We’ve also learned this lesson the hard way. These are now the clauses we require in every project we do:
- Payment is due X days after receipt of invoice, or immediately after the consultant has addressed any quality issues, whichever is sooner
- Late payment shall incur interest at 8% above the BoE base rate and a late fee of 100 GBP as per the UK Late Payment Legislation. Partial payments on invoices shall apply to late fees, interest, and then principal, in that order.
- In the event of a late payment the invoice for the next deliverable shall immediately fall due.
- The consultant shall be entitled to shift deadlines on deliverables in the event of a late payment as a result of any work disruption, without incurring any liability.
- Payment shall be made in X currency, or an exchange rate at X date on Oanda.com shall apply.
- The client is responsible for any bank fees incurred by their, or any intermediary bank. In the event of a SWIFT transaction it shall be made with the OUR payment code.
- The jurisdiction in the event of a conflict shall be England and Wales. Neither party shall be bound by arbitration.
- The client and consultant shall both indemnify the other up to the total value of the contract and shall not under any circumstance be liable beyond X GBP.
We also no longer share downloadable links of our deliverables until they are paid up. They get a view/comment only link for reports/data etc.
We’ve found that clients that aren’t willing to accept these terms won’t pay you either way.
We determine the net days on the invoice based on the credit rating of the client. Ironically, the good clients pay within 2-3 days normally, and the difficult ones are very “long tail”. About 1% of contracts tend to fully or partially default on their payments.
We’re in a particularly credit poor industry but our average delay due to late payment is 23 days. Those clients where we stop delivery pay on average 11 days sooner than those contracts where we don’t stop delivery.
This is based on around 2,000 invoices sent over the last 5 years.
Oh and another lesson! Ensuring that each deliverable invoice is small enough that it falls under the simplified claims procedure (in the UK it’s 10,000 pounds) greatly simplifies collection.
It costs something like 80 quid to file for recovery in court and in our experience invoices are immediately paid up when a “Letter before action” is sent.
You burn the relationship, but arguably you probably don’t want it anyway.
I believe this is what we call small claims court in the United States. The threshold varies by state, but it is a very effective way to deal with recalcitrant companies both large and small.
And another lesson: If it looks like a complete catastrofuck the minute you walk in the door, walk straight back out again. Sometimes the only winning move is not to play.
This isn't arbitrary peanut-gallerying, I've walked away from several jobs that weren't anywhere near as bad as the one in TFA because I couldn't see any way forward that wasn't going to end in disaster. One of them at least, I'm fairly certain, would have ended up in criminal prosecution.
I'm a consultant rather than a contractor, but the "shitshow" projects are amongst my favourites. They offer the chance to make a clear positive impact, which can be hugely rewarding.
From my pov, green flags for a good "bad" project mostly come from the attitude of leadership - especially if they already recognise there's a problem, and that some form of cultural change may be needed rather than expecting a purely technical solution.
On the other hand, if they seem reluctant to consider root causes, or if there's any sense that they're seeking to cover up problems or shift blame, then those are pretty clear red flags. Quick fixes tend to fall apart, and aren't really satisfying for anyone.
Hard to put into a list, it was just the equivalent of a code smell. Some random examples:
- Fly out to the initial discussion, talk to their architect, some guy they imported from France in an otherwise entirely non-French company a long way from France (not bashing French folks here but just wondering where they dug this guy up). They've read about scalability and told him to come up with a design for that, which is distributed stateless everything (this was years before microservices and CRUD and whatnot). Except that they don't have the resources to build the stateless distributed everything so they're getting all the downsides of stateless distributed everything without getting the scalability that it's supposed to provide. You know its bad when one of the nontechnical sales guys that you're having a few drinks with after work can give you a breakdown if why it won't work.
- Parachute in for the first date, they've hired a bunch of kids straight out of college who are all hacking away at whatever they've been assigned to. So I'm walking around chatting to all of them, asking what they're doing and how long they think it'll take. Most of the time the answer is "oh, probably about two weeks". At the same time I'm running a mental Gantt chart for all the components and figure out that even if they meet their wildly, ludicrously unrealistic time estimates it's going to take them at least two years to get the product out the door. Some of their two-week timelines I estimate would take an absolute minimum of six months work, but probably a lot longer. Or a few days if they use the existing open-source tool that does the same thing, but they're going to do it better so they don't need to use any existing code.
- Site visit, the office manager screws up the travel arrangements, screws up the accom, the developers clock in at exactly 9am and down tools on the minute at 5pm so it's tumbleweeds in the office at 17:00:01, the mgt. is in a separate set of offices on the other side of the building and don't talk to the devs, over lunch the devs are talking about how much longer they'll stay before they start sending out resumes.
- The possibly-criminal one, I'll use an analogy to avoid identifying the actual job but lets say you've been brought in to develop an automated pen-testing toolkit. Not just a vulnerability scanner but something that then exploits the vulnerability. "You don't think that this could perhaps be misused by the people that commissioned it?". "Oh, we were so enthusiastic about the job that we never even thought about that".
You may have noticed a common theme here, talking to the techies and/or taking them out for lunch/drinks. So if there's one takeaway, it's do that. That's how you'll find out whether it's an organisation you want to get involved with or not.
Does small claims work for b2b? I thought it was only for people. I've had a small (~£400) business invoice that I've chased a few times and now I'm waiting for the yearly interest to mount up to around the 5 year mark just out of spite
This is the sort of economics that small companies face when working with large companies, particularly when physical things/CAPEX are involved. Large companies expect net 30/60 terms to pay you. That's much simpler for their accounting/purchasing department. This bureaucracy occasionally necessitates nudging, especially if the intermediary you're dealing with didn't set up the invoice request on time in whichever SAP/Salesforce/Oracle system they use.
This is usually the same the other way; many vendors will give business clients net 30. That's nice if you're a small company and need to plan ahead. But occasionally, because you're considered small (liability), some vendors will want the money up-front. So unless you're very careful with cashflow, you end up in situations where your main sources of income (big contracts) are coming in after you need to spend money on a widget to fulfill deliverables.
