My first software development client invoice has went unpaid for a month now. The client does not respond to e-mails or phone calls. I sent a reminder yesterday that it's due.
I've had subsequent work from other clients since and those invoices were promptly paid.
How long should I keep trying to contact the client before taking him to court?
Large companies, in particular, routinely manage to get invoices held up in accounting. Invoices can get silently dropped for, for instance, not using the right P.O. number, or having the P.O. miskeyed into their backend.
Typically you would send an initial invoice with a +30 day (ish) due date. The client would pay as close to the 30 days as they could because it is better for their cash-flow.
If they failed to pay after 30 days you would send them an "invoice overdue" letter. When you're comfortable that had arrived you could then call/e-mail them essentially asking them about payment on the initial invoice.
If this "invoice overdue" notice isn't paid within short order (20~30 days) then you should send them a "final notice" and this should specifically indicate that the next step is court/collections.
Everything should have the date of issue, the date it is due (e.g. +30 days, immediately, etc), and you should not do too much "extra work" beyond sending out letters and the occasional phone call (as this implicitely costs you money).
If they still haven't paid after the final notice then you can either hire a collections agency (who will take a % cut) or attempt to sue them (and hope they don't declare bankruptcy).
I'm in Scotland. If the invoice remains unpaid after that period I will take the client to the Small Claims Court. It's very typical that if a case is submitted to that court, the accused ends up paying the invoice before the hearing date.
I finally heard from the client, he gave me a story about how his phone broke, his mother-in-law has been sick, how people who owe him money haven't paid it and how none of the potential clients for the software have come back to him yet.
He offered to pay part of the invoice now and part later. I said fine but I will apply interest to the invoice and he only has a further 30 days until the issue goes further.
I wait with baited breath for the rest of the payment.
I require a retainer to be applied against final invoice for all but the best clients (and I still worry about those).
I don't turn over work until there's a check if I'm upside down, and I try not to be upside down.
Finally, I don't start a project until I have a signed agreement and a retainer.
In the past, I have not hesitated to use small claims court when I knew a client was intending not to pay.
http://news.ycombinator.com/item?id=2132299
That thread is actually pretty good in its entirety:
2. Wait at least three months but no longer than six months. I've seen people wait less than 60 days but in my mind that can send the wrong message.
My contact is still not answering messages or returning calls.
The next step after an overdue letter will be the Small Claims Court with penalties added.
Payment: Net/30 - 2%, 7. Payment due in 30 days, 2% discount if paid within 7 days.
Also they added: If the fees aren't paid within the terms above, there will be a 20% interest per 5-business days.
I would think that would work encourage those willing to pay to pay faster. The ones who aren't going to pay I don't know.
I usually pay freelancers to do my stuff and I feel bad if someone is going to run away after getting their work.
I guess it depends on the scope of work. I think in Canada we have a law where if you do something criminal then you can't charge the person for stealing.
i.e. If you are selling drugs and I steal your drugs then you can't take me to court. In this situation if I were to steal your code/work then stealing it back or making it stop working would suffice.
If it's a .php script maybe make it refer to your web-server for certain parts of the script so that the full functionality isn't there if the user runs away with your code. Something like passing back a token for verification as with serial numbers. A phone-home mechanism of some sort.