Entrepreneurship & Small Business

Clients not paying for a prolong period

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  • Nov 12th, 2014 4:33 pm
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Member
Apr 19, 2010
380 posts
32 upvotes

Clients not paying for a prolong period

Hi everyone,

We run a software development company. We did some work for our client, but they have yet to pay for about 2 months now.
The invoice is roughly 9k

Has anyone here have experience dealing with people who don't pay... or perhaps .. delay payment?

I guess an option is to go the legal route .. but considering the amount is only 9k.. wouldn't legal fees eat into it.
19 replies
Deal Fanatic
Jul 13, 2009
5241 posts
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CBC wrote: Hi everyone,

We run a software development company. We did some work for our client, but they have yet to pay for about 2 months now.
The invoice is roughly 9k

Has anyone here have experience dealing with people who don't pay... or perhaps .. delay payment?

I guess an option is to go the legal route .. but considering the amount is only 9k.. wouldn't legal fees eat into it.
What were your payment terms?

2 months past due?

Have you given them friendly phone calls?
Member
Apr 19, 2010
380 posts
32 upvotes
we got our payment. But wanted to see if there are anything you can do to help speed this process...
I mean i have it under our contract saying that if they dont pay we will charge late fee.. but if you start exercising that .. you may sever the relationship ... ugh such a gray area to manage.
Newbie
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Sep 30, 2014
86 posts
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Toronto, ON
Software should be server based so, in case of non payment, you can block the services.
Deal Fanatic
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Nov 18, 2002
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BC Interior
web300 wrote: Software should be server based so, in case of non payment, you can block the services.
There are so many things wrong with that I couldn't even begin to list them.
Newbie
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Sep 30, 2014
86 posts
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Toronto, ON
ichpen wrote: There are so many things wrong with that I couldn't even begin to list them.
Then, i would like to suggest that consult this matter with your lawyer.
I think, he is the only person who can tell you the better and less cost way to get your money.
Deal Fanatic
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Nov 18, 2002
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web300 wrote: Then, i would like to suggest that consult this matter with your lawyer.
I think, he is the only person who can tell you the better and less cost way to get your money.
Yeah, ok.

Back to the OP's question. Under no circumstances should you breach your contract terms (if you have any) if the other party has breached theirs or if they're late. Doing so means you have no legal leg to stand on. Aside from the fact that you would have severed your relationship you cannot take them to any small claims actions if you have withheld your end of the contract.

Secondly, 45 days net is somewhat typical for payments. Again, payment terms is something you should have stipulated in your SOW or engagement.

If you're delivering software ensure you at least have an IP clause that transfers when payment in full is received.

Seems like you got it sorted, next time make sure you follow up. If you've given them ample warning there's nothing untoward with imposing small interest fees if payment is late. It is widely understood and accepted.
Jr. Member
Jun 10, 2009
140 posts
18 upvotes
Hamilton
ichpen wrote: Yeah, ok.

Back to the OP's question. Under no circumstances should you breach your contract terms (if you have any) if the other party has breached theirs or if they're late. Doing so means you have no legal leg to stand on. Aside from the fact that you would have severed your relationship you cannot take them to any small claims actions if you have withheld your end of the contract.

Secondly, 45 days net is somewhat typical for payments. Again, payment terms is something you should have stipulated in your SOW or engagement.

If you're delivering software ensure you at least have an IP clause that transfers when payment in full is received.

