Unpaid Invoice Collection Process and Termination Invoice

[WordIsBond]

Usually I would be of the same opinion as yourself re potential future work but in this case I can't see that happening.

Ok. So if there is nothing to be gained relationally, then you just have to make risk/reward/timing assessments. A mutually-agreed solution is going to get you your money in a more timely way, with less risk, but a lower reward. You have to decide how much risk you are willing to take and how much delay you can live with, and make your own assessments of the likely risks, likely delays, and likely reward, of the different approaches, then make the best decision based on your own risk and delay tolerance.

The risk of getting paid nothing is not nil. The chance of getting the full notice period is not nil. You know the company and the person, so you are better placed to guess the probabilities than we are. And you know your own tolerance for risk and how much you need the money soon, far better than we do. Those are the factors you consider, but you'll have to weigh them yourself, I'd say.

[WordIsBond]

Are you saying you'd take on a client for a second time, that didn't honour the contract the first time?

Maybe. Not a long project, certainly. Not one that forced me to take considerable risk. I might want more upfront than normal. I wouldn't go back to a client that didn't pay for work done, but one that broke off a contract, maybe, even if they didn't honour an agreed notice period. Especially if it were a startup with some cash troubles.

It just depends on the circumstances. In general, I don't like burning bridges.

[jpknz]

Is the bridge completely burned as far as this being a potential future client? If not, my view is a business should not burn those bridges for a relatively small amount of compensation.

Pretty much I'd say - more down to her personality than anything else. She's an odd one and I was warned by my friend prior that she would be difficult to work with - he was right. As I mentioned in the original post I suspect it was down to a mistake I'd made rather than financial issues but it's not something she'd talk to me about. She expected me to know everything without any training and very little guidance despite this being a completely new industry to me and her first company etc. One of her comments to me at the start was she wanted nothing to do with the company from a day to day perspective which had red flags all over it for me!

Usually I would be of the same opinion as yourself re potential future work but in this case I can't see that happening.

[man]

Is the bridge completely burned as far as this being a potential future client? If not, my view is a business should not burn those bridges for a relatively small amount of compensation.

Are you saying you'd take on a client for a second time, that didn't honour the contract the first time?

I can't see many situations where I'd take that view, maybe I'm too risk averse...

[WordIsBond]

Is the bridge completely burned as far as this being a potential future client? If not, my view is a business should not burn those bridges for a relatively small amount of compensation.

[jpknz]

Thanks for the response.

That's generally the case if you are working through an agency. This is a private arrangement, obviously, and it appears from what he said there's a clear notice period provision in the contract.

Yes private arrangement with notice period.

If I understand right, she owes you for a month of work, and said she'd pay that and half a month notice. You said you'd accept a full month notice, so a total of two months. You are fighting over two weeks of notice and you have put at risk being paid for a whole month of work. 6 weeks in the hand are better than 8 in the bush.

It's' one month (December - already invoiced and overdue) + 8 days (Jan - not yet invoiced) owed then any notice period on top. I said I'd accept 1 month to help her out but she obviously wants to pay less than that again.

And the company has no funds so she is personally funding. What is to stop her just closing down the company and starting a new one and leaving you with nothing?

Don't risk 6 weeks for a chance at 8 unless the 8 is virtually certain or the risk to the 6 is very low. In this case, I suspect the risk to the 6 is high and the chance at 8 is low. So do a deal on her terms, and get some money in your hand, and look for another contract.

This had crossed my mind however she does now have signed contracts and money coming in to the company as well as it took several months to get the company bank accounts open (there are several required for her company in different currencies and whatnot) so would be more work than a company without contacts simply liquidating and starting again. My thinking was along the lines of by the time the invoice is issued and not paid, chased etc and then finally a moneyclaimonline claim started that we would be a month or two down the road and there will be more contracts and money in the company meaning it would be quite a hassle to change those contracts

Thanks for your help - need to think about it a bit more. Maybe I'll issue a letter before action for the December invoice and see what her response is.

[WordIsBond]

CBA to read it all but contractors don't get paid notice if thry didn't work it.

That's generally the case if you are working through an agency. This is a private arrangement, obviously, and it appears from what he said there's a clear notice period provision in the contract. So without knowing everything he probably has a reasonable legal position to claim for a full two month's notice.

That said, OP, I think you've been daft here.

If I understand right, she owes you for a month of work, and said she'd pay that and half a month notice. You said you'd accept a full month notice, so a total of two months. You are fighting over two weeks of notice and you have put at risk being paid for a whole month of work. 6 weeks in the hand are better than 8 in the bush.

And the company has no funds so she is personally funding. What is to stop her just closing down the company and starting a new one and leaving you with nothing?

Make a deal on her terms. Tell her you've reconsidered, you want to part on good terms, and you'll take her offer. If she'll pay you for December within a week and pay the half month notice she offered within a month from now, you'll accept that and part as friends.