Depending on the situation, the contract can demand the client purchase/ship things and work doesn't start until you have them in hand. This is usually the best route as you now have an out, and it's not an unreasonable request, but it doesn't always pan out that way!
I took "good client" to mean, "is easy to work with/communicates well/knows what they want", not just "pays on time". The inverse being, the ones who don't pay on time were already a pain in the ass to work with.
I think OP needed "emergency service is cash up front".
In a different domain, this is the painful lesson of almost anyone who tries to help people in a bind -- you can try to help, but yours is unlikely to be the advice that sets them straight, so you shouldn't get too invested with unproven or, especially, proven unreliable actors.
This brilliantly captures what I see from YouTubers who do off-road vehicle recovery. People are super nice until the bill comes, then you learn “only release the vehicle on payment.”
It's worth keeping in mind that the only practical "saving" for the OP will result in not doing the job at all, since this client most likely doesn't actually have the money and never will.
It should be, oh, short-term rush job in a foreign country for a sketchy client? That is most definitely cash up front time. Oh, you can't afford that? Sucks to be you, not going to do it.
> - Late payment shall incur interest at 8% above the BoE base rate and a late fee of 100 GBP as per the UK Late Payment Legislation. Partial payments on invoices shall apply to late fees, interest, and then principal, in that order.
As I understand it, from our lawyer, is that this exact wording is automatically enforceable in UK courts and easiest in the event of a dispute. It’s also generally internationally accepted.
I've always wondered, in cases like this where 8%+2% (for example) can either mean 10% or 8.16%, why doesn't the contract just give a fictional example of how the maths would work out?
One thing I learned from consulting is if you position yourself as the "fix your mess" guy you have to be very defensive. Ask for more up-front, and bail at the first sign of underpayment.
Be pleasantly surprised when a poorly run project is being run by nice, honest people. Prep for the opposite.
You're not just delivering expertise, you're stepping into a situation where incentives are already misaligned, expectations are fuzzy, and there's often a cashflow problem hiding somewhere
It sounds counterintuitive but from my experience it are often nice and (somewhat) honest people. They just came after whoever messed it up horribly in the first place and at some point they came to the conclusion that they need some external help.
IMHO, he was defensive in the way you suggest. He got ~25% upfront.
But let's assume he got 100% upfront.
More importantly, he didn't protect scope or contract change requests. That was the time to contract. It sounds like collecting 100% would've been leaving money on the table for value delivered.
I like your label for "fix your mess" guys, but I know/use a few who definitely bill and get paid much later (especially lawyers). Sucks for OP that he contracted with a CN firm with credit risk.
Author - I don't think you learned the correct lessons here.
The most important thing is that you weren't "ripped off" - you were taken advantage of. Ripped off is when you buy a TV that's supposed to work and it doesn't. Or you just don't get one.
You were taken advantage of - which requires your active consent. Nobody made you do all these things for them on faith. You could have left after a few days. You could have demanded payment up front. But you volunteered to continue down this awful path.
I hope you learn to value your time, and yourself, higher than this in the future.
I’ve worked on these terms or similar ones on every job I’ve ever done, for 20 years. They’re the norm. How do I know? I’ve been in this industry for 20 years. I’ve been on both sides of freelance contracts in that time. I moderate a discord of 8000 of my peers. I speak at industry events. We compare notes. We all work ahead of payment, and honestly nothing about the fact that this was a rescue job was particularly out of the ordinary either. This is the case in which I wasn’t paid. If you’re suggesting we as a labor force attempt to change things en masse, it’s an interesting idea. If you’re suggesting I personally could have succeeded at getting payment up front in this case, you may be right, although I didn’t know how desperate they were until ~2.5 weeks into the run. If you’re suggesting I should demand payment in full before every job, you are suggesting I should win zero jobs.
Edit to note: I took the contract’s enforceability on faith. That was not what I thought it was. Had I known the contract gets you jack shit in the way of justice, I’d have taken more seriously the possibility that these guys would rip me off, which they did.
The difference between armchair pricing advice (and the advice of literature on the subject) vs the actual experience of trying to action said advice has lead me to question my sanity more than once.
I agree with you on all points, but I'm surprised you come with that much experience but also faith that contracts are enforceable, especially when dealing with PRC clients. I understand you had a California based entity you were dealing with but even then, I've experienced first hand the worth of a contract in California very early in my career and it's the same as in the PRC: toilet paper. I guess maybe you've just been lucky to go this long without finding that out?
I think you're prob right that I've been lucky? Also almost all my contracts are NY state. Also almost all my work comes word of mouth in what 10 years ago was still a small industry ... folks are less likely to rip you off when you know dozens of people in common.
Well, they signed a contract saying they would pay a certain amount in exchange of certain work. They were supposed (and promised) to pay that amount, and when the time came, they didn't. I'd say that's a rip-off and very similar to "I was supposed to receive a TV on exchange for certain work, and what I got in the mail was a brick".
> The most important thing is that you weren't "ripped off" - you were taken advantage of. Ripped off is when you buy a TV that's supposed to work and it doesn't. Or you just don't get one.
It isn't, but you can't get blood from a stone and squeezing costs money.
It sounds like the entity that the contract is with has no real assets and/or is based in a jurisdiction which is hard to enforce judgements in. That's a case where you need to get paid up-front, which is the real lesson in this article.
Good lessons in here, but the part about giving up on legal action because they told him they’d dissolve the entity is questionable. This is where it pays to have a good relationship with a lawyer who will be up front about your chances and the cost of legal action. The sum discussed falls into the difficult range where it could take enough hours to try to collect that you’d be worse off than where you started if the lawyer can’t deliver anything.
However them dissolving the entity and moving their assets and IP around is also not free and will incur overhead, if they actually did it.
Threatening to dissolve the entity seemingly admits that they do have something worth collecting against. In my experience the companies who run out of money just tell you that they’re out of money and they also start losing key employees and your email contacts because they’re not getting paid either. If the company continues to exist and they’re threatening you to not sue, that might be a sign that they do have the money but they’re relying on intimidating contractors to not try collecting it.
