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Accounts Receivable

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by arg cio

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How does one get a customer, who has become displeased with your service, to close their account, and pay the final bill?

This is for a free lance web development project that I took on, and at first things were fine, but then one day, I get thisemail (very professional) that says, "Terminataion of business".

Here is a little piece of the "puzzle". I worked out a hosting and development deal with a small company who had NO IDEA about the internet. I worked a fair deal, and they were going to pay a flat monthly rate for website/domain hosting. I also was developing their sites for them, and the initial feedback I got was "..Great!", "..Awesome!", etc. then oneday, "Nope, it looks unprofessional, scrap it!"
Okay, no problem. That wasn't the angle they were going for, they want "professional".
So I RE-DID the site, gave them a break on the hourly fees for the site they scrapped, and counted hours for the "new" site. The new site was professional, but they said It was going to slow, and they "found" someone else to do it. Okay, no problem. They asked for a invoice on the development, and I produced it, with a balance due. They decided to continue allowing me to "host" their site, and their "other guy" would upload it. No, problems. Site goes down, and I wasn't watching it as close as I should have. It was down for three days, I didn't know it. On the second day, they sent me email saying that it had been down for a week. I told them that wasn't possible, and I checked, and it was down, I got it online. they sent the termination email. okay fine, pay your bill, and I'll never talk to you again(email terminated business). But, now, they deny that any bill exists.

The bad news.. I don't have anything in writing other than my invoices that I have sent them. Any ideas?

BTW, I have two domains for sale (a way to get some money back, if I can sell the domains). :)

7 replies

by realgem

You probably don't want to hear this, but I think you are your own worst enemy.

ALWAYS keep records of any formal communication with your client, particularly those involving billing, completion, or other contractual angles.

Since you did not,I don't think you could support any legal position. The best you can do right now is to continue phoning them and try to find someone who is reasonable.

If you had any real documentation, I would say that you have a decent basis for a suit giventhe flip-flopping that they did.

Did you discuss a fee for the continued hosting? If not, then you failed to negotiate a contract.

And consider this: when your site was down for three days, might you have caused damages to the client? Did you delay their project by three days? What did that cost them?

by arg cio

Please post another answer if this information helps....

We did discuss a fee for the continued hosting, and it was paid in a reasonable time frame.

I don't know if damages were caused by the site being down, they claim there was, but I have records that indicate that they only had 1-4 visitors on average every two weeks, There would not have been any delay on a project, as they had access to anything they needed.

What did it cost them, I don't know, and they are unwilling to tell me.

I do know, that they paid me by check a "down payment" for starting work on the project, and later asked for a statement of where those moneys had gone. I generated a statement, and submitted it to them, and got no response, then after a short time, the issue began, and their internet venture with me ceased. After that, they stated that they would not pay, and that they would defend themselves in court if necessary.

by realgem

Well, my advice is to walk away from it and treat it as a lesson learned.

You've received partial payment for work that was partially completed. Naturally, they should not be using anything that you have developed since they have not paid for itin full. If they are, request that they return any materials to you.

They seem prepared to go to court, which means they've probably received legal advice.

I would acknowledge the termination of the contract/agreement, noting that there is nothing outstanding by either party. Be sure to thank them for the opportunity to work with them, and keep a hardcopy of the letter you sent! I'm not sure how you're feeling, but resist the temptation to write a snotty letter.

You're better off salvaging your reputation by walking away from this. You could do yourself irreparable damage by pursuing this further. I don't know what market you're in, but even if the local population is 1,000,000, the IT community is much smaller. Word gets around, people talk. You could easily close a lot of doors by making a big stink about this one contract.

Next time around, be more formal. Ensure that your work plan includes several checkpoints where the client signs off on the work done to date. This will prevent you from going too far and not getting paid for the work. I should note that it is extremely normal for clients to change their mind on how something looks. Be prepared for that eventuality, because it will very likely happen again.

By the way, you should post the domain names if you are interested in selling them.

by arg cio

WWW.StarSoundTechnologies.com

WWW.AudioMachineDesign.com

I am not longer in the hosting business(local market saturation). I am now staying with repair, and servicing. I also work for a company that does hosting, and it would be a conflict of interests. But as far as word of mouth from this company, I believe, if I was going to be hurt, it would already be happening.

Based on the communication already received, I don't think they have received legal counsel for this, but have stated that they have fought and won in the past.

(sorry it took so long to post a reply, but I thought I did, and it must not have taken it..)

by realgem

Well, I'm fresh out of ideas. I can't help you pull a rabbit out of your hat and get this customer to pay the bill.

The thing is, they think they have already paid. You get a customer to pay the bill by making the statement of work very clear up front, and then by invoicing against the SOW. Unfortunately, prevention is the best way.

You could continue to beg and plead of course. Ask to talk to someone "higher up". But, your former customer knows their position is defensible, althoughnot necessarily ethical or in the spirit of the contract.

By the way, the word of mouth thing goes both ways. Your former customer, if they continue to work this way, will find that quotes will be driven up by the cost of having a lawyer draft or review any contracts proposed to them.

by arg cio

Well, thank you for your answer! Since you are the only one that left any, I am giving you credit. I wish someone could have come up with collection agency, or some other idea and how to go about doing it.. but thanks!

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