Reply to: Client not paying, should I withhold code transfer?

[aussielong]

Why not embed a licensing product in your code? That way you deliver as agreed on due date... But they get limited functionality till they pay for a full licence.

I used ezlicence to do this once (might be dead now), it took about an hour.

[Software]

Try to speak to them politely and solve the problem within yourself.

Explain them the consequence of not paying the money on time about legal and also your personal problem.

This will solve the problem.

[Boo]

The contract is on time and material basis and does not cover the details of handling the code over in any detail.
Should I withhold the code transfer until I receive the money?
What are my options besides Small Claims Court if I don't?

You need to comply with any terms of the contract that exist, or else why should they pay you ? It might be possible for them to argue that you are required to deliver in the same way as hitherto as an implicit contract term based on past practice. In any case if you go to court to chase money do you really want to explain to the judge that you did not provide the software ?

If it is bespoke and cannot be sold elsewhere I would continue to provide it whilst chasing invoices. When payment becomes 2 weeks or so overdue then I'd pop in one of those £20 Solicitors letters you can commission.

Boo

[BS1397]

Should I withhold the code transfer until I receive the money?

There is no point in holding onto the code, not unless you feel as a professional that you can't release it yet because you think it is critical to test it further to avoid those undesirable anomalies or "special feature", or it may require optimization to meet your high standard of output?

Would you say that might take you at least a week?

[Safe Collections]

Hi.

So I had reservations for that particular client for quite a while, hence I negotiated 7 day payment terms.
The have been late every single time, I now have been paid twice, have one overdue invoice, and I will send the final one tomorrow.
I think they have run out of money and they have asked to suspend work for two weeks, I have asked for a formal notice which they sent.
My concern is that they now have no intention of resuming work or paying as I have completed a sizeable chunk of software.
They haven't received this weeks code changes yes.
The contract is on time and material basis and does not cover the details of handling the code over in any detail.
Should I withhold the code transfer until I receive the money?
What are my options besides Small Claims Court if I don't?

If you have serious reservations about the solvency of the client we would argue that you should withhold the code. At least until such time as your currently overdue invoice is paid. Otherwise what was the point in negotiating 7 day payment terms in the first place?

You don't need to spin it to the client as anything more than it is, good business practice.

If you hand over the code now you could be facing the prospect of finding you have two invoices unpaid as opposed to just one.

Admittedly given the nature of our business we tend to take a hard line, but just about every contractor who contacts us to collect an unpaid invoice starts the story with "the client had always paid late..."

Your further options if the account remains unpaid are debt collector, solicitor or small claims court more info in our contractoruk article.

[escapeUK]

Great advice, with that, they probably get me sued?

I imagine they would have to pay you to be able to sue you.

This work we didnt pay you for wasnt fit for purpose!

[SueEllen]

Hi.

So I had reservations for that particular client for quite a while, hence I negotiated 7 day payment terms.
The have been late every single time, I now have been paid twice, have one overdue invoice, and I will send the final one tomorrow.
I think they have run out of money and they have asked to suspend work for two weeks, I have asked for a formal notice which they sent.
My concern is that they now have no intention of resuming work or paying as I have completed a sizeable chunk of software.

Where are you working?

If you are working off-site you can inform them that you have not done any work this week because you have an outstanding invoice, and due to their previous late payment and excuses you thought you wouldn't get paid.

Once they pay that one, upload the code and chase them for the final invoice.

Ideally once the second invoice was overdue you should have sent them recorded delivery letters/emails with invoices attached which state they are overdue and have a lot of red on them before doing this.

If you do hand the code over you can get a debt collector to chase them for the final invoice if they don't pay rather than going to court. ( Choose one that only gets paid if they collect. )

I never needed to involve a debt collector with an ex-client who was late paying invoices as once I said I had done no work and it screwed up their plans they started paying all invoices on time. They also paid interest on one of the invoices because it was overdue. I had sent them enough warning emails though.

[Gentile]

Great advice, with that, they probably get me sued?