Seems like you got it sorted, next time make sure you follow up. If you've given them ample warning there's nothing untoward with imposing small interest fees if payment is late. It is widely understood and accepted.
In 20 years in business, I've never had a client actually pay the late fee interest on overdue invoices, not once, it doesn't happen, you could try to collect it, but you can kiss your working relationship goodbye.
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Nov 18, 2002
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swatson46n2 wrote: In 20 years in business, I've never had a client actually pay the late fee interest on overdue invoices, not once, it doesn't happen, you could try to collect it, but you can kiss your working relationship goodbye.
Doesn't happen in your case. Does not mean it does not happen. Significantly easier to enforce (or rather encourage) with software and IP rights vs. goods and services rendered. A healthy working relationship is based on mutual respect. We all need to pay salaries, bills etc. Not being paid on time or within reasonable time means that particular relationship isn't going to last.
Member
Dec 7, 2005
263 posts
54 upvotes
Pickering
ichpen wrote: Doesn't happen in your case. Does not mean it does not happen. Significantly easier to enforce (or rather encourage) with software and IP rights vs. goods and services rendered. A healthy working relationship is based on mutual respect. We all need to pay salaries, bills etc. Not being paid on time or within reasonable time means that particular relationship isn't going to last.
I agree with the last poster. No one charges or pays late fees in commercial transactions. The only reasons they are there is if in the case of litigation you can go after it. Without litigation pretend it doesn't exist and you will do much better.
Keep in mind that customers generally pay when they want to. Either accept it or set up regular followup to see if you can speed it up.
Deal Addict
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Jan 9, 2002
2712 posts
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Burlington
I've had several customers go "90" on me. The next order is normal terms...but I make it clear that if it goes +45, then it is CC to be charged upon completion of the job for any future work. My margins are not large enough to carry the AR for 90 days. I explain that to them, and usually from then on it's 30ish days.
Not your standard VoIP. Different and novel options & advice for my RFD friends.
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Jan 9, 2002
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credit card
Not your standard VoIP. Different and novel options & advice for my RFD friends.
Banned
Oct 16, 2008
1010 posts
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payables
each company tests the waters from a new supplier to see for how long they can hold onto company funds before releasing funds.
quick, polite call verifying your terms should quickly resolve your issue.
never say you cannot do business with them if they cannot pay you on your terms.
if it happens again,it may.don't get angry,get paid whenever and walk away.you're not in a position to be that companies financier.
or set up progressive billing, invoice as work progresses, if the progressive bill is not paid, then work stops.usually it's 50% up front along with the progressive billing.
that's assuming your a nice person and need the business.
most companies, if you don't abide by my credit terms, it's off with your head and any further work is paid up front.
or if it's a new client, always 100% up front on agreed quotation.
Sr. Member
Mar 3, 2010
588 posts
42 upvotes
Everybody interested who makes a software, or even better boxed up software in thousands of copies, we will advertise and make software protection system soon.
Smart card reader and smart card will be needed to run the software thus protecting that copy with encrypted smart card. That applet on the card can be personalized or be anonymous, have expiry date or not or simply be needed to run the software. So no valid smart card = no software.

Also, we will introduce Windows logon with similar solution. I'll post it here on the site when ready. It will be secure, low cost, all in the box thing to protect individual Windows PC. Has nothing to do with Internet.

Any questions? Send them to sales@smartcardsource.com
Deal Fanatic
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Nov 18, 2002
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ZackP wrote: Everybody interested who makes a software, or even better boxed up software in thousands of copies, we will advertise and make software protection system soon.
Smart card reader and smart card will be needed to run the software thus protecting that copy with encrypted smart card. That applet on the card can be personalized or be anonymous, have expiry date or not or simply be needed to run the software. So no valid smart card = no software.

Also, we will introduce Windows logon with similar solution. I'll post it here on the site when ready. It will be secure, low cost, all in the box thing to protect individual Windows PC. Has nothing to do with Internet.

Any questions? Send them to sales@smartcardsource.com
You know they stopped making dongles back in the 90s right?
Jr. Member
Mar 8, 2014
134 posts
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Mississauga, ON
ichpen wrote: You know they stopped making dongles back in the 90s right?
Dongles, where are dongles, I don't see dongles?
Deal Fanatic
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Nov 18, 2002
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JackReacher wrote: Dongles, where are dongles, I don't see dongles?
lol, not sure if serious. Was quoting the gent above..
Smart card reader and smart card will be needed to run the software thus protecting that copy with encrypted smart card
= dongle(esque)
Newbie
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Sep 24, 2014
82 posts
16 upvotes
White Rock, BC
Used to be a hell of a problem, but for whatever reason, when we moved out billing into Freshbooks, things are better. I know Freshbooks has an option where it will keep reminding them of the invoice until it is paid. If I don't have to do that, I am a much happier camper.

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