Ask HN: Collecting from Consulting Client

2 pointsb200003 comments

Share your experiences with collecting payment from consulting clients who refuse to pay for work performed. In particular interested in service providers and clients located in California and tips on what to do. Asking for a friend who has a client who owes him low 5-figures.

View on HN

Your friend will have to hire an attorney. They can expect a drawn-out lawsuit for breach of contract. That may go to mandatory arbitration depending on jurisdiction and amount.

Contracts only document the original agreement. In case of dispute you have to get a judge or arbitrator to rule in your favor, and even then you only get a judgment.

Freelancers & consultants: don’t put yourself in a situation where your customer can owe you a lot of money. Customers: don’t put yourself in a situation where a consultant can owe you a lot of work. Structure consulting contracts with frequent defined deliverables and payments.

what about a collection agency?

Collection agencies don’t have special powers. They will send letters and make phone calls trying to collect, but they can’t force the customer to pay. You will have to pay them a percentage of what they collect, and they may want payment from you up front.

Reply on news.ycombinator.com