[consulting] Proper Collections Procedure

[Eric Goldhagen]

At 11:12 AM -0400 8/16/06, Khalid B wrote:
>First collect all the info you have on their requests that caused
>the cost overruns, and make sure that it is documented. This will
>prove useful for your case with their management and in courts
>should that be necessary.
>
>Try contacting others in the hierarchy in the company if your
>contact is ignoring you. They may end up just handing it over
>to your contact anyway, but at least someone else knows about
>it now.
>
>Prepare a complete document recounting the history of the
>project, original estimates, their requests causing the overruns,
>and your repeated requests for payments. Present it to higher
>up management.
>
>Courts are the last resort, and the documents above will help
>if you wish to go that route.

The most important thing is to do all communication in writing from 
now on. No phone calls with promises of being paid. Written emails 
with payment schedules. Don't allow phone calls that can be later 
debated -- get everything in writing for accountability and clarity.

As Khalid points out, you want payment, not a day in court. Even if 
you win in court you waste a lot of time and money in the process. 
More than once I had to also agree to take a percentage of what was 
owed, just to get it over with and avoid the lawyer fees.

Going up the hierarchy of the company if there is one is the best 
place to start.

Do you know anyone that can act as an unofficial mediator? I once had 
a professional contact that also did work for the same client talk 
them into paying just by bringing it up and embarrassing them.

You could simply refuse to hand over the code until they pay. Will it 
cost them more to hire someone else to re-create it than it would to 
complete payment? That can be a motivator for them.

But, many of your options will be defined by the wording of the work 
agreement or contract that you are doing development work under. Many 
agreements have provisions for mediating these issues.

Best of luck.

--Eric

>On 8/16/06, Michael Haggerty <mhaggerty at trellon.com> wrote:
>>I have a question for other members of this list about how they handle
>>collections.
>>
>>I have a complicated matter with a client and their delinquent invoices.
>>They are refusing to make payment on fairly large bill after they have
>>received a lot of custom code and already launched the site on their own
>>servers. The justification they cite is cost overruns in the development
>>process, most of which were for features not included in the original spec
>>but which they themselves requested. The overruns were within 15% of the
>>total project price.
>>
>>I have tried dealing with them reasonably for several weeks and received
>>multiple payment promises that were broken. The bill is now quite a bit
>>overdue and it's taking a huge amount of time dealing with all the craziness
>>around their tab (they keep requesting further clarification about things
>>that were done months ago and it's eating up my team's time). They are
>>dealing with other Drupal shops at this point and there is no way for me to
>>cut off services. What really burns me is the site was for a third party who
>>has already paid them and the cost of development was less than 1/8 of what
>>the third party paid.
>>
>>Anyone have any ideas?
>>
>>M
>>
>>
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