legal, software, web-development, payment, contractsI’m a software developer and director of a small software company, and I usually work by invoicing my clients which in a sense are my employers (corp to corp relationship).
Sometimes I get long term jobs, but up until now, I had no legal way of making sure I get payed.
As a result there were times at which the job was over and the client decided to not pay me (using many excuses such as I'm broke etc).
Is there any legal way I can make sure they will pay me after I complete the job for them? I’ve heard of contracts but I’m not so sure they really work.
Note that I’m from Greece (European Union) and I usually work with companies found within the US.
What do you suggest? Thank you.
This is the difficulty we all face in business. Yours might be especially difficult since you won't know the legal recourse you have being in Greece and having American clients.
Some things to consider.
We usually have very little trouble in getting paid, but will commonly use the first two items.
There is no contract that will ensure you get paid. You can only do what you can to reduce the risks. At the end of the day, if the client does not want to pay, a piece of paper won’t bring instant relief. You would legally have to chase and an arbitrator or judge would have to award in your favour.
It is important that you realise this - it implies that just because you have a contract, it does not mean that within 30days of delivery you can hand on heart confirm you’ll get paid.
One of the issues that come with your sort of service is your definition of “job done” and the clients definition often differ greatly. I’ve been contracting since 1994 and have seen a few contracts and been part of a few misunderstandings to have a fair idea on what I am talking about.
Oh! Don’t consider your client as an employer. They are not. Legally, huge difference. You are a service provider. They are your customer, or your client. One business working for another business is NOT the same as an employee/employer relationship. When you pay your electricity company, they are not your employee, you are not their employer. Your electricity company is a service provider. You are the client/customer. Employees get sick/holiday/pension and other benefits. When you are a service provider, you do not get these benefits.
So…
You need a contract, and a project plan. The project plan needs to have stage gates - nothing worse than you doing your thing for several months, then produce the goods and for the client to say they wanted red apples, not green apples. If you have stage gates, showing clearly agreed milestones, it weakens their potential arguements at a later stage.
Saying that - I just won’t work with a client if I felt there was any doubt about getting paid.
Long story cut short I had friends who had a web design company. A well known local business man asked them to do a football club fan site. Basic detail and design was agreed. Three or four months later, it was delivered. Client then spent the next six months pushing for extra changes. He kept delaying payment until the web design company almost went bust. He then threatened if they did not do as he asked he would tell all his business contacts not to do business with my web design friends.
Clients like this are rare, thankfully, but they do exist.
My friends eventually just gave up - stopped all further changes until they could get a base line. Pay for the work done, and agree more clearly on what future changes would be done, and agree a price for those changes.
Simarly make sure your contract includes a project plan. Agree when certain stages will be done, agree certain tests that will confirm the task is delivered. Ensure customer has a maximum of five or seven days to reply to any of your questions. At every “stage gate” you reach, they have x number of days to accept/decline that level of progress.
Its painful making such plans, but it reduces head aches later.
Also agree on an arbitrator. Many contracts have them. Almost all of mine say that English courts and English law applies - one had me agree to US arbitration law in a specific state and town - I had a good relationship with the customer and accepted it, though I would never have afforded to chase for unpaid bills.
Lastly, if you do have a disagreement with the client, pause, stay calm. Ask yourself if they are being an idiot, or if there is potential of genuine misunderstanding. Did they wake up one day to make your day hell, or did you both start two different journeys? If the latter occured, find compromise. Getting most of your money sooner is better than the risk of more, or less money after you have exhausted legal avenues.
Oh… and there are companies who will buy your invoice - speak with your bank or an accountant for recommendations. Basically, they will pay you 90% of your invoice for example, and then go chase the 100%. When they get paid, they make a tidy profit.
Best of luck!
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