Ever have a client default on payment? at DVinfo.net

Benjamin Hill · June 21st, 2006, 01:59 PM

Hi, my question is for some of the more experienced freelancers & business owners. Has anyone had a client default on a payment, or be very, very slow about payment? How did you deal with that? Thanks for any answers.

K. Forman · June 21st, 2006, 02:11 PM

Yeah, I have had one person skip payment, after driving 3 hours down, 3 hours back, and using my tapes I had to have overnighted because it was short notice.

I sent several emails, and always got "the check is in the mail" line. I guess there really isn't anything I can do about it...

Mark Bournes · June 21st, 2006, 02:29 PM

Thanks for the heads up

Mark

Steven Davis · June 21st, 2006, 02:31 PM

Wow, hehe. Thanks for the laugh, sorry it was at your expense.

Emre Safak · June 21st, 2006, 02:45 PM

Since I am new to this, what is the procedure? Do you mail the product (say, a DVD) then wait for a check or do you insist on receiving payment before delivery, or something in between?

Mark Bournes · June 21st, 2006, 02:56 PM

Actually you should get half when you both sign the contract. Then they get the final product when you get the rest of the $$$. If they are local then it makes it much easier. Then you can make the exchange in person. If not then you bill them. But at least get half up front in your contract. This way you never end up empty handed.
Mark

Steven Davis · June 21st, 2006, 03:01 PM

It is our policy that for wedding gigs, we do not provide services witout full payment in advance. Suppose the B&G break up in a week, now they don't like each other and have no desire to see the 5 hours of bliss that they had on their wedding day.

If it where a corporate gig, that's different. But still payment should be provided after all parties find some comon ground as to the final product being provided to the customer.

K. Forman · June 21st, 2006, 03:13 PM

Quote:

Originally Posted by Mark Bournes

Thanks for the heads up

Mark

Yeah... he's in your neck of the woods.

Boyd Ostroff · June 21st, 2006, 03:22 PM

Quote:

Originally Posted by Keith Forman

I sent several emails, and always got "the check is in the mail" line. I guess there really isn't anything I can do about it...

I use e-mail for everything too, but would probably make some phone calls in a case like this. It's a lot easier to blow someone off by e-mail.

Benjamin Hill · June 21st, 2006, 03:29 PM

It is a corporate client & I had done lots of work in the past for them; so credit had been established, so to speak. We had been foregoing the 50-50 terms and contracts for some time now (which was apparently not too wise, but hindsight is 20/20). I really can't see them totally defaulting, but since it is a large bill I think I'll at least discuss it with a lawyer.

Peter Wiley · June 21st, 2006, 07:21 PM

A letter from an attorney sometimes makes a world of difference.

You want to make an effort to collect and document it carefully. If you cannot in the end collect there are tax implications that will help ease the blow. On federal and most state returns a bad debt can be taken as a deduction, but you have to be able to prove that you made a good faith effort to collect.

Jim Michael · June 23rd, 2006, 08:41 PM

Quote:

Originally Posted by Peter Wiley

A letter from an attorney sometimes makes a world of difference.

You want to make an effort to collect and document it carefully. If you cannot in the end collect there are tax implications that will help ease the blow. On federal and most state returns a bad debt can be taken as a deduction, but you have to be able to prove that you made a good faith effort to collect.

I'm not an accountant but I think you are referring to an entity that is using accrual accounting method, not cash based. In cash based accounting you don't count a sale as income until you get paid. So, if you don't get paid all you have is your expenses as a deduction.

Peter Wiley · June 25th, 2006, 03:08 PM

Jim, you are right. I should have noted the accounting method issue. Ben does not say what method he uses.

Here it is from the horse's mouth, so to speak:

http://www.irs.gov/taxtopics/tc453.html

Benjamin Hill · June 25th, 2006, 04:04 PM

Cash accounting method. Thanks for the info, I had a close call there and will return to more business-like practices of 50/50 & maybe credit card # in the future.

Brian Wells · July 18th, 2006, 06:46 AM

I have been stiffed twice in the video business -- both clients, I later discovered, had multiple civil collection lawsuits against them from individuals, banks, hospitals, and the state. Other clients who have been slow to pay (but eventually did) have also had problems paying their medical bills. I have only searched the civil court records. But, I wouldn't be the least bit surprised if the bad apples were listed in criminal records as well. When evaluating new clients, it never hurts to do a free search of the public records. It can potentially save you from a lot of trouble later on.

