How to get paid and figure out if I want to keep this client

Question

I have a client who is not paying on time, but it looks like the specifics don't match similar questions on this SE site.

I got a call from a client I did website work for years ago. I had not done this kind of work for many years and frankly I'm not sure I want to now, but nevertheless about a month ago I agreed to bring his website, SEO, social media, and overall marketing for his small business up to speed. Why? He has told me many times how I'm the most honest, most well-informed contractor he's had experience with. And I personally kind of like him too.

So I started working on an hourly basis. I sent one very small invoice and got paid. Then we talked a whole lot about all sorts of feature he would like me to implement. I started that work, and sent a second invoice on the first of the month (one of my two stated billing days). I didn't get paid. On every invoice it states that I charge a whopping ten percent per week late. I sent many voicemails and emails asking to please let me know what's going on with payment, and didn't get replies. Then the 15th of the month rolled around (which I stated initially as one of my invoicing dates). Since I hadn't been paid for the last invoice, I simply didn't send him an invoice at that time but emailed him and said that I will combine it with the next scheduled invoice for this reason (probably a bad idea I realize). Eventually he sent a portion of the invoice payment. I emailed back to let him know that he's three weeks late and what the remaining balance is.

Finally we got in touch via phone. He basically told me that he thought I hadn't done all of the work I said I did. He looked at the page source code and it didn't look complete to him. I explained why his perception would be different and what work I had done as specified. He accepted this and said that part of the reason he didn't pay in full is that he's been swamped with personal family stuff, and part of the reason is that he didn't think I did all the work. That struck me as pretty weird. He also expressed concern that he has no idea now how much all the changes he has asked for are going to cost. And once again, he told me how honest and high-quality my services are compared to others he has dealt with. He also said he would pay me more (but not all) of the now three weeks overdue invoice that day. I didn't receive any payment.

Basically this is how the client relationship strikes me:

1. He's not good at communication. He's very busy and English isn't his first language.
2. He almost never replies to emails but phone calls are fine. He's asked me to avoid emails for communication and I've asked him to please use email.
3. He might not have enough money to afford all the things he has asked for. But so far I have been working for an hourly fee (which is quite high).
4. He also has started paying monthly for hosting and social media services from me.
5. What seems very abnormal is for a client to be so overdue on payments and to actually withhold payment of an invoice without any communication because he didn't think the work was done.

I told him that I will send dollar estimates of each module of remaining work so that we can decide which ones are the highest priority if he cannot afford them all. I also reiterated that in the future if he has doubts about the work or an inability to pay, he must contact me immediately to say so.

I basically plan to state the following to him: I would like to work for him and help his business. I also have sympathy for his recent family difficulties. I am happy to figure out payment plans that would work better for him, but first I need to be paid in full for all outstanding invoices, especially given that I skipped one of them just to be nice. The most crucial thing I need is communication about any problems with my work or his ability to pay. Once again, he heeds to pay in full immediately before we negotiate anything else.

Does the above seem like an appropriate communication? Is anything missing from it? Is anything I'm doing here really abnormal?

Answer 1

TL;DR: In any case, I would suggest to stay positive. Try to turn the things like you are not raising a conflict of interests by asking something for yourself. Try to convince your client that you have the same goals, to make the job done at minimal cost and maximum quality.

Also, resolving an existing problem prior doing anything else seems to be a good idea to me as it will help you both keep your face and avoid loss of reputation/respect.

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You have actually done a good insight into the problem. Let me focus on the following ideas:

1. You have highlighted what's wrong with the client, but you did not look what you have probably done wrong. Think of it for yourself and learn from it:

   • Have you communicated with them often enough?
   • Are you sure they were aware that you are on the right track?
   • Have you raised the unsolved issues (like poor communication) early or let them stay unresolved?

2. Get to a mutual agreement of how you wrap up the work done in the past. I would not go ahead with any future tasks without it.

3. Get to a principal decision on any future work. I mean, one of the possible outcomes may appear a decision just to throw this client away and look for another project for yourself. You said you want to keep the client, but reading your description I would probably decide to forget it;
4. Get a written contract that will govern what you do and how. Ultimately, it should define:
   1. Type of job, fixed scope + fixed price or per-hour work + flexible scope;
      • In case of flexible scope, define very thoroughly how the scope is defined (certainly, not in a bunch of emails or, worse, over the phone) and what are success criteria to decide whether the job is done or not;
      • Don't forget about milestones and deadlines as well;
   2. Hourly rate or the final cost;
   3. Terms on overdue delivery and overdue payment;
   4. Terms on communication; weekly calls?
   5. Terms on any extra payments like hosting or whatever; who's responsible for that? when and how it would be done?

From my experience, I'm not really surprised by a client who does not like emails and prefers phone calls. Schedule your communication in a way that satisfies everyone.

Answer 2

Does the above seem like an appropriate communication?

It's fine. Practices vary, but your decisions and path aren't out of the ordinary, and are quite generous (though your fee per week late is exceptional!).

Is anything missing from it?

A contract, and written communications. The real problem here is that he doesn't pay attention to email, and unless he's very organized he isn't remembering phone conversations.

Send him paper invoices in the mail. Don't rely on email invoicing for him.

Don't do any further work until you and he both agree on what work you'll do, and what payment plan he will follow to catch up. Tell him this is as much to protect him as it is for you - you don't want to exacerbate the financial situation by running the bill higher until you both agree on how to deal with the existing problem.

If you add a new charge to the invoice every week, you better send him a new invoice each week. A 10% penalty per week is high, and since you have no contract and most of your communications are via phone, then you are on shaky ground.

Personally, I'd say, "Look, I'm going to stop charging you the late fee so you can catch up. I'm not going to work on the website until you catch up. Once you catch up, we can decide how to proceed. I expect a fixed bid per change will work best for you. We'll decide what tasks need to be done and how we can verify together that they were done, and I'll affix a price to each one. If it's too high, then we don't do it, or we change the plan so it is easier, and thus cheaper."

Is anything I'm doing here really abnormal?

Not really. Note that this client may have accepted the late fee policy, but many clients, particularly large corporations with lawyers, will laugh at you. You might want to find out what industry practice is for your area and expertise. Maybe it's normal and you're fine, but it does seem a little excessive.