I’ve just finished the ordeal of dealing with a non-paying client. So what can you do about it? Really there’s not a lot.
- Call, email, send letters asking for payment or explaination. This only seems to do any good if they’ve forgotten about paying or they care about paying.
- Office of Fair Trading – don’t care unless you are a PAYG employee who has effectively had “wages witheld”. So if you’re a company contractor, you’re on your own.
- ASIC – don’t care unless the client has been doing something illegal, like insolvent trading…and even then, only send a “reminder of your legal obligations letter”
- Engage a debt collector – The generally take about an 11% cut of whatever they get out of them. Pretty much, they just send letters, and ring the client a lot. The extra advantage, is they can list the client as a defaulter…but this is only for debts over 90 days old. This can be effective if the client cares about being listed as a defaulter. It also means that the client can make threats and yell at the debt collector rather than you 🙂
- Go to court. If the debt is under $7,500 you can go to small claims court, which doesn’t involve lawyers etc. If the debt is over that amount, which in my case it was, you can take it to magistrates court..which costs lots more money. If you win..which you hopefully would, the other party has to pay your court costs..but not for your time for preparation or being there 🙁
In my case, I did step one over and over until my letters and emails were being ignored. Step 2 and 3 are no use to me. Step 4 – this at least got a reaction. After many unanswered emails, using a debt collector at least got me an email telling me to back off or my invoices would never be paid. When i was just about to start step 5, and organise a summons, the money magically appeared.
So 4 months later, I’ve finally been paid…yay. Lucky i always stash a bit of money so didn’t starve to death when i had close to 12 weeks of invoices not paid.
So what did I learn from the experience?
1. Trust my instincts – earlier I had a bad feeling money would become and issue. I really should have stopped working at that point and demanded payment before continuing. After finishing up a contract, you don’t have any leverage to ask for money.
2. Start your own – “Never do work with again” list. Pity it’s probably not a good idea to publish this list. I think that a lot of ppl would think twice about burning contractors if there was somewhere ppl could publish it…like ebay feedback 🙂
So anyone else got any horror stories? Any advice on how to deal with non-payers?