Legal action is not free, so all of this has to be weighed.
EDIT: I should explain how I know this. Younger me took a job with a startup that got in over its head with spending but the CEO didn’t want the party to stop. His strategy was to stop paying any vendors and use the remaining cash flow to only pay past invoices for vendors that we needed something from (more work, more product) or anyone who looked like they were going to sue us. If someone got lawyers involved, they got paid. Needless to say I didn’t keep that job very long.
I don’t know this for certain, IANAL, but it seems to me if they’re threatening to dissolve the entity, that could open the owners to personal liability.
I believe dissolving a corporation requires you to attest you've paid all debts. If that's impossible, you have to go through the bankruptcy process. If you attest that you've paid all debts but you haven't, now you're committing frame against the government which they really don't like. You could be imprisoned for that.
I've started operating in really granular units of work. Like less than $1000 per. Cash on delivery. This won't work with all clients and all jobs, but there are places where it does work very well. Advantages include being able to avoid paper contracts altogether. Verbal agreements and a 4 column xlsx that is reviewed monthly are all that seem to be required with some of my clients.
If I don't get paid for one day of work, I will probably get over it in a few hours. If I don't get paid for six months of work, we will have a serious problem. The tighter and more incremental we can make the delivery process, the less likely anyone gets screwed.
If a party is pushing hard for long-term contracts or large up-front sums of payment, I would walk away from that transaction unless there was a literal golden goose sitting in their lap.
I am also trying to set granular milestones and get paid every 1000€. Not provide 20000€ work and then start looking for my money. I can live with a loss of 1000€, but missing 20000€ will impact negatively my mortgage and investment plan.
I have a friend who retired but still does some contract work. They were on salary their whole career and are not used to sending invoices and tracking down payments. One of their clients was late paying and my friend wasn't concerned, but I encouraged them to be diligent about insisting on being paid on time. I have been a freelancer for over a decade and in my experience, the further away you get from a bill, the less real it becomes to the person who owes it. They start forgetting what the project was, or worse, start questioning why they even have to pay for it. You have to stay on top of these things or they can spiral out of control.
Just for my own general curiosity, once a bill is overdue, how often do you nag the customer about it? Or does it look more like an escalation process? (Start out with a polite email, then a phone call, then a phone call to their manager/business partner, etc?) Do you ever "fire" customers who always pay, but always pay late and only after they've been reminded 3 times?
They get 30 days to pay. I used to start sending reminders if they were late by even a day past that, but I quickly learned that can unnecessarily embarrass or annoy some clients, so now everyone gets a two week grace period after the 30 days are up.
I send a gentle reminder just to my immediate point of contact to start. If that doesn't work, I start sending more business-like requests for payment every week, and I CC anyone I think might help make it happen.
I've never fired anyone, and everyone has eventually paid (knock wood), but there have been times when I assumed the money was a lost cause (though never five figures worth like the person who shared this blog post).
But more than once, I've had a client contact me and request new work, and I've had to remind them they still have an unpaid invoice. I'll tell them I can't start anything new until the old work is paid. They almost invariably blame the delay on their billing department, and the money eventually finds its way to me.
Never do anything on faith or as a handshake deal. Always ensure you get paid (hint: escrow is kryptonite for weasels). Trust everyone, just not the devil inside them.
Back in my freelancer days, I learned this lesson the hard way, and I became strict about payments (half in advance, the other half required to turn over the final work). But when someone I'd known for years had an emergency, and needed their software patched over a weekend, I made an exception and delivered the work in good faith. And then they tried to get out of paying for it. I had to harangue them for months to get the check.
The lesson I learned is that it doesn't matter how long they've been your friend, when it comes time to pay, they may still try to stiff you. The value of your service diminishes infinitely after it has been performed.
I don't know what it is about me, but I have a sixth sense for losers who will not pay. There's been a number of times where acquaintences have taken contracts I've turned down (against my advice too) and have not been paid. There's something about slick communicators that just activates my spidey sense.
And TBH, I have also had a few false positives. One contract I did not take (it was for a mix of equity and cash) turned into a 10B+ company, and I would have made enough to retire (again) on it over a 1-year contract. I didn't because the founder who called me just sounded completely clueless and was barraging me with marketing speak instead of explaining what he needed. I was so exhausted from his BS I just decided I didn't need the headache. (This is also a danger of having enough to retire ... you turn down a lot of potentially lucrative work because you just don't think the headaches are worth it).
In the grand scheme of things, other than that one big missed opportunity, I haven't missed too much upside by being so picky. And when I'm counseling colleagues about their unpaid contracts and conflicts, I'm always silently thanking the stars I have the luxury to say no. I know that's a priviledge.
I was owed billable hours from Stanford University but refused to do any further work until the outstanding invoice was paid. Their accounts payable department didn't want to, so I had to tell the client "sorry" and walked away. It's really weird because I didn't have a problem in the near past then and was even an FTE at one point. I'm unwilling to work for free or for imaginary, low liquidation preference equity of a worthless startup.
Ordinarily, I would sign master agreements and set PO terms up-front. Typically, the better customers would agree to very strict requirements / objectives for a particular time period for a specific price. Any deviations would require negotiation. Hourly is fine too but there must be regular milestone deliveries so that there's demonstrable value for money being conveyed rather than an appearance of a milking-oriented consultant. Expectations must always be managed.
Actually sort of darkly clever– they turned OP into an unwitting investor.
Project goes well, he gets paid and they're best buds, and he doesn't even realize he was scammed (by intent). If not, well there's no point suing a failed company.
What's an "AR bus"? How can augmented reality windows work on a bus unless you are (a) tracking the passenger's head and (b) there's only one passenger?
When you walk into a shitshow like this, the first thing you do is secure your payments. Anyone who is in such bad shape like how OP described it means that they are desperate, and desperate people will do and say anything to get help.
It is most likely going to not pay anyone so you need to make sure you're paid above and beyond anything else otherwise walk.
I am so deadly serious - do not continue working if your invoices are late.
