Entrepreneurship & Small Business

Chasing International Clients for Non-Payment (Canada -> US)

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  • Jun 1st, 2020 2:39 pm
[OP]
Newbie
Oct 10, 2018
30 posts
1 upvote

Chasing International Clients for Non-Payment (Canada -> US)

Hi all -

I have a small video production company (3 employees) in Toronto.

We have always worked on a flat-rate basis (25% upfront, 75% on completion).

I now have a new client with a ton of weekly deliverables. The quantity will vary, so they have requested we track and submit labour hours, monthly, for a net-30 payment.

It's a small company, so working for 2-months before getting paid isn't an appealing concept for me.

But, demanding weekly or full upfront payments seems unreasonable too.

My thought is building an airtight contract, but this client is in another country (USA) and chasing them from Canada seems like a big hassle.

Does anyone have experience with this?

TL;DR: Is it possible to chase a US client as a Canadian for non-payment? Any payment options that are fair to both sides, and mitigate risk?
5 replies
Sr. Member
User avatar
Jan 19, 2007
913 posts
414 upvotes
Torontario
AdamGotTickets wrote: Hi all -

I have a small video production company (3 employees) in Toronto.

We have always worked on a flat-rate basis (25% upfront, 75% on completion).

I now have a new client with a ton of weekly deliverables. The quantity will vary, so they have requested we track and submit labour hours, monthly, for a net-30 payment.

It's a small company, so working for 2-months before getting paid isn't an appealing concept for me.

But, demanding weekly or full upfront payments seems unreasonable too.

My thought is building an airtight contract, but this client is in another country (USA) and chasing them from Canada seems like a big hassle.

Does anyone have experience with this?

TL;DR: Is it possible to chase a US client as a Canadian for non-payment? Any payment options that are fair to both sides, and mitigate risk?
This sounds to me - my usual clients are on fixed and small scope (25/75), and now I have a new client on a way bigger contract with bigger scope.
Best is in your SoW/contract to put milestone payments (monthly). That's the cadence of the timesheets tracking they request you, so it that would be easier to reconcile.
N30D is usual thing - but be mindful that if you need to buy things upfront (materials, infrastructure, equipment) - ask that all in advance as payment.

You might consider a tight contract from another perspective - scope: if the client begins demanding a lot of new things (inevitably happens) this will cut into your margin.
Finally consider a time and materials contract with a $ cap - means the onus is on them to define scope.
[OP]
Newbie
Oct 10, 2018
30 posts
1 upvote
Hey Ohnabatko!

Actually, the opposite is true!

Normally I work with reputable Canadian corporate clients that I would have no trouble chasing.

In this case, it's more of a small US startup that is hiring us for various jobs to help get their business off the ground.

RE: Monthly Timesheet Cadence: Initially they requested monthly timesheets with net-30 payment.

I was skeptical as we would have dedicated considerable resources (2-months of work) before seeing payment. It seems too risky.

Important update: since my first post, I learned they have negative BBB reviews due to non-payment to contractors.

I ended up demanding a 40-hour payment upfront to begin, which they obliged.

Let's assume I have a tight contract... is it feasible to chase a US client for non-payment?
Sr. Member
User avatar
Jan 19, 2007
913 posts
414 upvotes
Torontario
Ok - it seems you have things figured out it seems.
Deal Fanatic
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Dec 10, 2004
5683 posts
1555 upvotes
Thornhill
I deal with that. Extremely hard to do much, especially now. It almost seems like many don't take it seriously until they are sued and then they start with typical excuses that range from "didn't get your emails" to "we have no money". However, these a-hole at times receive the work before telling you they have no money, completely aware of their fraudulent behavior. That of course helps as judges will see through that if it comes to litigation.
Anyways, contracts do help especially if you are willing to take them to court in the USA. Providing, they have assets and the case is simple, it can be worth it as you can claim damages and they will pay. Often, even a demand letter from a lawyer can work. All depends what you are willing to spend, time,etc.

In my field it takes me 4 weeks to finish the work. 20% upfront, 30% in 2 weeks and the rest before the order is delivered. Once they pay 50%, they are less likely to cancel on you. At 20% and 80% on the delivery I've had a few times those who would MIA. Nowadays it's very rare as once they pay 50%, they want something for it.

Since those who you work with have a history of non payment, I would introduce a new system to charge more upfront. 50% to start is not uncommon. Or you can take weekly or by-weekly payments. if needed, you can just update them with a new policy, even if they are paying now with no issues as they can stop at any time and you will be stuck)
[OP]
Newbie
Oct 10, 2018
30 posts
1 upvote
Thanks Dazz -

Your comment made several horror stories of annoying follow-up emails run through my head, so I'm going to keep charging them 100% upfront as long as they'll tolerate it. (Only because they have the horrible reputation of non-payment).

With more neutral international clients, I think I'll adopt your 20/30/50 schedule. Seems like a great option.

Thanks again.

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