Ask HN: Handling an international non-paying client

[ycombosnator]

tl;dr foreign company hasn't paid my team's invoices, we probably can't sue, what else can we do?

I contracted with an overseas company and was paid for most of my work there. Unfortunately, the company hasn't paid my team for the last few months of our work. We're now coming around on 9 months since the due date.

The manager still promises payment but always has new excuses. The company has not gone under and actually has even hired new contractors, albeit in different divisions.

Due to the fact that this company is on the other side of the globe, a lawsuit is impractical.

Are there any other tactics we might employ, such as public shaming blogs, glassdoor reviews, etc?

edit: thanks for all the helpful feedback. Some more details: we have not worked for quite some time (basically after it was clear that something was wrong with payments). I've escalated this to the CEO, he/she has ignored our contacts. This company is in Australia and I am in the US.

[valarauca1]

Close repos, stop working, if they ask why or ask for a copy of the unfinished work. State they'll receive it on payment.

They play hardball, you play hardball. That's life.

[toomuchtodo]

This is the best advice without getting an international business law professional involved.

[cmdrfred]

I'd 'update' the software to include a feature they are asking for along with some DRM. Get creative, make it hard to reverse engineer (Maybe write some critical functions in Python and then load them from a webserver or something). Wait until it gets loaded into production and pull the plug.

But then again, I'm an A-hole.

[pritambaral]

While it's a nice plan, certainly fun to watch, implementing it takes time. Investing time on a non-paying client doesn't sound very prudent.

[Animats]

Australia? You're in luck. Australia has a "Civil and Administrative Tribunal" system for disputes up to $25,000. It can be used entirely on line and by phone. See "http://www.qcat.qld.gov.au/matter-types/debt-disputes/applic.... If there's a hearing, you can request that it be by phone.

I used this once after a problem with freelancer.com. They paid up within hours after filing.

[pan69]

This link seems to be dead. Also keep in mind that you will have to file this in the state (territory) where the business is based. The above link is for Queensland. Have a look here for more info:

https://www.accc.gov.au/contact-us/other-helpful-agencies/st...

[faster]

A long time ago I did some work for a startup in China (I'm in the US). They paid my first invoice, but stalled and promised and didn't pay the second. After 3 months of listening to their lines ("the check was mailed yesterday", "the check will go out today!", "the person who signs the checks was in an car accident") I saw in the news that they had gotten another round of funding, and who the backers were. So I sent an email to the CEO and said that I'd let their backers know that they weren't paying their bills if they didn't pay today. Guess what? They paid.

I guess you could call it a threat of 'focused shaming'.

The amount due was a relatively small amount. A collection agency might work better for larger amounts.

[CyberFonic]

+1 on the scold.

Emails don't work well in these situations. Send a letter, ring the CEO ... and STOP doing any more work.

[orthecreedence]

First, stop all work, close repos, etc etc etc.

This doesn't help you now, but next time get a deposit of two-months estimated work up front. If they don't want to pay the deposit, don't work with them. Now, if you do two months of work and they happen to not pay you, you stop all work, take the deposit, and you lost nothing. If they want to start work again, charge another 2 month deposit up front and scold them for wasting your time.

Time to scold you (sorry)...why the hell did you do 9 months of work without getting paid? What are you thinking?! You have inadvertently taught this company to never pay you, ever. You are now (and most likely always will be) the guys they get free work from.

You might have to cut your losses and move on.

[tkinom]

This worked for me once a long time (10+ years) ago. Collect emails as evident and stop working. Send them a email and tell them I send all the emails correspondent to a collection agency.

The last email got me the full $4k invoice paid in full in one week after weeks of delay.

In the future, setup project in milestone phases, next phases won't start until payment received. AND written in the statement of Works/Contract that you will only provide the source code and / or assign the copyright over until the payment is received in FULL.

[atlantic]

I second this approach. Had a similar problem with a client in the UK two years ago. They dragged their feet for a few months, then gradually stopped answering emails and taking my phone calls altogether.