You don't have to be a jerk about it, just explain to your primary contact that you need to be paid and you pick up tools again when the money has arrived.
BUT it is on YOU to properly negotiate reasonable payment terms. And if you don;t know or don't trust the client then require payment in advance until a stronger commercial relationship can be settled in. Do not be a baby - go research business contracts and payment terms.
Do not be afraid to lose business from companies that are squeamish about paying you - in fact actively avoid such companies.
There's no such thing as a company temporarily being in dire straits. These kind of companies are always in dire straits and crisis - it's a business tactic to not deliver and not pay. Just stay away, whether you're a customer, a contractor, an employee or if they want to be your customer.
Your blog is a treasure trove - thanks for sharing.
Do you still cut your own hair ;) ?
But yes us folks in the creative world can learn a few things from the corporate world when it comes to contracts and payment schedules. Mike Monteiro's talk 'F*ck you, pay me' comes to mind.
The fact that this is so many words makes me worry the author underappreciated the main lesson: risk exposure.
When you go out of pocket - you are out of pocket and the risk is all yours. If that one thing was different then all the remaining risk is on the client - they don't want to do version contr - ok cool you still get paid.
Usually when you have to pay in to get paid out (outside of a direct investment scenario) it's a scam. The people who fall for the Nigeria Prince thing are operating the same way.
That doesn’t really sound like “being ripped off,” as opposed to “betting on a lame horse.”
The people behind this were irresponsible, childish, and exemplars of the Dunning-Kruger effect. They weren’t really hardline crooks. Crooks are probably a lot more organized.
I have gotten myself invested with similar crowds. There’s usually a charismatic spokesperson, leading the chaos.
They likely didn’t plan to rip him off, but paying him wasn’t really something they thought about. Real crooks put lots of planning into taking money.
> Multiple very junior developers were touching (binary, TouchDesigner) code and deploying straight to production via thumb drive, with zero version control. In fact, they didn’t know what version control was.
I suspect many startups fit that description. If they survive, then they usually pull themselves up by the bootstraps, eventually. Many of them collapse, taking everything with them.
When I was unemployed, looking for a job, living off severance, someone from my previous job contacted me to do some consulting work "for a friend". Initial terms were for some kind of stock in the company.
It seemed shady from the start, but since it involved python, something I had very little experience with, I decided to try it. I worked like 15-20 hours per week for a few months, learned enough python to be comfortable with it and some other APIs as well (being a little vague on purpose). Later said they could maybe afford to pay me some $$ due to another company they had founded being sold (I verified this much, the person had founded and sold a few companies).
It eventually fell apart after my first deliverable (as I expected, mostly). I used encryption to send python files that would only work for a couple of weeks. Not sure if they ever did anything with it (it's been a few years). Oh well, it ended up helping me get another job where python was a good skill to have.
The biggest loss was that of losing all trust in the person setting things up.
He says "trust your gut" about 12 times, but the whole lead up has 0 mention that he was worried he would not get paid. His only gut feelings seemed to be around tech issues.
I once worked for a founder who gave me a “raise” from a W2 to a 1099 contractor. Except the raise was just not deducting any of the taxes from my pay. I was 24 and was naive.
I sued him, and won reclassification as well as two payments he never paid me, but both the state and IRS could care less that I’d been taken advantage of. They happily added their fees, interest and penalties for something I was the victim of. Years later, the debt resurfaced in the form of aggressive levies directly to my bank account after no contact for over 10 years and no collection activity. By then, the fees and interest were 3x what was “owed” to them. They actually told me it’s standard practice to wait until the debt grows and then collect on it. After so many years I didn’t even have the records from the lawsuit.
I learned that the government doesn’t care about you, especially if you’ve been scammed you have to be extra careful because that’s a signal to them you’re someone they can get even more money from. The process of disputing it will waste more of your time and mental health than it’s worth in all but the most extreme cases, and that is 100% by design.
Contract terms can vary greatly depending on the situation and the company you’re working with.
Early/frequent payment terms are always good to have but you may not always have the leverage for it depending on where you’re at as a contractor.
Takes getting ripped off a times before insisting on better terms I guess. It’s like bombing your first job interview… you can prepare but it just needs to happen.
> The faith was that if they could’t pay, they’d let me know because I was actively digging their asses out of a hole they’d dug, and doing so tirelessly and professionally, without complaint.
I get what the author is saying here. But it's a bad idea to treat one's work team with deep communal devotion in this way, as if they are a kind of dysfunctional family-- or, in the author's case, apparently higher in status than real family.
Doing this without proper remuneration creates a market distortion, and that is bad for capitalism.
There's not any incentives to pay you when they're in China and there's no legal recourse from the US. Even in the US suing is often times not worth it economically and getting someone to pay after a win is painful too if they don't just file bankruptcy. Escrow or upfront only is the best way to go.
A contract is an entrance ticket to a court case. If you can't afford to fight the court case, the contract isn't much use. If the other party aren't in a jurisdiction that the court can enforce in, the contract isn't much use. If the other party can just vanish and when you try to take them to court, the contract isn't much use.
A contract doesn't stop other people from doing things (or make them do things that they would otherwise not do). It just specifies that if they do those things (or don't do them) then you can take them to court. You still need to be able to take them to court for any of this to work.
Contracts aren't toilet paper. But they also aren't the magic solution to all problems that they are sometimes held up to be.
Tried freelancing for a bit. Thought being my own boss might give me better mental health. I couldn't have been more wrong. The better part of my time was spent on convincing the clients, what is built is what they had described.
Man that was an awful read (but well written). As someone who is starting to slowly work on my own consulting activities, I feel I am up against a world of "ripping-off". Thanks for sharing.
no it isn't. why you did not sue them? success rate of international arbitrage (New York Convention) proces into China is 90% success rate. USA/EU companies who sue Chineses companies in China for breach of contract seem to be winning rates. Enforcement of USA curt orders do not need to go thorugh Chinese courts again, and are enforced by local authorities (local sharks) with success rate of 80% for foreign firms suing chinese firms. fees are also fairly low. case is straightfoward.
if author went and sue, likely he would get his money back.
