Ask HN: What Do I Do if a Client Refuses to Pay?

Lessons for next time: 1. Never cap invoices. Instead, cap your work. If there's 80 hours of work, and the company is only willing to pay for 40, guess what? You should only do 40 hours of work (and bill for it).

2. Don't worry about bleeding the company. What's the worst they can do? Not pay you? Hell, that's what they're doing right now!

3. If there's a change in the work timeline, the contract should be renegotiated. You mentioned earlier that one of the other developers quit a few days in. That, right there, would have been grounds for a renegotiation. I mean, unless the departure of this dev. was explicitly planned for, it constitutes a fairly radical change in the terms of the contract — you now have to do 50% more work than anticipated.

4. "I've met with my manager and the owner of the company on three separate occasions and I've always felt like they listened and the financial situation would be taken care of. Each time I find myself grabbing my own ankles on pay day again."

Whoa, this should have been a gigantic, enormous red flag. Words are cheap, especially if you're of the sociopathic type that heads all too many companies. What counts is action. I mean, even if the company is in financial trouble, they still have a contractual obligation to pay you. Out and out missing a payment is unacceptable. At the very least, I'd expect a clear warning in advance and a concrete set of steps detailing how and when the make-up payment will be delivered. And even then, if they consistently miss paying you, fire them.

Its titled: "fuck you, pay me"

The video isn't actionable advice but worth a look.

If I were in your shoes I'd quit immediately once a payment was missed. These situations don't get better in my experience. :(

If this company is living hand-to-mouth for payroll, are they going to be around for a while, anyway?

Honestly, capping your invoices and continuing to work without being paid only enables them to be shitheels.

You need to tell them that you will resign unless you're paid, in full, immediately.

I would also consider talking to a lawyer.

(Please don't take any of this as criticism -- I've been in your place before!)

Do not just walk away. That's unfair to you, and the company is just going to do the same thing to the next guy. You may not care about the next guy and his problems, but think about it this way: the company you now hate is going to get more free work. Don't let them.

Do not work for free. $10,000 is not a lesson, it's a crime.

At the same time, you have a debt to collect - either through negotiation or legal action.

I mean, definitely is not your (direct) problem if the client haven't pay yet and is not your fault neither that you missed the deadlines...

I would just be straight with your manager...

Seriously. Start by paying a lawyer to write a nasty demand for payment note with a hard deadline. This works for me 95% of the time.

1) Tell them you're not comfortable enough with your relationship to do any more work until you see the money you're owed. Might also be worth pointing out they'll still owe you for work done and that they'll incur additional expenses searching for someone else to pick up the project.

2) Start looking for other work, this isn't making you any non-theoretical money at the moment.

3) If 1 doesn't work lawyer up or walk away, depending on whether you can afford a lawyer.

4) Never work with them again.

Get a lawyer, like everyone else is saying. The fundamental fault I made was not enforcing my boundaries - this is the purpose of lawyers, to help you do this, but you first have to be aware of it yourself. So if you are not very familiar with contract law, learn the basics and how to analyze a contract etc. Apologies if I'm assuming things, but my assumption based on what you are saying is that you aren't.

I would recommend this to -everyone- in the IT field - there is now far too money sloshing around and every clever asshole out there is hell bent on becoming the next Steve Jobs. And learn a bit about the Loser/Clueless/Sociopath theory of management - I ended up working for a bona fide sociopath, as it turned out...

I too quasi-capped my invoices on this hell of a project - I lowered my rate for certain types of tasks, given they were mostly data entry like stuff, so it seemed logical and at that point, I was psychologically mired in the whole thing. Somehow this website I was hired to build turned into my being the entire IT staff for a enterprise B2B startup. As in everything - sysadmin to QA to CTO.

I finally snapped out of it when a) the CEO lied to a customer about the data we were selling - blatant negotiation in bad faith and the customer was going to sue (and mostly definitely win) and B) it became apparent how they were playing 3 card monte with the invoices and lying to all the salesguys and me about cash flow issues while they paid off the loans their OTHER company had made to fund the startup.

So everyone working for this company quit. It took us 6+ months to get paid back because the CEO's wife then went and started pulling crap, reinterpreting contracts and claiming people were not owed so much money...

I too, like lots of contractors, have a commitment to the job and professionalism that you exhibited - I am certainly not faulting you for that. But you have to realize some clients will consciously take advantage of that - read up on manipulative people and how to deal with them. A good book is "In Sheep's Clothing" by George Simon.

Then I suggest some deep soul searching / psychoanalysis to figure out what your blinds spots were and why - it was all a valuable lesson for me and I suppose it would have happened someday. I can say it was ultimately useful. But 4 years of hell is a long time to waste.

So I hope you can find the silver lining in all this and I wish you luck.

In terms of leverage, if you stop and quit right now, what will happen to the project? Are you on the critical path? This does give you some leverage.

Also, what level of documentation do you have with regards to getting paid? Based on your statements, you have met with management and have had verbal discussions. I would suggest doing these things via email. Do not just leave it to verbal communication for obvious reasons.

At this point, you need to build your case for yourself to prove that the company owes you money and you have not been paid. This is not so much that you would sue but that if you do go down that path you have evidence.

The next step would be to write an email to management stating:

1) The work you have done and how much you are owed. 2) A deadline expecting to get paid (lets say a week). 3) What will happen if the deadline is past and payment hasn't been made.

Be prepared for a couple of scenarios in this case. The company ignores your email and the deadline is past. You need to walk away. How nasty do you want to be is also a considering. You can backup your work and remove it from source control and hold the company for ransom until you get paid (I know someone that did this and they got paid pretty quick). If you don't want to go down that road, quit and look at suing the company with the expectation that you may not recover your wages.

The other scenario is that the company does pay you. In this case, take the money and find another job pronto. There is no reason to work for a company like this.

The other thing I want to add to this is that it is not your company and not your problem that the client is not paying the company. Don't make it your problem.

The most important thing is that you need to stop working without getting paid. If you feel the company is going to screw you over, just quit and spend that time looking for another job. Your payback with the company can be that you spread the word in the area that they a deadbeat company and everyone should stay away.

I would lawyer up, but also work on killing them with kindness. Make it right. Gary-Vaynerchuk the heck out of them. (http://www.garyvaynerchuk.com/)