Getting Paid. Advice For Freelancers

 Posted by on April 15, 2012  Add comments
Apr 152012
 

Are you self-employed?   Did you ever take on a job, do the work as agreed and then find that your customer either went missing or came up with some lame excuse for not paying you?  You did a bad job.  It wasn’t what he expected.  You were too slow.  He changed his mind.  He found someone cheaper.

All those excuses are bullshit.  You had a contract, you did what you were asked to do and you’re entitled to be paid.  It doesn’t matter if you’re a plumber, a photographer, an architect or a bricklayer.  The principles are the same.

It doesn’t matter whether the contract is oral or written.  It’s still enforceable under the law, but unfortunately, too many small self-employed people don’t know their rights, so I’m going to lay down a few pointers that people might find helpful when dealing with customers who don’t want to cough up the cash.  This isn’t legal advice, because I’m not a lawyer, but I do have a reasonable understanding of the legal issues involved, as well as some of the practicalities.

First and foremost, you need a contract, and it should be in writing.  Do not assume , because you’re a friend of the client, or a cordial acquaintance, that he will act in good faith.

At the very minimum, your contract should define the services provided, and it should specify the price agreed and the payment terms.  It should also define clearly what the customer has to do so that you can complete your work.  For example, if you’re designing a website for somebody who sells footwear, you might need pictures of all the shoes he wants to sell.  Those pictures must be of good quality and they must be free of copyright issues.  Otherwise you can’t use them.  Likewise, because you’re not an expert on shoes, you might want him to provide you with the blurb that goes with the pictures.

A particular difficulty arises when you make a contract with a client who owns a company. At law, the individual and his company are separate ‘legal persons’, and therefore you need to be certain with whom you are contracting. If the client tells you that your contract is in fact with the company, ask him to arrange for a letter of engagement or a purchase order to be issued to you from the company. The company’s stationery should set out its full company name, its business name if it uses one, and the names of the company directors must, by law, appear on the stationery.

You should, if dealing with a company, reply to the letter of engagement and place on record a retention of title clause.  So, if you manufacture trainers and you get an order for 10,000 pairs of trainers from your best buddy Joe Jackson, owner of Jackson Footwear Ltd., trading as Shoeless Joe’s, you need to specify that title to the 10,000 pairs will not pass to the purchaser until payment in full has been received by you.  If you fail to do this, and Shoeless Joe’s goes into receivership, liquidation or even examinership – your shoes go down the Swanee – they can be sold and the proceeds used to pay preferential creditors, which will not include you.

Once you have delivered the service or product, you are entitled to full payment, but don’t ever enter an agreement where you only get paid once the job is completed.  Define payment stages.  So much when we get to this stage, so much when we get to that and the balance on final delivery.

Set this all out in an email to your client and get agreement in writing.

When the job starts, keep a note of all conversations with your client, however trivial.  Even if you think of him as a friend, he’s now your customer and you have a contractual relationship.  It’s amazing how quickly a cordial relationship can deteriorate when money is at issue.  You don’t have to be officious and legalistic about it, but you should send little routine emails every time you discuss even the smallest details of the job.

Hi, Fred.  Really enjoyed the few drinks last night.  We can add in those new  pages you asked for, but it will take an extra two days work.   Let me know if you still want me to go ahead with the extra work.  Also, while I think of it, we’ll need those pictures of the shoes this week or or the job will be delayed.  Get on it, will you?  Thanks.  See you in Mac’s for a pint on Friday.

That won’t offend anyone.  If there are pictures involved, the date they were taken can sometimes be an issue.  Again, without giving offence, let’s say the shoe pictures turn out to be rubbish and you have to go to the shop, or send a photographer to take some shots there, you should first agree that this is extra work, brought about because the customer didn’t deliver what he agreed to.

Hi Fred.  Those pictures aren’t really up to scratch, and as far as I can see, they’re copied from the manufacturer’s website.  Do you have an explicit release from the company permitting the use of their images?  If not, you’ll have to get new pictures taken, but obviously, there will be a cost associated with that.  Let me know what you want to do.  I can take the pictures or you can hire another guy to do it.  Whichever you prefer.  However, we need the pictures this week or the job will be delayed.

Hint.  It might happen that your client later claims the pictures were taken on one date, when in fact you know they were taken on a different date.  Leave no room for doubt on this.  Email copies to him.

Hi Fred.  Here are some thumbnails of the pictures we took today at your shop.

Even if your client later claims he never received the emails (and this does happen) you have proof you sent them, and more importantly, you have evidence that you were working diligently on the job.