No longer a contractor but I used to offer a 10-15% discount for paying upfront. Almost every client took this deal. Earned a little less but never lost sleep over payments.
In such a situation (startup with unclear financial situation, foreign country) I would demand weekly payments. And if it is more than a week late, I would just leave.
OP wasn't ripped off, OP just forgot to define their contract. Like, entirely.
Nobody forced OP to work 11-14 hour days. Contracting 101 stipulates that you define your hours ahead of time. You come in, you provide your expertise, and you leave at the end of the day. Let the client's junior employees work long hours. Not your problem.
OP brought their own equipment, which is totally fine but "who provides equipment" is also in the contract from the start. OP should have made a list of equipment that the client will require to complete such a project and stipulate a client budget be set aside to cover any shortcomings as they arise.
The contract is where you define when you get paid. "Deposit is XYZ quantity, non-refundable. Contractor will be paid for the upcoming week in advance by X date. Failure to remit payment will halt work."
I understand that the point of this blog piece is that it was a learning experience for OP but this stuff is pretty obvious isn't it? This is pretty much what comes up when you google stuff like "how to get into freelance contracting." I'm shocked and feel bad for OP for letting things get this far. Sadly, they were not ripped off by anyone but themselves.
> They were carpetbaggers and dilettantes convinced by their own inexperience and the advice of a onetime VJ that they could pull off something I’d twice helped quote to be brought home by a cadre of hardened killers with shitloads of math and know-how at eye-watering prices. They were way way way over their heads and were in no way interested in updating their priors in light of the shit they were swimming in.
And yet, somehow, you gave them the most important time you had for their promises.
Very very important to get something up front; sometimes half up front doesn't always work for long projects, but you can scope out tranches where if you dont get paid for the first section of work, you walk away.
Has saved me from wasting my time on loads of projects before.
Reading the thread, I think most of us who have worked contracts here have been burned one way or another
Doesn't China have that whole "social capital" thing where defaulting on debts and other bad behavior can have real long-term consequences? Or does that not apply if you're defaulting on debts to non-Chinese?
Hmm, definitely an unpleasant lesson in lead qualification. Lots of clients aren't worth it. Good learnings to trust your gut. Especially with places that are in bad shape income-wise.
Sadly every consultant can tell you at least one (hopefully only one) story about clients who refuse to pay. Either outright, or with some excuse about you "not delivering", or they "not liking" what you delivered. I have one of those stories as well.
My SO has her own story - she ran into a guy whom she later found out does it as a policy: hires people, never pays, threatens to sue them if they publish their story. Her lawyer told her to just forget about it.
It's then that find out the limitations of our legal system: if the client is international, forget about it. If they're out of state, prepare to deal with an expensive legal process taking place where the laws may not always favor you. And even if it's local, and you won in a small claims court - good luck collecting.
I have periodic payments built into all my contracts, with the final payment taking place after acceptance tests, but before me surrendering all materials and code. I won't say this is a 100% bulletproof solution, but the alternatives suck.
In atheist cultures with no concept of sin, people see obeying contracts as being sheep, it is in fact looked down upon. People will pay you only when they need something else from you, so solution is to frame a contract in a way they won't be able to make do without your final deliverable - and assume that final deliverable will never be paid, just price that in.
It's not a pleasure to work like this, but it can be done.
One thing I've learned from working in different fields, which seems to hold true for all business: If a client approaches you with a dumpster fire of a repair job, are too broke to get a real fix, and get agitated (or simply ignore) by the talk of what the job will cost - simply tell them "sorry, I can't help you with this one".
99 out 100 times they will be a hassle, and you'll be lucky if they pay you anything beyond the upfront payment.
Even worse if it is another business, as the author writes, those can just declare bankruptcy and walk away.
> End clients can’t tell the difference between these bozos and me. I don’t know what to do with that information but it feels bad.
This is unfortunately all too common. It's hard for someone who isn't an expert in the specific field to separate a smooth grifter from a more typical sales pitch
You went to China and worked for free. What you whining about? Are you surprised they did not pay you? You even had a sore wrist. What a hero! No sympathy whatsoever.
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- Payment is due X days after receipt of invoice, or immediately after the consultant has addressed any quality issues, whichever is sooner
- Late payment shall incur interest at 8% above the BoE base rate and a late fee of 100 GBP as per the UK Late Payment Legislation. Partial payments on invoices shall apply to late fees, interest, and then principal, in that order.
- In the event of a late payment the invoice for the next deliverable shall immediately fall due.
- The consultant shall be entitled to shift deadlines on deliverables in the event of a late payment as a result of any work disruption, without incurring any liability.
- Payment shall be made in X currency, or an exchange rate at X date on Oanda.com shall apply.
- The client is responsible for any bank fees incurred by their, or any intermediary bank. In the event of a SWIFT transaction it shall be made with the OUR payment code.
- The jurisdiction in the event of a conflict shall be England and Wales. Neither party shall be bound by arbitration.
- The client and consultant shall both indemnify the other up to the total value of the contract and shall not under any circumstance be liable beyond X GBP.
We also no longer share downloadable links of our deliverables until they are paid up. They get a view/comment only link for reports/data etc.
We’ve found that clients that aren’t willing to accept these terms won’t pay you either way.
We determine the net days on the invoice based on the credit rating of the client. Ironically, the good clients pay within 2-3 days normally, and the difficult ones are very “long tail”. About 1% of contracts tend to fully or partially default on their payments.
We’re in a particularly credit poor industry but our average delay due to late payment is 23 days. Those clients where we stop delivery pay on average 11 days sooner than those contracts where we don’t stop delivery.
This is based on around 2,000 invoices sent over the last 5 years.
It costs something like 80 quid to file for recovery in court and in our experience invoices are immediately paid up when a “Letter before action” is sent.
You burn the relationship, but arguably you probably don’t want it anyway.
