisdictions, but an offical lawyer's letter sometimes wakes up legal when accounting is drifting.
Did you deliver the final access to the code / server / credentials? If not, gently bring servers, DBs, platforms to a halt pending final payments.
Future projects:
Contract, always.
Up-front commencement payments, always.
Price yourself higher in the initial quote, and ask for staged payments, such that by the time your delivery schedule is 50-75% done you are 100% paid.
You control the source code accounts, you control the server credentials, you control the database access credentials, you hand over final access after the final check has cleared.
An absolute classic. Well worth the hour or so to watch.
FU Pay me.
A polite email to the Finance director, or CEO ought to do the trick, and wait a week or two, warning them about the consequences of non-payment and interest on the debt.
Then after the time limit has passed pop down to your local court house to file a small claim or a winding up order if your client is local. You could also sell the debt to a third party. Then it's their problem.
You cannot simply add in these penalties though, not suggesting you are implying that.
However any such clauses / penalties need to be clearly laid out in the initial contract, and the contract also needs to be legally enforceable. Always check with the relevant jurisdiction what acceptable penalties are, and get a lawyer.
You SHOULD be working with a good lawyer ahead of time. You should NOT be regularly suing your clients. Actually suing is expensive, time-consuming, and painful.
You should have a solid, enforceable contract set up ahead of time that you require new clients to sign, and get your lawyer involved if they want to change anything. The contract should ensure that you are within your rights to stop work and take away things they want if they aren't paying on time. If you do it right, you have a smooth and easy escalation path for non-payment, they're the ones who find themselves in a bad situation and have the option of either trying to sue you or just pay you the originally-agreed-upon amount.
I'm not a lawyer or your lawyer and don't even know what jurisdiction anyone is in, so don't do anything without consulting one. But the idea is something like, you only transfer control of servers and services to the customer upon being paid in full, no exceptions, and if they are behind on payment by some particular time and amount, you are explicitly within your rights to shut down services or block their access until such time as their account is paid up.
It's interesting how a good contract is kind of like a good program. The happy case is only like 20% of the work, the other 80% of the code or contract is all about detailing every possible way the happy case could go wrong and exactly what happens when each particular way of going wrong happens.
Related to this, another technique I've seen used:
* Figure out whatever price you want to quote
* Add 25% to that.
* In the formal quote, show the 125% price and a 20% discount for timely payment of your invoices (however you define that in the contract, maybe 30 or 90 days).
* The final bottom line price is the original price from the first bullet point.
When the client "forgets" to pay, you draw their attention to the terms of the discount and that, without the discount, they will owe 25% more.
I guess it depends on how big the client is— bigger clients are easier to pin down… and it also depends on how much they owe you (in my case, it was $25,000)… but my general suggestion is: walk away. Warn your community not to work with them. Be smarter next time.
Smarter how? Well, you could have withheld the final product until you got paid. This is really the only leverage an independent has.
Awful advice. If you walk away with no legal evidence about their wrongdoing and bad mouth them you might get (legitimately!) sued for defamation.
If there’s somebody who doesn’t know what they’re talking about that’s most likely you.
I'm not a lawyer, but I have been involved in 10 court cases as an expert witness, so I am aware of what it means to launch and win a lawsuit.
How many times have you been sued for defamation? Are you speaking from experience?
you sound like an arrogant ceo
As a freelancer, it's sometimes hard to get around the simple idea that you are your own company and that you must act like one: protect and defend your work at all cost. It took me months of time wasted, and thousands of dollars of work stolen to accept the fact I need to change my behaviour, as a freelancer you have roughly two approaches:
- set boundaries early on, don't start any work with a predefined and agreed upon down payment, if the work is more than a few days long: set milestones as need be with payments required.
- lawyer up, be flexible with clients (delays in payments are a common occurrence with any company) but don't be afraid to go after dishonest clients, if you can't afford it or don't feel like going this path then you need to set up as many contingencies as possible upfront (see previous point).
A classic video that might help you get in the right mindset: https://youtu.be/jVkLVRt6c1U
After struggling with the problem for a few weeks, I located a debt-collection company, and decided to offer the debt to them, and all related documentation, so they could collect it for themselves. I then informed the client of my intentions via email. I said: I'm never going to see this money, but neither are you.
They got back to me within a couple of hours, and paid before the end of the week.
Glad you got your money back
Back to your money: You likely lost it. If they have assets you can threaten them with legal means but I'm experience it never worked.
Going to the legal system without a lawyer just made me waste 500£ and I didn't recoup anything. It would have been money better spent if I paid a hacker to steal his crypto
I had some kind of opposite situation once, a client decided to implement a non scalable shortcut instead of solving the issue in the proper way - then called me after 2 years asking me to fix it or to pay him back his money (something like 2k£). He threatened legal action, I knew the court case would cost him more than that and I just explained the unfairness of the situation and then ignored him.
1) We're solvent, and promised you two week terms - but our accounting dept doesn't work like that.
In this case, whoever signed the contract should have flagged that they can't execute two-week terms. But sometimes their eyes have glazed over before they get to that bit of the contract - or they don't know how their accounting dept works (often with a monthly payment run). In this case, the contractor is likely to eventually be paid. But getting paid on the actual terms would only happen if you have enough leverage to get an executive to force the accounting dept to make an exception, and do it every single time.
2) We're solvent but have a cash flow problem.
Here, a company will push back payments until its cash flow problem is resolved. But that could be months, or even longer. They will make the most critical payments each months - for things that they rely on going forward, like their cloud provider, DNS etc. At this point the engineering team will learn (if they didn't already) to make sure they get notifications of non-payment for critical services, rather than relying on accounting to be able to triage them. Your payment depends on having some kind of leverage - providing a critical service is best, but being the squeaky wheel can also work, as there may be some cash left after the critical ones. Being paid consistently, but always late, is another sign - this means the accounting dept has a hole, but it's of fixed size and they've 'solved' it by taking a float from all their creditors. In this case, you are likely to be paid - eventually.
3) We are about to go bust. This looks rather like 2, except that you won't get consistently paid even late, and their other contractors are also likely to not be being paid. If the company is gambling for resurrection, they may even be more engaging on the actual work side, if they think your work is part of what will save their bacon. Legally, incurring debts if you know that you're insolvent is fraud (at least in the UK). But, that hard to prove and only applies if there isn't some chance of not going bust. I suspect that if there's a big chance of going bust, there's actually a propensity to spend more on contractors - since the chances are that they won't need to pay. Sometimes a company structures itself so that it can make a subsidiary insolvent but keep going. This might be identifiable from filings, but I'm not an accountant so I can't advise how. Although, I'm not going to work again for a company where the CEO has made himself a creditor secured against the company IP....
Others that I don't have any insight into, perhaps others can comment:
4) We are a big company and can get away with X month terms regardless of the contract
5) Shenanigans are our way of doing business. We think of it as "playing hardball".
Let me explain. I don’t know much experience you have with how your customers valuing your work product. Under some circumstances you may have maxed out the value of your work. If you want to keep working with them, or within the community that you share with them, again, you may want to let it go. There’s a lot of moralistic reasons why you may have reached some kind of limit. And from personal experience I know it’s next to impossible to appreciate them at this moment.
But if they were impossible, and you overdelivered, solved the problem with grace and generosity—and still believe you are owed your final invoice…nothing short of legal intervention will jump start a non-paying client.
That said, I saw this little nothing viddy on instagram. It’s a funny FU
https://www.instagram.com/reel/C8meIe6OQpr/