The notice period is gone, you aren't going to get it. You might have a legal case but you don't have any legal way to force her to fund the company so you don't have a legal case that is worth anything.

Don't risk 6 weeks for a chance at 8 unless the 8 is virtually certain or the risk to the 6 is very low. In this case, I suspect the risk to the 6 is high and the chance at 8 is low. So do a deal on her terms, and get some money in your hand, and look for another contract.

[b0redom]

^-- this. If you're not actively working for her, why should you be paid?

[northernladuk]

Holy crap. That's a long post.

CBA to read it all but contractors don't get paid notice if thry didn't work it. It's the T&M nature of our work. If she's paid your invoices for time worked then just move on. If she has offered you something for notice then grab it and move on.

The only way to get it back is to go to court and that's expensive and time consuming.

Just move on.

[jpknz]

Hi

I just wanted to check that I'm following the correct process for this and not missing anything as it is the first time I'm having to go through this.

I took a 12 month contract doing some admin work for a startup (literally just me as the only employee as the company had just started). The contract is between the startup and my company so I'm a contractor to the startup not a direct employee. After a month and a half the owner has terminated the contract citing she cannot keep funding the company while money isn't coming in (it's taken longer than she thought to get the contracts with clients in place). Not an issue however I suspect the real reason was down to a mistake I made but she hasn't said that and has claimed poverty instead. To date she has only paid the first invoice for November which was around half a month.

The contract between my company and hers states that termination (by either party) must be 2 months. As she was claiming poverty I said make an offer and we can see if we can come to an agreement on the notice period. Her initial offer was that she would attempt to pay the December invoice (from me) by the end of the week (now almost 2 weeks ago) plus half a month termination period. I countered with (ignoring the December invoice as I consider that completely separate to the termination issue/offer) that I would be happy to spilt the notice period down the middle at 1 month instead of 2 months plus the days already passed in January until we had the termination conversation. If this wasn't acceptable then the contractual notice period of 2 months will apply.

Long story short is that she has dug her heals in is only offering the days in Jan plus half a months notice period. I have followed up the December invoice separately but have not had any response at all on that. A friend of mine works with her and has advised that she isn't likely to pay which is what I suspected.

The process I was going to follow is below. I want to check that I'm not missing anything or doing something that I'm not meant to.

Jan days plus notice period

1. Respond back to her latest email (which simply reiterates ' last and final offer of' Jan days plus half months notice) along the lines of : 'It's unfortunate we couldn't come to an agreement on the notice period. As this is the case the contractual notice period applies. Please find attached an invoice for January days and 2 months notice period which is payable within 7 days' (again this is in the contract). Issue invoice for the amounts above and attach to email.
2. When 7 days has passed (assuming she hasn't paid) send a reminder email advising that now overdue
3. Allow another 7 days to pay before sending a letter before action (presuming she hasn't paid by then) with the below points. This will be sent recorded delivery to the business registered address (her accountant - which also happens to be my accountant and my business registered address) and a copy via email to her directly.
4. 1. Attached invoices remain unpaid and overdue
   2. No response received from yourself on these (presuming there isn't)
   3. Unless payment is made within 10 days then legal action will be taken to recover the debt
   4. Interest will be added from the day after the original due date (NB nothing in the contract about interest) at 8% + BOE base rate ( Debt x interest rate x (the number of days late/365) = interest )
   
   

December Invoice

1. Chase again today (will be second time).
2. Send letter before action (presuming not paid) the same as number 3 above.
3. When the 10 days in step 3 for Jan + notice period have passed (and payment still not received) then proceed to use MoneyClaimOnline and make one claim for both issues - I'm assuming I can make one claim for both?

Obviously all of the above presumes she is doesn't pay at some point. Have I missed anything or is there anything else I should consider?

Can I invoice the termination notice period now that she has terminated the contract or do I need to wait until 2 months from termination have passed?

Maybe not a strictly legal question but any advice on how should I add interest to the invoices? Simply issue a new one each month with just interest on it or is there some legal requirement about how this should be done or do I just mention in when I'm chasing the payment and add it to the moneyclaimonline claim? Should I warn about interest earlier (e.g. the 1st or 2nd reminder instead of letter before action)?

For reference the termination clause in the contract is below:

"3. Your engagement will be for an initial period of 12 months, until 18 November 2019 or until terminated by two months' prior written notice by either party or by mutual agreement or any other arrangement agreed. Your engagement might be extended by mutual agreement."

And the payment clause

"9. Payments will be made in arrears within 7 days of receipt of an invoice. The invoicing period each month ends on the last day of the month."

I realise that there may be zero money in the company bank accounts however I do know there are contracts now signed with her company so money will (or it hasn't already) start coming in.

Thanks in advance for any advice.