I wouldn't have thought so. But even if that were a possibililty, I'm not sure why you're worried about them being willing and able to spend money pursuing a legal case, when it seems they can't even pay their suppliers on time.

[stek]

Let's be clear here. So far they have been late. Happens a lot, and most cases are paid and everyone goes there own way. A few are not paid whatever the op does. So.. you put your code in as normal and chase them for payment starting gently and then with interest and so on till you get paid. Nothing so far actually says you won't get it. If you don't put the code in you definitely won't get paid. The only other option is if you put it and the can't pay. If that is the case you wI'll never get the money whatever you do if you get my meaning. Whether you deliver or not you won't get paid.

All this said I cannot see an argument for not completing. If they can't pay what does it matter what you do with code. You have already done the work so stick it in and get the moral highground and a chance to get paid. Withholding it is a sure way to nothing surely.

Do the work, stick invoice in and start Dunning I say.

I just got 6k from something I forgot about - so swings and roundabouts really....

[northernladuk]

Just expalin it to them then, be honest and up front. You haven't paid on time yet and to be honest I have become a little nervous about having my invoices paid.

Let's be clear here. So far they have been late. Happens a lot, and most cases are paid and everyone goes there own way. A few are not paid whatever the op does. So.. you put your code in as normal and chase them for payment starting gently and then with interest and so on till you get paid. Nothing so far actually says you won't get it. If you don't put the code in you definitely won't get paid. The only other option is if you put it and the can't pay. If that is the case you wI'll never get the money whatever you do if you get my meaning. Whether you deliver or not you won't get paid.

All this said I cannot see an argument for not completing. If they can't pay what does it matter what you do with code. You have already done the work so stick it in and get the moral highground and a chance to get paid. Withholding it is a sure way to nothing surely.

Do the work, stick invoice in and start Dunning I say.

[moggy]

I've been doing those gentle reminders with all the previous invoices - like I said they haven't paid on time a single time using various excuses.
Since I have very little to lose, I want to flip it around now...

Just expalin it to them then, be honest and up front. You haven't paid on time yet and to be honest I have become a little nervous about having my invoices paid.

[yasockie]

If you want to try the gentle approach first, I say send them an email (or letter, recorded delivery) reminding them of your outstanding invoices and leave it at that - don't mention handing over the code but don't give it to them. If they wonder where the code is, let them chase you for it and then you can reply that you can't hand over the code until payment is sorted.

I've been doing those gentle reminders with all the previous invoices - like I said they haven't paid on time a single time using various excuses.
Since I have very little to lose, I want to flip it around now...

[Willapp]

Is there any other way I could phrase this to the client so that they see this is in a positive light?

If you want to try the gentle approach first, I say send them an email (or letter, recorded delivery) reminding them of your outstanding invoices and leave it at that - don't mention handing over the code but don't give it to them. If they wonder where the code is, let them chase you for it and then you can reply that you can't hand over the code until payment is sorted.

[Willapp]

There's a saying that "possession is 9/10th's of the law", or in other words once you've handed over the code, what leverage do you have to ensure payment? Even if you go down the small claims route there are no guarantees of receiving the money (trust me, I've been there) and if that happens do you really want to give them the satisfaction of knowing they got your hard work for free?

I say hold onto the code and inform them (in writing) that they have breached the terms of the contract due to non-payment of your invoices and you will not be turning over any further work until all outstanding invoices are settled in full. At least then you're in the driving seat and they would have to go legal if they think there is a case for you to hand over the code without them paying for it.

[yasockie]

I would say, your chances of getting paid if you hand over the code are slim.

The chances of getting paid if you withhold the code are zero (don't know this for sure, but it's what I'd base any decisions on).

Are there any IP issues? Obviously you wrote reusable code...

I find it hard to think like that client, to assume that perspective, as they often say contradictory things in one sentence etc.
Is there any other way I could phrase this to the client so that they see this is in a positive light?
For example: if I receive my final invoice on time I will provide you with critical bugfixes at no extra charge?