> simplified claims procedure
I believe this is what we call small claims court in the United States. The threshold varies by state, but it is a very effective way to deal with recalcitrant companies both large and small.
https://www.gov.uk/make-court-claim-for-money
This isn't arbitrary peanut-gallerying, I've walked away from several jobs that weren't anywhere near as bad as the one in TFA because I couldn't see any way forward that wasn't going to end in disaster. One of them at least, I'm fairly certain, would have ended up in criminal prosecution.
From my pov, green flags for a good "bad" project mostly come from the attitude of leadership - especially if they already recognise there's a problem, and that some form of cultural change may be needed rather than expecting a purely technical solution.
On the other hand, if they seem reluctant to consider root causes, or if there's any sense that they're seeking to cover up problems or shift blame, then those are pretty clear red flags. Quick fixes tend to fall apart, and aren't really satisfying for anyone.
- Fly out to the initial discussion, talk to their architect, some guy they imported from France in an otherwise entirely non-French company a long way from France (not bashing French folks here but just wondering where they dug this guy up). They've read about scalability and told him to come up with a design for that, which is distributed stateless everything (this was years before microservices and CRUD and whatnot). Except that they don't have the resources to build the stateless distributed everything so they're getting all the downsides of stateless distributed everything without getting the scalability that it's supposed to provide. You know its bad when one of the nontechnical sales guys that you're having a few drinks with after work can give you a breakdown if why it won't work.
- Parachute in for the first date, they've hired a bunch of kids straight out of college who are all hacking away at whatever they've been assigned to. So I'm walking around chatting to all of them, asking what they're doing and how long they think it'll take. Most of the time the answer is "oh, probably about two weeks". At the same time I'm running a mental Gantt chart for all the components and figure out that even if they meet their wildly, ludicrously unrealistic time estimates it's going to take them at least two years to get the product out the door. Some of their two-week timelines I estimate would take an absolute minimum of six months work, but probably a lot longer. Or a few days if they use the existing open-source tool that does the same thing, but they're going to do it better so they don't need to use any existing code.
- Site visit, the office manager screws up the travel arrangements, screws up the accom, the developers clock in at exactly 9am and down tools on the minute at 5pm so it's tumbleweeds in the office at 17:00:01, the mgt. is in a separate set of offices on the other side of the building and don't talk to the devs, over lunch the devs are talking about how much longer they'll stay before they start sending out resumes.
- The possibly-criminal one, I'll use an analogy to avoid identifying the actual job but lets say you've been brought in to develop an automated pen-testing toolkit. Not just a vulnerability scanner but something that then exploits the vulnerability. "You don't think that this could perhaps be misused by the people that commissioned it?". "Oh, we were so enthusiastic about the job that we never even thought about that".
You may have noticed a common theme here, talking to the techies and/or taking them out for lunch/drinks. So if there's one takeaway, it's do that. That's how you'll find out whether it's an organisation you want to get involved with or not.
> Ironically, the good clients pay within 2-3 days normally, and the difficult ones are very “long tail”.
Why ironically? Isn't that exactly what you'd expect?
Kind of mirrors "it's expensive to be poor"
This is usually the same the other way; many vendors will give business clients net 30. That's nice if you're a small company and need to plan ahead. But occasionally, because you're considered small (liability), some vendors will want the money up-front. So unless you're very careful with cashflow, you end up in situations where your main sources of income (big contracts) are coming in after you need to spend money on a widget to fulfill deliverables.
Depending on the situation, the contract can demand the client purchase/ship things and work doesn't start until you have them in hand. This is usually the best route as you now have an out, and it's not an unreasonable request, but it doesn't always pan out that way!
In a different domain, this is the painful lesson of almost anyone who tries to help people in a bind -- you can try to help, but yours is unlikely to be the advice that sets them straight, so you shouldn't get too invested with unproven or, especially, proven unreliable actors.
>> "emergency service is cash up front“
Neatly distilled I believe you are correct
It should be, oh, short-term rush job in a foreign country for a sketchy client? That is most definitely cash up front time. Oh, you can't afford that? Sucks to be you, not going to do it.
> - Payment shall be made in X currency, or an exchange rate at X date on Oanda.com shall apply.
Typically you would reference average exchange rate published by the central bank
> - Late payment shall incur interest at 8% above the BoE base rate and a late fee of 100 GBP as per the UK Late Payment Legislation. Partial payments on invoices shall apply to late fees, interest, and then principal, in that order.
Do you mean 8 percent, or 8 percentage points?
They mean “percentage points”.
https://www.gov.uk/late-commercial-payments-interest-debt-re...
As I understand it, from our lawyer, is that this exact wording is automatically enforceable in UK courts and easiest in the event of a dispute. It’s also generally internationally accepted.
Be pleasantly surprised when a poorly run project is being run by nice, honest people. Prep for the opposite.
But let's assume he got 100% upfront.
More importantly, he didn't protect scope or contract change requests. That was the time to contract. It sounds like collecting 100% would've been leaving money on the table for value delivered.
I like your label for "fix your mess" guys, but I know/use a few who definitely bill and get paid much later (especially lawyers). Sucks for OP that he contracted with a CN firm with credit risk.
The most important thing is that you weren't "ripped off" - you were taken advantage of. Ripped off is when you buy a TV that's supposed to work and it doesn't. Or you just don't get one.
You were taken advantage of - which requires your active consent. Nobody made you do all these things for them on faith. You could have left after a few days. You could have demanded payment up front. But you volunteered to continue down this awful path.
I hope you learn to value your time, and yourself, higher than this in the future.
Edit to note: I took the contract’s enforceability on faith. That was not what I thought it was. Had I known the contract gets you jack shit in the way of justice, I’d have taken more seriously the possibility that these guys would rip me off, which they did.
> The most important thing is that you weren't "ripped off" - you were taken advantage of. Ripped off is when you buy a TV that's supposed to work and it doesn't. Or you just don't get one.
Pretty sure they used "ripped off" correctly: https://dictionary.cambridge.org/us/dictionary/english/rip-o...
>You could have left after a few days.
Veering towards victim blaming territory there. Also was the FAQ about progress payments added to the OP site after you commented earlier?
