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Comment by shubb | Hacker News Reader

To share a failure - back in 2015, I tried to set up as a freelancer and ended up going back to perm/employed work about a year later.

Between subcontracting from established freelancer friends and reaching out to my network I was able to get a few projects, and things were progressing nicely but then my biggest single client had some internal issues and basically didn't pay me for 6 months.

My financial situation going into freelancing was not good - I had some debt going in, and then put some incidental expenses like visiting a customer's city and staying in a (cheap and amazingly nasty) hotel for a few weeks on a credit card. The gap between invoicing the work and getting paid was too much and I realised I needed reliable cash flow.

They say the main reason businesses fail is lack of capital. Turns out starting a business with negative capital is hard. Too hard for me.

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The moment a customer does not pay a bill within the specified terms is the moment you must stop working for them.

This also means that you must invoice regularly.

Learned that the hard way.

I bill NET 15 to protect myself, and it's served me well. A fair number of potential clients balk, preferring their usual NET 30 (or even longer), and if they don't come around, I wish them well and walk away from the opportunity.

If funds aren't in my account on the scheduled date (it's printed clearly on invoices), all work (even a tiny commit or Slack message) is suspended for the client. Thankfully this doesn't happen often, and when it does, the client almost always gets with the program thereafter. After two late payments (it's in my contract), I can terminate the engagement as-is, that's to say no wrap-up work of any kind.

This all helps to keep me paid, and just as importantly, improves the quality of my clients.

This is effectively what I do too, and it seems to work for me as well.

Completely agreed.

I abandoned freelancing/moonlighting over collection issues. Including one client that I was basically 40 hours a week who didn't pay for six months, just like OP.

If I ever start again, I hope to be more diligent.

Always worth watching: https://vimeo.com/22053820 featured on Reddit's /u/freelancing, poetic symbolic title F*ck You, Pay Me.

If you are freelancing, watch it once a week.

You went six months at 40 hours a week without collecting anything at all?

Usually this goes with paying some, but not all. There's always an excuse and they promise to pay more soon.

Most likely it is even a valid excuse. The problem is that the bill runs up over time and you end up deeper and deeper.

These customers tend to be super nice. I still don't hate the customer that teached me how this works, but I did have to engage a lawyer and that's one thing I never want to go through again.

Yes, eventually 100% of the money came through.

I was naive and just starting out then. Today I would never put up with something like that.

>The moment a customer does not pay a bill within the specified terms is the moment you must stop working for them.

Be reasonable and communicate. I've had clients tell me in advance they'd be late and had mega corps tell me they are holding all payments until next quarter. . This is really where you have to live with your client being slow pay. When things go sideways, sometimes the right call is to get your work in per the deadline so that when you do end up in court, the whole amount of the bill can be collected, not just the part you turned in.

The big thing is communicate and be reasonable. I've also had clients where I've been able to ask for an advance (and got it) or ask for them to pay earlier. Being flexible set that up (i.e. you were slow last quarter... any chance we can speed up the next milestone payment?)

>This also means that you must invoice regularly.

#1 mistake that most freelancers make is not billing or waiting until "it's worth doing". Have a great system for tracking your hours and deliverables and billing them, as that is all you'll usually need to win any billing dispute.

Yep. Also late fees. I do net 30 with statutory interest (8% plus base rate) which is the maximum on UK B2B invoices. Acts as a nice encouragement and bumps you to the top of the payment pile.

It helps to have a financial buffer. When I started freelancing in 2012, I could do so while keeping the unemployment benefits I got for getting fired in the bankruptcy of my last employer (they survived and actually had a healthy business, but they'd made some poor financial decisions driven by a bug in their home-made accounting system). I ended up not really going anywhere that first year, got a few minor gigs, but after a year I got approached by a recruiter for a bigger client, and that took off. I've been doing half-year to year-and-a-half projects for various large client, including a railway company and 4 banks.

But I rely a lot on recruiters finding me on LinkedIn. I hate LinkedIn with its dark patterns, but it's where 90% of my work comes from, so I don't complain too hard.

Sounds like you had terrible clients. Stuff like this seems to be very common, I had simular problems. The hardest part is to be relentless and judge bad people was wanting and move on to better things.

Did you continue to work for this client during these 6 months not getting paid?

No, basically I delivered an app, but the engineer on their side got fired so the back end didn't get done. They didn't want to pay me until they rehired and finished the backend so they could see the app working.

This won't help you, to other freelancers in the same situation, there is this amazing video by Mike Monteiro, titled F*ck You, Pay Me [1]

He has an example where the same thing happened, an entire department got laid off.

[1] https://www.youtube.com/watch?v=jVkLVRt6c1U

I mentioned this video also, the six month delay is due to one of the classic excuses he mentions.

This is what small claims court is for.

In most places, no lawyers are allowed, and no discovery. Filing is cheap typically.

Discovery is vital to keep nonsense costs down.

If anyone is thinking of going into consulting:

- simple, plainly worded contracts with pay schedules are important

- check your local small claims court, focus on if lawyers are allowed, if discovery is allowed

- find out what your local demand letter laws are like. A demand letter may be required prior to small claims court.

Small claims court in most areas has a max cap of dollar amount. Someone owed me $8k. Small claims maxes out at $5k.

IN RETROSPECT... I could possibly have taken them to small claims twice, over two unpaid invoices - each around $4k. That would have kept me under the limit, and possibly sped everything up a lot.

Even dragging them into court for part recovery, is a victory.

Also, if it is a larger corp, even 50 people, small claims court means you are expending far less energy, and funds, than they do.

A corp of even 50 will probably hire a lawyer for advice, and to prep the case, even though the lawyer cannot be in court. The lawyer may try to hound you, trying to pretend they can compel discovery (again check local small claims laws here!)

Many small claims courts don't even allow recovery costs. Meaning, they just spent $20k, and pulled half a dozen employees into repeated discussions, you spent $100 on filing, and some of your time.

I have so little sympathy for miscreants who have no valid reason to pay, other than the one cited above. Pfft. Need to test it, will take half a year.

Come on! Their incompetence is not a valid reason to place an account in arrears.

I work, you pay, that's that.

(No anger here at all!)

So drag them into small claims, and watch them waste multiples of what they would have originally paid.

Factoring companies could be a solution for that.

They pre-approve the bill / contract and pay you (minus a fee) and deal with your client themselves.

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