I wrote a very angry email saying I intended to sell the debt to a collection agency, to ensure they paid in full, even if I never saw any of the money myself. They replied on the very same day, we negotiated, and I recovered about half the money I was owed by the end of the week.

On the other hand, forget shaming them publicly - you open yourself up to accusations of libel - or empty threats of legal action - you simply don't have the resources. The same goes for sabotaging or erasing your code. But debt collection is a very real option.

[zackmorris]

Happened to me too, lost about $350 on one client and $1100 on another. The first one was dissatisfied with my work and kept demanding more and more minute changes to reach even the first milestone (essentially a feature creep issue). The second paid initially but I made the mistake of finishing the work on the promise of a final payment which never came. I just ate it.

The truth of the matter is that loosing a grand and a half to learn the F U pay me principle is probably pretty cheap. What hurts more is the time I lost (6 weeks to the first client, maybe 2 weeks to the second). I was inexperienced and "just wanted to do a good job" and assumed that my contribution had little value and that the clients knew best.

Software development is not a handyman service. Clients can’t just drop someone else into a project and expect it to ever be finished. So a contractor that can actually deliver is rare and his or her skills are in such demand that clients really don’t have the leverage they think they have. I think the myth of the ninja programmer stems from this. An overachieving freelancer that doesn’t charge enough is the holy grail.

So in the end, I think the single biggest problem in contracting today is an information deficit on the part of developers. We forget just how much education we’ve acquired, how few of us are being considered for a contract, how much regular employees are getting paid for similar work, etc. Even now I am almost pathologically incapable of setting my rates correctly and charging the appropriate amount for the hours I’ve worked.

I’ve been thinking lately that we need a set of guidelines that all developers follow, for the good of the whole. Things like charging half up front, refusing to work for free beyond the hours agreed upon and charging say 75-150% of the going rate for the type of work performed. Freelancing sites like eLance and oDesk should track these at least as much as, say, how often a developer responds to job invites. As it stands, I think we are in a race to the bottom and losing our influence day by day until this mobile bubble implodes by decade’s end.

In other words, this nonpayment problem shouldn’t have happened in the first place, because our industry has serious issues that older professions have done a better job of addressing.

[sauere]

The first and most important step: stop working, do not answer any questions, do not deliver anything. Demand your payment.

How much is the amount we are talking about here? I have seen some people in similar situations and things never ended well. Some invested five-figure $$$ in lawyers and legal fees and never got a penny back.

[csomar]

Here are my suggestions (in order):

1. Get the CEO on phone. This worked for me TWICE. If you face the person face to face and tell him that you need the money to operate, odds are he is going to pay.

2. How much can you sabotage him? Can you get/have access to his site/business. Don't tell him that you are going to shutdown the site if he doesn't pay BUT "in case of non-payment, the site might go under-maintenance because of lack of blablabla"

3. See if you can reach some of his friends/clients and if one of them will pressure him to do it. This is very effective if 2 and 1 doesn't work.

4. DMCA notice. If you don't have access to his login/servers, you might want to shutdown the site or a part of it.

Email me if you need help with a cold call.

[scott_s]

A popular and infamous presentation by Montalvo Machado on this issue: http://www.youtube.com/watch?v=6h3RJhoqgK8

[virtue3]

This. so much this.

Really, the single most important lesson when doing work for any company.

[Igglyboo]

What country are you in and what country are they in? If it's something like US -> UK you have legal recourse most likely. If it's something like US -> Somalia then you're out of luck, stop working and demand payment. Also take away their access to everything you have done.

[carterparks]

I'd avoid the public shaming but I would threaten legal action even if you aren't prepared to follow through. I might even hire your general counsel to write a threatening letter. And yes, stop working now. As you probably know you should have stopped months ago.

[hunvreus]

You may have to take the loss; as others said it is the price of the "Fuck you, pay me" lesson. You'll most likely learn multiple other lessons along the way that will encourage you to have a tougher stance when dealing with clients.