> A contract is toilet paper
It isn't, but you can't get blood from a stone and squeezing costs money.
It sounds like the entity that the contract is with has no real assets and/or is based in a jurisdiction which is hard to enforce judgements in. That's a case where you need to get paid up-front, which is the real lesson in this article.
> That's a case where you need to get paid up-front
Or at least in very small batches and with very short due dates.
However them dissolving the entity and moving their assets and IP around is also not free and will incur overhead, if they actually did it.
Threatening to dissolve the entity seemingly admits that they do have something worth collecting against. In my experience the companies who run out of money just tell you that they’re out of money and they also start losing key employees and your email contacts because they’re not getting paid either. If the company continues to exist and they’re threatening you to not sue, that might be a sign that they do have the money but they’re relying on intimidating contractors to not try collecting it.
Legal action is not free, so all of this has to be weighed.
EDIT: I should explain how I know this. Younger me took a job with a startup that got in over its head with spending but the CEO didn’t want the party to stop. His strategy was to stop paying any vendors and use the remaining cash flow to only pay past invoices for vendors that we needed something from (more work, more product) or anyone who looked like they were going to sue us. If someone got lawyers involved, they got paid. Needless to say I didn’t keep that job very long.
Definitely bring it up with your lawyer.
If I don't get paid for one day of work, I will probably get over it in a few hours. If I don't get paid for six months of work, we will have a serious problem. The tighter and more incremental we can make the delivery process, the less likely anyone gets screwed.
If a party is pushing hard for long-term contracts or large up-front sums of payment, I would walk away from that transaction unless there was a literal golden goose sitting in their lap.
I send a gentle reminder just to my immediate point of contact to start. If that doesn't work, I start sending more business-like requests for payment every week, and I CC anyone I think might help make it happen.
I've never fired anyone, and everyone has eventually paid (knock wood), but there have been times when I assumed the money was a lost cause (though never five figures worth like the person who shared this blog post).
But more than once, I've had a client contact me and request new work, and I've had to remind them they still have an unpaid invoice. I'll tell them I can't start anything new until the old work is paid. They almost invariably blame the delay on their billing department, and the money eventually finds its way to me.
Well run businesses will pay you on the 29th day. :)
Also, mandatory: https://creativemornings.com/talks/mike-monteiro--2/1
The lesson I learned is that it doesn't matter how long they've been your friend, when it comes time to pay, they may still try to stiff you. The value of your service diminishes infinitely after it has been performed.
>
“Starting work without a contract is like putting on a condom after taking a home pregnancy test"Choice quote from the linked talk (aptly titled "F*ck you, pay me").
> I missed the month of May with my 2-year-old kid. My wife cared for a 2-year-old alone.
The weirdest part to me, receive a call and just get up and go? Priorities? Did you write this blog post from the doghouse?
And TBH, I have also had a few false positives. One contract I did not take (it was for a mix of equity and cash) turned into a 10B+ company, and I would have made enough to retire (again) on it over a 1-year contract. I didn't because the founder who called me just sounded completely clueless and was barraging me with marketing speak instead of explaining what he needed. I was so exhausted from his BS I just decided I didn't need the headache. (This is also a danger of having enough to retire ... you turn down a lot of potentially lucrative work because you just don't think the headaches are worth it).
In the grand scheme of things, other than that one big missed opportunity, I haven't missed too much upside by being so picky. And when I'm counseling colleagues about their unpaid contracts and conflicts, I'm always silently thanking the stars I have the luxury to say no. I know that's a priviledge.
Ordinarily, I would sign master agreements and set PO terms up-front. Typically, the better customers would agree to very strict requirements / objectives for a particular time period for a specific price. Any deviations would require negotiation. Hourly is fine too but there must be regular milestone deliveries so that there's demonstrable value for money being conveyed rather than an appearance of a milking-oriented consultant. Expectations must always be managed.
Project goes well, he gets paid and they're best buds, and he doesn't even realize he was scammed (by intent). If not, well there's no point suing a failed company.
Some favorites:
- No way they would actually screw me over! We're buds/they got me tiger balm/they paid some/I did them a solid
- Thin veneer of safe fallbacks that doesn't hold up under scrutiny. Legal or other 'repercussions'
- Endless delays and excuses (though it's usually too late by this point)
It is most likely going to not pay anyone so you need to make sure you're paid above and beyond anything else otherwise walk.
I am so deadly serious - do not continue working if your invoices are late.
You don't have to be a jerk about it, just explain to your primary contact that you need to be paid and you pick up tools again when the money has arrived.
BUT it is on YOU to properly negotiate reasonable payment terms. And if you don;t know or don't trust the client then require payment in advance until a stronger commercial relationship can be settled in. Do not be a baby - go research business contracts and payment terms.
Do not be afraid to lose business from companies that are squeamish about paying you - in fact actively avoid such companies.
Do you still cut your own hair ;) ?
But yes us folks in the creative world can learn a few things from the corporate world when it comes to contracts and payment schedules. Mike Monteiro's talk 'F*ck you, pay me' comes to mind.
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https://www.mikemonteiro.com/
https://creativemornings.com/talks/mike-monteiro--2/1
When you go out of pocket - you are out of pocket and the risk is all yours. If that one thing was different then all the remaining risk is on the client - they don't want to do version contr - ok cool you still get paid.
Usually when you have to pay in to get paid out (outside of a direct investment scenario) it's a scam. The people who fall for the Nigeria Prince thing are operating the same way.
The people behind this were irresponsible, childish, and exemplars of the Dunning-Kruger effect. They weren’t really hardline crooks. Crooks are probably a lot more organized.
I have gotten myself invested with similar crowds. There’s usually a charismatic spokesperson, leading the chaos.
They likely didn’t plan to rip him off, but paying him wasn’t really something they thought about. Real crooks put lots of planning into taking money.
> Multiple very junior developers were touching (binary, TouchDesigner) code and deploying straight to production via thumb drive, with zero version control. In fact, they didn’t know what version control was.
