Has anyone had to deal with a studio that hasn’t paid on time? I’m over 2 months on a remaining $6,000 and they are acting weird.
This is the first time I’ve had to deal with it, and was wondering if I could get some advice. I have a signed contract, BTW. Thanks in advance.
It is pretty much like collecting money from anything else. You can get a lawyer involved and take them to small claims court. The contract will show that they owe the money, but the process is slow so you are not going to collect right away. It could drag on for months.
DON’T IMMEDIATELY JUMP TO THE LAWYERS.
Contact the client with your concerns, weather its by e-mail, phone call, whatever. Talk to them. Find out if there is an issue with the work done, or an issue with them getting money from their client.
Suggest some sort of payment plan. $1000 a month is better than nothing.
People that jump to the lawyers are people that have either never sued, or never been sued. Its never a nice experience for either parties!
lawyers are never the first move, that should be obvious and he stated that he tried to get the money but the studio is acting shifty.
3 strike rule. 6 grand is a good amount of money.
I’m a member of the ‘Federation of Small Businesses’, they have helped me numerous times with legal issues including getting money from an awkward client. If there’s a similar organisation in your country I’d recommend joining.
Find out where you stand, write a letter explaining what your next step is and keep all communications formal and in writing. You are within your rights (normally) to charge interest on late payments, remind them of that so that they don’t delay further. I always state that late payments incur a fee (10 - 20% depending on clients reliability) for every 30 days that they are late, it’s amazing how quickly they pay when you remind them of how much extra they’re already going to pay.
You can’t rush anything. Give them deadlines to respond and be punctual on chasing them up but make sure that they have time to sort out the payments. Usually 7 day intervals are enough.
Quote laws and acts for your area/country so that they know you’ve done your homework.
Act fast…if they’re going into liquidation you might not get anything!
When we start out doing business, that is something never anticipated. Does your contract have a clause for payment plans or a payment schedule? Or does it have a clause for a 3rd party mediation? Do you have a clause for late payment penalties that the client is responsible for?
I have all the above, plus a clause for “In case collection proves necessary, the Client agrees to pay all fees incurred in that process.” So the client knows what they are responsible for.
First I’d try a “soft” approach, email or call the client, trying to understand where they are and what’s going on. It shows you care (kudos for you), and you sincerely want to help them (still putting you in a good light).
If the Client tries to stall or evades you entirely, then I’d go to the next level, which is send them a final invoice, stating that if they don’t contact you within ___ days either to set up a payment schedule, or pay in full, then it will be turned to collections. Let them know this is a FINAL notice, and that if you don’t hear from them, it will go to collections.
As an example, take a look at your electricity bill, and look for a “disconnection notice”, and see their wording. A friend of mine went thru this and I copied their bill for reference.
And if you don’t hear from them in ____ days, send them to collections!
Dun and Bradstreet is a very good collections agency to work with. They are reputable, and very very good. Be aware that if your contract doesn’t have the “the Client agrees to pay all fees incurred in that process”, you will be responsible for the fees.
So this is an opportunity for you to review your contract and make sure it works for the future. And it’s an opportunity for you to salvage your client relationship.
good luck!
Late payments are unfortunate, but not uncommon.
I occasionally freelance for a studio that takes 2-3 months to pay. I start nagging their accounting weekly after 60 days and eventually the checks show up.
They are only doing themselves a disservice, really. Word goes out and the studio has a harder time attracting freelancers.
Stay on top of it, but refrain from lawyers for now.
60 days overdue… send an ultra professional letter to the client’s top person (president, CEO, etc…) via certified mail and specifically ask them to respond in writing via certified mail explaining the reason that they refuse to submit payment.
If they respond properly, evaluate their reasoning and decide your next step.
If they do not respond:
90 days overdue, go to the post office and confirm that the letter was received and signed for by the person you addressed it to. If it was signed by someone it was not addressed to, call the company and specifically ask for the person who signed for it, and ask them if they gave it to the addressee. They will of course say yes. Ask them to transfer you to the addressee. When they tell you that the person is out of the office, immediately go there (if they’re local) and request to speak with the addressee and take a copy of the certified letter in a sealed envelope with a additional cover letter explaining that this is a copy of the same letter that was sent to them via certified mail and signed for by who.
Should they really not be there, leave the letter (politely) with the receptionist.
Call the person who signed each day, and politely ask them to transfer you to the addressee. Often receptionists do not sign for certified letter, a manager does, so they have more clout.
At 100 days overdue, make a slightly revised letter noting the attempts that you have made to contact the addressee and that this is a notarized version of the same letter. Go and have two copies of this letter notarized and have the Notary send the letter via certified mail (some will do this, some will not… find one who will). This notary service will cost some cash, but far less than an attorney.
At 110 days overdue, if you have not received a response, contact the notary and ask them to get the signing info on the certified mail they sent (again, probably a small fee)… use this and spend the next 10 days trying again to get through to the addressee via the signee.
If at 120 days you have failed to receive a response from the addressee, it’s time for the attorney (if the amount is worth it to you). You have a bit of a paper trail illustrating your attempts to collect in proper and polite channels so it’s an easier case, and the lawyer may give you a “prepared” client discount (don’t count on it tho).