A few of the things you'll learn the hard way;

- Ask for an upfront payment before work starts (40%). - Subsequent payments (over the initial 40℅) are tied up to deliverables (usually a few weeks sprint). - Code is never handed over before final payment. - Ignore promises of future payments or recommendations: if you're not being paid, you do not work. - Learn to say no: not just no to additional features, but also no to certain projects.

[notahacker]

I expect Australia has a relatively efficient system for settling small claims, assuming you have a reasonably solid paper trail involving signed contracts, dated invoices and evidence of work undertaken. They certainly have decent law firms who should be able to advise on a much more effective way to get noticed and paid than making probably illegal threats involving glassdoor reviews.

There's also likely to be an Australian debt collection agency willing to buy their debt at a substantial discount (again assuming a paper trail) if you've reached a situation where you just want some money for the work done now.

[kirillzubovsky]

Get a collection agency involved if the outstanding bill is really high, but if you can forgo the payment, tell your friend and friend's of friend privately about the misbehaving company, then just forget about them. You can make more money working with a new company than you would by worrying about this one. It's unfortunate, but that will teach you for the future (like it has to probably every single person who tried freelance consulting before). btw, would appreciate a private message with the name of the Co as well, for future ref ;)

[joshuaheard]

Depending on the country, it can be practical to execute on an American judgment overseas. If your amount due is over $100,000, I would contact an international law firm and see what they think.

[cylinder]

Well it would be important to know which country it is, which you did not mention, so I'm not sure how you expect us to help you. There's a big difference between UK and China.

[davemel37]

This might seem counterintuitive but if this company is juggling invoices...stopping work is the worst thing to do because you fall off their priority list of people they need to pay.

while i don't think you should work with struggling companies and you definitely shouldn't work if there is a high likelihood of not getting paid..

but if you want to get paid...the best thing you can do is show how it's in their best interest to prioritize paying you over other outstanding invoices...

[zoner]

Tell the local autorities that they are using your copyright material without permission, therefore they're breaking copyright law. It's an offence in most countries and will involve confiscation of evidences (servers or computers).

It's easier if the foreign country has an embassy in your country.

[briandear]

If it's China that advice is worthless.

[lovelearning]

Slightly off topic, but I think such transactions should always be done via some kind of escrow service. If a buyer refuses to agree to escrow, don't take up the contract. Justice systems of all countries involve huge costs but in the end offer very little hope to the little guy.

[willmacdonald]

Use facebook.

I frequently make a facebook connection with clients. As a last resort I will post a subtle comment to there facebook page.

Works everytime, and it doesn't cost anything.

I should add that I don't use facebook for anything important myself.

[JSeymourATL]

>The manager still promises payment...

Escalate the dialog with a superior. Go to the CEO/CFO/COO. Call one day, then e-mail the next. Old school overnight letters get attention. Stay on them daily for a month.

[arsalanb]

I feel removing your work (Eg: clearing out you git repo, or deleting source files off the live page, etc) ought to get the attention of somebody superior.

[aantix]

Write a Twitter bot and make anyone that mentions that company aware of their tactics.

[brador]

In some countries that would be Libel.

[cbd1984]

But not in America.

America even has a law giving that notion teeth: http://en.wikipedia.org/wiki/SPEECH_Act

> The Securing the Protection of our Enduring and Established Constitutional Heritage (SPEECH) Act is a federal statutory law in the United States that makes foreign libel judgments unenforceable in U.S. courts, unless either the legislation applied offers at least as much protection as the U.S. First Amendment (concerning free speech), or the defendant would have been found liable even if the case had been heard under U.S. law.

[Someone1234]

Libel is a false statement. Therefore not libel. However they could sue you for "libel" and then you'd lose because they had a bigger budget for lawyers fees.

[aroch]

It isn't libel if its based on a fact...

[bikamonki]

What's your bargaining power? Use it to get your money.

[porter]

Start getting paid upfront.

[Kinnard]

Bitcoin.