June 21st, 2006, 01:59 PM	#1
Benjamin Hill Major Player Join Date: Nov 2005 Location: Iowa City, Iowa Posts: 670	Ever have a client default on payment? Hi, my question is for some of the more experienced freelancers & business owners. Has anyone had a client default on a payment, or be very, very slow about payment? How did you deal with that? Thanks for any answers.

June 21st, 2006, 02:11 PM	#2
K. Forman Capt. Quirk Join Date: Apr 2002 Location: Middle of the woods in Georgia Posts: 3,596	Yeah, I have had one person skip payment, after driving 3 hours down, 3 hours back, and using my tapes I had to have overnighted because it was short notice. I sent several emails, and always got "the check is in the mail" line. I guess there really isn't anything I can do about it... __________________ www.SmokeWagonLeather.us

June 21st, 2006, 02:31 PM	#4
Steven Davis Inner Circle Join Date: Jun 2004 Location: Richmond, VA Posts: 3,065	Wow, hehe. Thanks for the laugh, sorry it was at your expense. __________________ What happens if I push the 'Red' button?

June 21st, 2006, 03:01 PM	#7
Steven Davis Inner Circle Join Date: Jun 2004 Location: Richmond, VA Posts: 3,065	It is our policy that for wedding gigs, we do not provide services witout full payment in advance. Suppose the B&G break up in a week, now they don't like each other and have no desire to see the 5 hours of bliss that they had on their wedding day. If it where a corporate gig, that's different. But still payment should be provided after all parties find some comon ground as to the final product being provided to the customer. __________________ What happens if I push the 'Red' button?

June 21st, 2006, 02:29 PM	#3
Mark Bournes Major Player Join Date: Nov 2005 Location: Jupiter, FL Posts: 565	Thanks for the heads up Mark

June 21st, 2006, 02:45 PM	#5
Emre Safak Trustee Join Date: Feb 2004 Location: Brookline, MA Posts: 1,447	Since I am new to this, what is the procedure? Do you mail the product (say, a DVD) then wait for a check or do you insist on receiving payment before delivery, or something in between?

June 21st, 2006, 02:56 PM	#6
Mark Bournes Major Player Join Date: Nov 2005 Location: Jupiter, FL Posts: 565	Actually you should get half when you both sign the contract. Then they get the final product when you get the rest of the $$$. If they are local then it makes it much easier. Then you can make the exchange in person. If not then you bill them. But at least get half up front in your contract. This way you never end up empty handed. Mark

June 21st, 2006, 03:29 PM	#10
Benjamin Hill Major Player Join Date: Nov 2005 Location: Iowa City, Iowa Posts: 670	It is a corporate client & I had done lots of work in the past for them; so credit had been established, so to speak. We had been foregoing the 50-50 terms and contracts for some time now (which was apparently not too wise, but hindsight is 20/20). I really can't see them totally defaulting, but since it is a large bill I think I'll at least discuss it with a lawyer.

June 21st, 2006, 07:21 PM	#11
Peter Wiley Major Player Join Date: Apr 2002 Location: Lewisburg PA Posts: 752	A letter from an attorney sometimes makes a world of difference. You want to make an effort to collect and document it carefully. If you cannot in the end collect there are tax implications that will help ease the blow. On federal and most state returns a bad debt can be taken as a deduction, but you have to be able to prove that you made a good faith effort to collect.

June 25th, 2006, 03:08 PM	#13
Peter Wiley Major Player Join Date: Apr 2002 Location: Lewisburg PA Posts: 752	Jim, you are right. I should have noted the accounting method issue. Ben does not say what method he uses. Here it is from the horse's mouth, so to speak: http://www.irs.gov/taxtopics/tc453.html

June 25th, 2006, 04:04 PM	#14
Benjamin Hill Major Player Join Date: Nov 2005 Location: Iowa City, Iowa Posts: 670	Cash accounting method. Thanks for the info, I had a close call there and will return to more business-like practices of 50/50 & maybe credit card # in the future.

July 18th, 2006, 06:46 AM	#15
Brian Wells Regular Crew Join Date: Sep 2004 Posts: 143	I have been stiffed twice in the video business -- both clients, I later discovered, had multiple civil collection lawsuits against them from individuals, banks, hospitals, and the state. Other clients who have been slow to pay (but eventually did) have also had problems paying their medical bills. I have only searched the civil court records. But, I wouldn't be the least bit surprised if the bad apples were listed in criminal records as well. When evaluating new clients, it never hurts to do a free search of the public records. It can potentially save you from a lot of trouble later on.