When a Client Won't Pay...
Over the years I have worked on a number of consulting projects and had to put up with a “rotten apple” client on more than one occassion - one that might take an eternity to pay, or might bicker over the agreed upon price after they have received the services rendered and are staring at the invoice, or - worst of all - those that simply don't pay. Thanks to some excellent long-term clients, I am in the position now where I can be very conservative when accepting new jobs. Essentially, when working with a new client for the first time I will not do a lick of work that is not pre-paid. After I have worked with the client long enough to develop and build some trust, and after I have been paid a couple of times, on-time and without nickel and diming, I'll do work on a Net 15 or Net 30 basis. That has been my policy on consulting jobs for a couple of years now.
However, I have not seemed to learn my lesson in this matter with regards to my training services. Occassionally a technology training company will request my services to teach a class on their behalf. I've done this maybe a half-dozen times over the past few years. Anywho, it's never yet been a problem until recently when a local company failed to pay me for a three-day class I taught. It has now been over half a year since the services were rendered and I've yet to see a dime. I've gotten nothing but the run-around when trying to communicate with the company - being sent to voicemail, not getting returned emails or phone calls, being given a cacophony of excuses as to why I've yet to be paid.
When a client doesn't pay I am aware of three available options:
- Do nothing - just chalk up the experience, write off the loss on your expense sheet, and never do business with that client again. This is the easiest approach as it requires no action on your part, counts as income off the top at the end of the year, and can help teach a valuable lesson moving forward. However, you don't get paid, so that's a bummer.
- Sell the debt to a collection company - I've never done this but have talked to consultants who have gone this route. Essentially you sell what is owed to you to another company for pennies on the dollar and let them hassle the client for their money. This approach takes a bit more work than doing nothing, but not too much more, and you do get something. Problem is, you get much less than was owed, although I assume you can take the difference off your income sheet at the end of the year.
- Get a judgement against the client - that means take them to court and sue them for the money owed. This can, of course, be expensive and time consuming and might not yield any results, especially if the client can't pay because they simply don't have the cash. This route can be especially a hassle if they money owed exceeds the limits allowed for small claims court (hence necessitating hiring a lawyer) or if the client resides in another state or city.
In the past I have, without fail, always taken option #1. However, I have decided that with this latest client I am going to pursue option #3 for two reasons: first, and most importantly, this client seems very unethical. They claim that they have yet to pay me because of cash flow reasons, yet they've continued to operate their business for six months since payment was due. Furthermore, I have talked with a number of other instructors they have hired during various times (both before and after me) saying that they, too, have yet to be paid. This behavior makes me sick to my stomach. Second, and more trivially, I am curious about the whole small claims court process. I've never been to any sort of court matter before, so it will be interesting to observe and record the process and results.
Has anyone taken the small cliams court route before for a non-paying client? Any advice/recommendations/tips? Is it worth it or am I just wasting my time and energies chasing a few measely bucks that I likely won't see in the end anyhow? Thanks!