Client won't pay?

Subject: Client won't pay?
From: geoff-h -at- MTL -dot- FERIC -dot- CA
Date: Wed, 23 Oct 1996 13:21:41 -0500

(Sorry, lost the beginning of this thread... client claims
he can't pay.)

A few possibilities. I've read (Financial Post magazine? in
a Canadian context) that if the client is in danger of
bankruptcy, you should file your claim (don't recall with
who... probably the bank) early in the process, before
everyone else, and this may get you some of your money.
You're not ahead of the preferred creditors, but at least
you're at the top of the list for the rest of the
creditors. I don't know how this works in the U.S., but
hopefully a listmember can provide details. An alternative
is to take them to Small Claims Court if the sum is low
enough, but that's going to cost you time and perhaps
money. You simultaneously set a good and a bad precedent
this way: you let it be known that nobody messes with you.

The second possibility is that the client really does have
his heart in the right place, but simply has no money. It
may not even be his fault, particularly if he isn't senior
management. In some cases, bartering may recoup part of
your investment. For example, they may give you a (legal)
spare copy of some software, a dozen copies of their
product (that you can then resell), free use of their
office copiers/printers/etc., or something else equally
helpful. Worth a try. If nothing else, get a sterling
letter of reference before you walk away.

The final possibility is that their cash flow simply
doesn't permit a lump-sum payment, but may permit a series
of smaller payments (with or without interest). Propose
this! A conscientious client in a bad position might be
able to pay (slowly) out of petty cash what they couldn't
pay by requesting a large cheque from the accounting
department. (I've done this several times with clients who
were solvent, but who didn't want me to wait forever for my
invoice to clear their purchasing department or to be
signed by a manager who was away on vacation.)

--Geoff Hart @8^{)} geoff-h -at- mtl -dot- feric -dot- ca
Disclaimer: Speaking for myself, not FERIC.

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