I suspect many startups fit that description. If they survive, then they usually pull themselves up by the bootstraps, eventually. Many of them collapse, taking everything with them.
It seemed shady from the start, but since it involved python, something I had very little experience with, I decided to try it. I worked like 15-20 hours per week for a few months, learned enough python to be comfortable with it and some other APIs as well (being a little vague on purpose). Later said they could maybe afford to pay me some $$ due to another company they had founded being sold (I verified this much, the person had founded and sold a few companies).
It eventually fell apart after my first deliverable (as I expected, mostly). I used encryption to send python files that would only work for a couple of weeks. Not sure if they ever did anything with it (it's been a few years). Oh well, it ended up helping me get another job where python was a good skill to have.
The biggest loss was that of losing all trust in the person setting things up.
A little hyperbolic, but more accurate than not when laypeople think about contracts.
A contract isn’t a magic spell, it is a declaration of shared understanding that can be used for clarity and in legal proceedings.
If you think of a contract as a way to ensure you get what you agreed, yes, it is toilet paper, because a contract doesn’t remove counterparty risk.
> End clients can’t tell the difference between these bozos and me. I don’t know what to do with that information but it feels bad.
this is only getting worse with ai.
all the artifacts of good work are there but none of the depth.
I sued him, and won reclassification as well as two payments he never paid me, but both the state and IRS could care less that I’d been taken advantage of. They happily added their fees, interest and penalties for something I was the victim of. Years later, the debt resurfaced in the form of aggressive levies directly to my bank account after no contact for over 10 years and no collection activity. By then, the fees and interest were 3x what was “owed” to them. They actually told me it’s standard practice to wait until the debt grows and then collect on it. After so many years I didn’t even have the records from the lawsuit.
I learned that the government doesn’t care about you, especially if you’ve been scammed you have to be extra careful because that’s a signal to them you’re someone they can get even more money from. The process of disputing it will waste more of your time and mental health than it’s worth in all but the most extreme cases, and that is 100% by design.
Early/frequent payment terms are always good to have but you may not always have the leverage for it depending on where you’re at as a contractor.
Takes getting ripped off a times before insisting on better terms I guess. It’s like bombing your first job interview… you can prepare but it just needs to happen.
> The faith was that if they could’t pay, they’d let me know because I was actively digging their asses out of a hole they’d dug, and doing so tirelessly and professionally, without complaint.
I get what the author is saying here. But it's a bad idea to treat one's work team with deep communal devotion in this way, as if they are a kind of dysfunctional family-- or, in the author's case, apparently higher in status than real family.
Doing this without proper remuneration creates a market distortion, and that is bad for capitalism.
> A contract is toilet paper
A contract is an entrance ticket to a court case. If you can't afford to fight the court case, the contract isn't much use. If the other party aren't in a jurisdiction that the court can enforce in, the contract isn't much use. If the other party can just vanish and when you try to take them to court, the contract isn't much use.
A contract doesn't stop other people from doing things (or make them do things that they would otherwise not do). It just specifies that if they do those things (or don't do them) then you can take them to court. You still need to be able to take them to court for any of this to work.
Contracts aren't toilet paper. But they also aren't the magic solution to all problems that they are sometimes held up to be.
> A contract is toilet paper
no it isn't. why you did not sue them? success rate of international arbitrage (New York Convention) proces into China is 90% success rate. USA/EU companies who sue Chineses companies in China for breach of contract seem to be winning rates. Enforcement of USA curt orders do not need to go thorugh Chinese courts again, and are enforced by local authorities (local sharks) with success rate of 80% for foreign firms suing chinese firms. fees are also fairly low. case is straightfoward.
if author went and sue, likely he would get his money back.
Nobody forced OP to work 11-14 hour days. Contracting 101 stipulates that you define your hours ahead of time. You come in, you provide your expertise, and you leave at the end of the day. Let the client's junior employees work long hours. Not your problem.
OP brought their own equipment, which is totally fine but "who provides equipment" is also in the contract from the start. OP should have made a list of equipment that the client will require to complete such a project and stipulate a client budget be set aside to cover any shortcomings as they arise.
The contract is where you define when you get paid. "Deposit is XYZ quantity, non-refundable. Contractor will be paid for the upcoming week in advance by X date. Failure to remit payment will halt work."
I understand that the point of this blog piece is that it was a learning experience for OP but this stuff is pretty obvious isn't it? This is pretty much what comes up when you google stuff like "how to get into freelance contracting." I'm shocked and feel bad for OP for letting things get this far. Sadly, they were not ripped off by anyone but themselves.
> They were carpetbaggers and dilettantes convinced by their own inexperience and the advice of a onetime VJ that they could pull off something I’d twice helped quote to be brought home by a cadre of hardened killers with shitloads of math and know-how at eye-watering prices. They were way way way over their heads and were in no way interested in updating their priors in light of the shit they were swimming in.
And yet, somehow, you gave them the most important time you had for their promises.
Has saved me from wasting my time on loads of projects before.
Reading the thread, I think most of us who have worked contracts here have been burned one way or another
My SO has her own story - she ran into a guy whom she later found out does it as a policy: hires people, never pays, threatens to sue them if they publish their story. Her lawyer told her to just forget about it.
It's then that find out the limitations of our legal system: if the client is international, forget about it. If they're out of state, prepare to deal with an expensive legal process taking place where the laws may not always favor you. And even if it's local, and you won in a small claims court - good luck collecting.
I have periodic payments built into all my contracts, with the final payment taking place after acceptance tests, but before me surrendering all materials and code. I won't say this is a 100% bulletproof solution, but the alternatives suck.
It's not a pleasure to work like this, but it can be done.
99 out 100 times they will be a hassle, and you'll be lucky if they pay you anything beyond the upfront payment.
Even worse if it is another business, as the author writes, those can just declare bankruptcy and walk away.
> End clients can’t tell the difference between these bozos and me. I don’t know what to do with that information but it feels bad.
This is unfortunately all too common. It's hard for someone who isn't an expert in the specific field to separate a smooth grifter from a more typical sales pitch