Ideally, you should keep in mind when exchanging emails with your client that one day, they might have to be read out in court. So, absolutely no profanities and a minimum of irrelevancies.

Contemporaneous notes are extremely important.  Confirm every change, however minor, to your client by email.  A client with integrity will take this as a sign of your professionalism.  A client who objects is one you should not be working for.  I can’t emphasise enough how important contemporaneous notes are, because you might well end up in court, and I know this is where many people recoil.  This in fact is why so many self-employed people go unpaid.  They’re afraid to hit the nuclear button and sue, but they shouldn’t be.  If you have done all the things I described here, you  need have no fear of going to court.

You will win.   What’s more, the other guy will end up paying your fees, your lawyer’s fees, your expert’s fees, his own lawyer’s fees and the costs of any expert he happened to bring.  You should not gloat about this in public too much.  A little will be fine.

A customer who reneges on a deal will very often look shifty and dishonest in the witness box.  He’ll mutter, he’ll stumble and he’ll put his hand in front of his mouth, unconsciously trying to stop the lies he’s telling.  He may well invent incidents that never happened, such as a fictitious altercation, but provided you maintain a constant stream of friendly emails, this sort of problem can be avoided at source.  In any case, judges are skilled at spotting untruthful witnesses by their demeanour and body language.  If you have your records straight, you need have no fear, and if the other guy is telling porkies, he will be exposed.  I’ve seen cases where a judge went though people’s evidence line by line and rejected every sentence.  Sometimes, it surprises me that such witnesses are not arrested for perjury.

In a similar vein, keep careful note of your phone records.  Some customers will claim that they never heard from you for months, and phone records can be useful in challenging such statements.

It may happen that you need to bring in an expert witness.  If you do, make sure to employ a person who is firstly a genuine expert and secondly, independent.  A witness with no axe to grind carries great weight in a court of law, especially when up against a witness for the other side who might be in some way related to the defendant, or who might have been employed by them.

For instance, let’s say Fred hired me to fit a bathroom, but fired me because he could get his cousin to do it for less money.  I hire a plumber I don’t know from Adam, and he gives evidence about my work.  His word will carry far more weight than that of the guy who did the job after I got the sack.  Why?  Because he has  no vested interest in the case.  No axe to grind.  He is an honest broker and the court will treat him as such.

Hire independent experts and pay them.  Don’t try to DIY it.

Don’t be afraid to go to court.  If anyone tries to stiff you on a deal, sue their ass.

[NOTE: This is one of those posts that evolve organically.  If anyone makes a useful suggestion, I’ll incorporate it without flagging the change.]

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  8 Responses to “Getting Paid. Advice For Freelancers”

Comments (8)
  1.  

    A very useful post Bock, and hopefully a good discussion will get going. I’m a freelance journalist.
    I once did a travel article for a now defunct travel magazine, and they ignored my invoice for the measly fee of €120.00, for several months. My calls were ignored. Emails were unanswered.
    It got to the point that I asked them to at least just RESPOND, even if it was to say they were broke – it was only €120 so I was prepared to walk away. I think that’s what this man was banking on. But being ignored – no, I wasn’t having it. I did the job and deserved to be paid. So I called in, and I was incredibly polite to the two people working in the office. The boss wasn’t in. No problem at all, I said, could you just let him know I was here?
    The next day, I got an aggressive email from him claiming that I had “trespassed” in his building and firing all sorts of obnoxious threats at me. It turned out the same publisher had treated many of his debtors the same way. I got paid because I refused to go the f**k away as per his bullying plan. After my Gmail account “iwillnevergoaway3@gmail.com” sent its first email to this him, the money was in my bank account the next day. I have some hilarious correspondence which I think you’d like to see. A judge would have lapped it up. Happy to email it to you if you want. Peter

  2.  

    Very good article Bock, It is good to share information and peoples experiences. Good for people considering starting a new business venture and there are alot of them in Ireland right now, who can’t get suitable employment so are taking that step to help themselves.

    In my business experience in Ireland, for 12 years I ran my own property cleaning and maintenance company, I have heard many excuses for not being paid, and I know I haven’t heard them all!