If at any point the you do get the client on the phone or confront them in person, find out what’s going on and instill upon them that they need to send a response via certified mail in order to keep this friendly. Your client is delinquent, and unless the reason is damn good, you should expect them to respect you enough to put it in writing. If they don’t, well this is probably a bad client with a history of delinquency.
All of this is about treating each other politely and with respect, using the business tools put in place by society… you start out politely building a paper trail about the situation and build up to a more enforceable paper trail.
At lawyer time, the relationship is likely not salvageable, so don’t start there.
This is very effective if you keep your head, and your cool. Any smart business person knows where this is leading when they receive your first letter. They also know how they will look if they do not comply with your documented and perfectly responsible actions. By going straight to the top, you are probably going to piss off people in the middle, but you’ll get results and possibly a better relationship with the top, if you handle yourself well.
Your in business… that is the top game in the world. Play it like a pro.
If your in the States then use a service like legalzoom.com to file a small claims court case and the person/company will usually pony up and pay for it immediatly without even going to court. It only costs $100 and they will have a process server serve the company for you. You can’t even have a lawyer in a small claims case. So if you we’re going to hire one all they can do is file the paperwork and send letters.
aaww thank you,
I need to quote this,
because sometimes some people make unprofessional post and accusation in
my local 3d forum board, revealing the person names and institution 
Thanks to all. That’s some great advice.
Some I already know…I’m not in a an emergency to get the money, and I’ve worked with the company before, and I also have(had) a good relationship with them in the past. They also love my work…or so it says in one of the last emails received regarding the job in question(keeping it as ammo in case something goes down).
I think a lawyer would be the last line of defense, as everyone has suggested. I’ll wait longer and be very courteous with an occasional email reminder. Hopefully I won’t have to show up there and do “sit-in” in their lobby until some action is taken to pay this bill.
Thanks for letting me know I’m far away from drastic steps.
Oooh I feel your pain. This year I had a similar experience. A local production house made a tv series and sold it to Nickelodeon, who paid them. The production house in turn paid no one and used the money for a following production. Now as luck would have it my girlfriend is a lawyer and her firm offered to back me for free. I was amazed at how much profesional work was involved preparing for legal proceedings. Most people on the outside never see how much legal work there is. The client refused to pay (even though my products were approved and aired on tv, also in the commercial trailer) up to the point where we could legally enter their premisis and reposes equipment up to the sum of the debt.
They paid.
The only way to avoid this whole situation is to ensure you get paid up front. This is not as strange as it sounds. Watermark all work in stages and remove the watermark when the money is in the bank. Sell no work files, or make a special price for them and only release them when you have the money. Make sure you have a steady minimal source of income so you don’t have to gambol on a client paying you. Mine is teaching part time.
I really wish you good luck on this.
Chris
In the contract world it’s very common to have late paying clients. I strongly recommend that you do NOT go to lawyers, you will permanently lose that client.
Like others said, simply send a professional letter stating your invoice is 60 days past due.
If they come to you for more work, make sure they know they have to pay up the balance before you do any new work.
And next time, send your invoices with Terms Net 15 days
Not true,… within 2 weeks I got a request for another job. I turned it down because it was VFX only, but I would have worked for them again,… only on a cash up front basis.
It also has a lot to do with respect.
Chris
Oooh, that is always a very embarassing thing to do. Ain´t nothing worse than the repo men showing up and grabbing your operators workstations and monitors with some clients in the foyer that are getting really tense and thinking about switching over to another production house ;).
However that is one big hammer you´d better keep up through to the end.
In the UK there’s another option that doesn’t involve the lawyers. Once your client has failed to pay by the due date, you can send them a “Statutory Demand”.
Read more about it here : http://www.insolvencyhelpline.co.uk/legal_issues_explained/statutory_demand.php
Have any UK freelancers used this tool?
First off, what does your signed, written, carefully-worded contract say? :bounce:
Secondly, since you have a good relationship with them, call 'em up. Maybe the accounting department lost your paperwork. Or maybe the post-office did.
Send them another invoice, marked “COPY,” and highlight the due-date. Don’t stamp it “PAST DUE.” That’s tasteless… Send it certified.
Assume that an ordinary mistake has been made. Obviously, if you don’t get timely satisfaction, you might have to take them to court. The judge is going to want to know the same things they ask on TV: [ol]
[li] What was your written agreement, exactly? I don’t give a damn what “you said she said you said…” Show me a signed copy. Show me that you did comply with your part of the deal. [] What did you promise to furnish? Did you have explicit approval to do so? Did you have a clear and specific understanding of the price? [] Did you furnish it, and did the client accept it? Were there any objections? Uh huh… right… Prove it. Is there any “dispute” here? [] Why are you here? Show me what you did to attempt to resolve the situation in good-faith. Show me proof of what you mailed to them and when did you mail it and that they received it. Show me any evidence of bad-faith on their part. [] You are asking me to compel them to pay you. The burden of proof is on you. Why should I do that, and in what amount? [/ol]
[/li]
If you have not already done so, read any one of Hermann Holz’s excellent books on consulting contracts. Go watch some re-runs of good ol’ Judge Wopner in the original People’s Court.
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