March 27, 2019

Any tips on handling non-payment of an invoice?

Sooooo, I'm in a bit of a sitch. Until now, I've been running Scribly.io by invoicing for work after it's been delivered. This has been great for boosting conversions, and typically most people have paid extremely quickly. I'm now having my first instance of someone going totally off grid after receiving the work and not having paid for it.

Is there anything I can do about it ? Or do I just learn from it, change the model (already done) and move on?

It's not the money - it's the principle...

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    Depends a lot on whether we're talking $100, $1000 or $10'000+...

    Also depends where you (and the customer) are based.

    In Switzerland and Germany, for example, there's a really easy system to get pretty much all solvent customers to pay up.

    In the UK and US, it can be much more difficult.

    First up, I'd try contacting the company a few times in a friendly manner. Watch out with your wording though - depending on your location there are rules you have to follow.

    If that doesn't work and it's a large invoice, it's probably worth seeing how and whether you can lodge a claim against the customer.

    If it's a smaller invoice, I'd either forget about it (and learn from the experience) or perhaps sell it on to a debt collection agency (for much less than the invoice amount).

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      +1 to everything Louis said.

      It sounds like you're already factoring in your time and energy. In a lot of cases, even when you CAN get them to pay, but depending on the $$ amount your time and energy might be better spent focused on the customers who are paying.

      The only other thing I've had success with is giving people with outstanding debts the ability to pay it down with a payment plan. If they have any intentions of paying, but simply can't all at once, I've found some people do want to settle up and appreciate this offer. Presenting it firmly (including terms, late fees, and ideally as an auto-debit on a schedule) makes things a lot less time consuming on your end.

      This sucks...I'm sorry it happened and glad you're changing the model to account for it!

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        This comment was deleted 2 months ago.

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          All such great advice everyone - thank you so much. The value of the invoice isn’t that high, couple of hundred dollars. I was just feeling so frustrated that this has happened as it’s someone who found me through IH and was very keen to get started ASAP, and I just think it’s really sh*tty on their part. But as you guys rightly say, best not to get emotional about it and just let it go.

          Now I’m billing upfront which I was really nervous about doing but actually it’s been so well received.

          Will put this one down to a lesson learned the annoying way !

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            This comment was deleted 8 months ago.

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              Hey @thomasm1964 - thanks so much for this, that's great advice. I actually had no idea that these types of escrow services existed, definitely going to look into this in more detail. Thanks!

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    In addition to what has been said, I believe you need to get percentage of the total cost as a down-payment before starting to work on the project & value the work to be done for the first milestone based on the down-payment.

    Then for the next milestone, set a time or amount of work limit that you can take if the next payment hasn't been received. If you didn't receive the payment when you reach this limit, send a notification to the client mentioning that the work will be stopped because you can't afford using your resources for their project until you receive the payment.

    This can become flexible with clients that you have already build a good business relationship with, however it is a necessity with new clients to avoid such situation.

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      Great shout @AmrAbdou - thanks so much for pulling this advice together. Have you had any experience of billing in milestones through Stripe?

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        If you use stripe as your payment processor, you just need to add your bank details & set payment cycle.

        For my business, I currently use payoneer because I receive the money via direct bank transfers, not credit cards.

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        This comment was deleted 8 months ago.

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        This comment was deleted 7 months ago.

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      Great reply from @AmrAbdou.

      I would add to that:

      • whenever possible, try to split the work in different deliverables don't produce/deliver the next until the previous one is paid up.

      • add an item in your terms and conditions that stipulates that the intellectual property rights of the delivered work is only transferred to the client upon full payment, and that public use of the work without your permission prior to fill payment needs your approval. This gives you some legal leverage, but is only really practically useful when larger amounts of money are at stake.

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    You need to sell a license to the work and specify that it is not owned until paid in full. That way you can have an attorney offer a cease and desist to anyone who goes 30 days without paying. With software, it is often the case, that the client does not own the cod e until it is paid in full.