    90% of my work was contract which meant we got paid or should have been paid every 30 days or by calendar month.
    Excuses from customers ranged from I didn’t get your invoice, even though they agreed to a fixed monthly term and know they have to pay. You did a shite job and I had to pay someone else to come in, even though we still had the contract (at that stage for 13 months) and no one had come in?
    One customer who owed us 3,500 eu for work done told me that he could only afford to pay half, despite agreeing to the initial price before the work commenced, he then told me as he handed me a cheque for half the amount “If you take me to court I will tell them you did a terrible job and I will not pay you the balance”, that was in 2009, and of course I never got the balance, he still drives a rangerover and has a house in Killaloe which is on the edge of Lough Derg which has an indoor pool and a speed boat on the drive.

    These are just a few exmples, I have heard lots of excuses over the years, thankfully 80% of customers were happy with our services and paid us.

    The harsh reality of doing business in Ireland is that it is the Norm to Not pay or at very least hold off paying for as long as possible, the contractor who screams the most will get some payment, but not all payment. Getting some payment is hoping that you will keep working in the hope of getting paid. Contractors are afraid to scream as they don’t want to loose contracts, it is a catch 22 but in reality if your not getting then you don’t need these contracts as you are funding them, you can’t fund peoples services and let them keep your money in their accounts which is what they will do.

    Taking court action is a last resort before venting and causing property damage to those who owe you! which I don’t recommend. Going to the small claims court doesn’t cost much and can/can’t work for you, as in you might be lucky and proove you are owed what you are owed and the judge orders them to pay you, the reality is more like this: taking someone to the small claims court pisses them off and even when they are ordered to pay you, a large portion will still not pay you and in the background will do everything they can to tarnish your name in your industry. They will still hope you will just go away!
    Now it gets expensive as you will then have to take them to the commercial courts, (for amounts under €10K, not worth it) where it can get nasty, with a bit of luck they will make you an offering on the court door steps, but you will never fully get what you are owed and at this stage it has cost you a small fortune in legal fees. You come away still being the looser, even with the law on your side, which by the way is a complete and utter ASS!

    I simply just walked away from bad payers and put it down to experience, easy to say but it was far easier and cheaper for me to do so.

    Today, I no longer work in the property services sector, the recession and Fianna Fail killed that business for me plus the loyal employees I had lost their jobs. At 40 I returned to University and retrained in Computers, I am too old to be hired by the likes of Ebay and Google so I had to restart my career by self employment and now work online where none of my services are on a work now and pay later contract, I am starting to do more services that must be paid upfront regardless and by the end of this year all services will be money up front, no pay no service, simple.
    Cashflow is King and vital for business to continue trading!

    I am not greedy and provide good services at fair rates, I believe in repeat business and my business growing by word of mouth which is priceless, I look after my customers, I am a nice guy and don’t believe in the saying that nice guys finish last, more like those who fail to research will fail.
    Another useless negative saying I hate is “God loves a tryer” This saying is very common with the Irish, don’t listen to negative sayings like these, shut them out and go for your dreams.

    Thanks for sharing your article and I hope this and my offering of my experiences can help people who have entrepreneurial dreams avoid the pitfalls that I fell into at the greed of others.

    Never give up on your dreams.

  3.  

    Simon, thanks for the comprehensive reply. I’d just take issue with you on one thing. People can go to the District Court which has a max limit of €6,350. Fees are on a set scale, and therefore costs won’t spiral out of control.

  4.  

    Interesting article Bock and appreciate Simon’s detailed reply.

    People I know who were not paid for building work at the end of the boom all complained that taking someone to court for non payment was expensive and if you lost the case you could have to pay their legal and other costs. If you won you may get paid by instalments which may only be paid for a while forcing you to take another court action to get payments re-started.

    The law is undoubtedly flawed.

  5.  

    If a defendant fails to pay, you can seek an automatic decree against them. This damages their credit rating, which is not a good place to be in the current climate. You will be paid, if your defendant has any sense.

    People need to understand how easy it is to sue people when they don’t pay.

  6.  

    This is the right blog for anybody who wants to understand this
    topic. You realize so much its almost hard to argue with you (not
    that I personally will need to…HaHa). You definitely put a new spin on
    a subject that’s been written about for ages. Excellent stuff, just wonderful!

  7.  

    Good post with good advice. Reminded me of a vid I saw a while back by Mike Monteiro:

  8.  

    Great post. I’ve cause to know some people who moved to Ireland or moved back to Ireland having worked abroad. All of them bemoan the fact that getting paid here is a huge issue. As you mention, severe delay is almost as bad as non payment in some cases. The courts may need to do something to tip the balance in favour of people who do bring their cases to court. Perhaps there could be some punitive damages awarded when the person or company owing the money clearly have no case and have acted in bad faith…

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