How to Deal With a Client Who Refuses to Pay
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- Опубликовано: 16 авг 2023
- What do you do when a client refuses to pay, or argues that the payment should be lowered? When you’re starting out a business, how do you handle the high initial overhead? Adam answers questions from Tested members Xtafa, thallanvarmir1506 and nikonshooter71, whom we thank for their support! Join this channel to support Tested and get access to perks, like asking Adam questions: / @tested
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Also add the clause: Client must pay for any and all expenses (legal and otherwise) resulting from a breach of this contract.
The theater company probably needed the swords for something else.
Also dont hand it over if they wont pay and still sue them! The item might be basically worthless in any other context but they still owe you for the full amount!
I have some really unique ways of dealing with this
I find if you put enough contingencies or what ifs in the back of the contract this usually won't happen
My business professor at my IT University always told the story that in his job before he built software solutions for companies. Upon delivery he installed them with a hidden trial license, that ended with the due date of the invoice and gave them the final license upon payment. The companies were then REALLY quick to pay the invoice once the program stopped working, as it already was established in the workflow by then.
*very smart idea to insure absolute honesty on the part of the client and to avoid misunderstandings in the future*
I work in Software now and used to do Software Asset Management, back when you had perpetual license like you mentioned. Whats crazy is there were companies that would give you the keys to the shop let you take what you want and then charge you at the end of the year. They would get there money too, they actually banked on it to get more money out of accounts.
Now everything is cloud based, so licenses get turned off with a few mouse clicks if contracts or payments end. As you said companies pay really quick when things go down, the lost operational cost alone makes it worth paying the piper. So some software companies will now charge reinstatement fees to click a switch. Its a different world now with Subscriptions.
that trial should be mentioned upfront, not be hidden. I'd be wondering what else is going to fail and how much will it cost me?
@@Erni3KIt costs you what you agreed to pay in the contract. Failure to pay is breach of contract. If you refuse to pay you don't deserve to keep the product you are legally obligated to pay for.
@@bardsamok9221 wellllll, legally, it depends on the country, there are some spotty laws out there and black areas that aren't covered. But fringe cases are the exception, not the rule.
I knew a guy who continued to work in a garage that stopped paying him, I was always amazed how many nice tools he managed to collect in the time between leaving there and starting somewhere else
Going out of business situations always cause this when the business is driven there. I don’t see many successful legacy businesses having this problem unless of course the legacy business is built off of exploitation.
😳
Wait, don't just stop at that much story..
So..what do you mean he continued to work there, without pay? (I'm sure some sorta deal with arranged)
Like elaborate on your story? Please.
@MRSketch09 he chose to renumerate himself with a generous bias as close as he saw fit to the amount of his missing pay with the tools he found around himself at the workplace he was leaving
that's called stealing...@@masteroogway6660
I had a client go at me physically because I gave them a bill for 100eur for a urgent reconstruction of their file system and as a consequence a rebuild of the windows registry without breaking the licensin they had for the apps installed.
Later his father, a retired cop, proceded to threaten to shoot me if I take them to claims.
Still the most absurd interaction about a trivial amount of money.
Holy cow!
I would do two things:
1. sue for intimidation and threatening violence
2. go to small claims court
3. Use the backdoor you installed to wipe his machine remotely... Lol
@@mundanestuff Not a good idea if you want to see them in court or in general. Installing backdoors or wiping PCs is a really good way of getting your reputation ruined and to lose court cases. Pulling a web site - okay, the data is still there, you can switch it back on any time. Holding stuff back until you get paid is just fair. But destroying data is a big no-no.
@@KonradTheWizzard that is why you never mention it ever and make it look like a system failure. You will learn it the longer you work in IT
My dad and I just had this happen. A drunk driver drove through a lady's wall, we fixed it while mainly dealing with her, and a little bit with her insurance. After we were done, she refused to pay the final 2k clams, and even found out she had told her insurance that we raised the job estimate by a thousand dollars. He's filing the lawsuit, putting a lien on her house, and reporting her for fraud to her insurance company.
The Lien will have the most impact and best outcome for your Dad. Because you know where she lives, a private debt collector may be the fastest solution. I used one in the past for an overseas debt and got instant results.
@@jeffparisse4202 Tell us you work in international crime without telling us you work in international crime.
(this is a joke.)
I had the opposite happen. A contractor quoted me a prize for some renovations, I accepted, paid the materials upfront then they started breaking things as they were working and had to fix em themselves at some point I was fed up and told em to stop (they had to fix the gate too which was the meaty part of the deal but I stopped em before they could do further damage) and suddenly they decided that the prize they quoted had gone up because of all the extra-work they had to do (which was fixing stuff they broke lmao) and quoting absurd renewed prizes on the things that were already part of what we negotiated before (even had gone as far as making a new revised project sheet with different expenses marked than the initial one). Needless to say the minute I heard I had to pay double for half the work I sent em packing and they then proceeded to threaten me and my mother saying they would be forced to send "someone" to collect by any means necessary (had to go to the police to put em on warning too lol) and sent a fake letter pretending to be from a lawfirm (called em and they didn't have anything to do with said company as a client lol). Needless to say it was quite a ride.
@@aelix56lol
You cant just put a lien on someones house. You needa judge and a court of law lmao. In ontario you need to go to the court to get a certificate of substantial performance.
When I was a video maker, my terms were to pay in thirds: one third up front as down payment for my expenses, a third due at the midpoint where there's a rough cut for the client to look at and confirm it's going the way they want, then the final third, on delivery. The point of paying thirds was to make sure you were never losing money at any stage, and if the project was cancelled at some point, you, your sub contractors and suppliers are not left holding the bag on expenses.
Yes it's always wise to have some kind of payment upfront because of time wasters, and to make clear in the contract that this is not refundable. And make the payment and delivery timeline explicitly clear.
This is what we do for fixed cost software development contracts as well.
Something else to consider is, you really want to be sure up front that you're talking to the actual person that signs the checks, not just an intermediary pretending to be The Check Signer. Because if it's not TGTSTC, and the intermediary doesn't communicate well to their boss, you can get into situations where you've totally satisfied your contact person... but they don't get authority to pay you and their boss doesn't understand the project or has other ideas, and kills the whole deal. And you never knew about this. Saw it happen sooo many times, where we worked so hard to craft the message to the intended audience, and the guy signing the checks wasn't part of that planning, isn't that audience, can't relate to the message or understand it may not be his cup of tea but absolutely hits the nail on the head for the INTENDED TARGET AUDIENCE... so I do ask the person talking to me about a job who *really* signs off on the completion and payments.
.
I do 10% first. 40% submittal of the building permit; 40% at delivery / issuance of the building permit, then 10% after to manage during construction. am architect.
@@warchitect73 Seems fair for what you do. The exact percentage is going to vary by job and by how much you have to lay out in advance to get things going: camera rentals, professional crew, permits, things like that, in my case. It's a very small community and word gets around if you pay your bills and people on time or not. So my front third is mostly acquired in order to make sure my rentals have been covered and my people paid. if the project dies in pre-production or the start of production, I don't have much if any profit, but I have no loss or debt, and my reputation for paying my obligations is protected. I don't usually start earning money until the middle payment, and most of the profit comes at the end.
Your response to when a client won’t pay seems to assume a contract is always in place. I think the first bit of advice though is to ensure no work is started until a contract is signed. You’ll still get clients that will jerk you around, but having paperwork is often a good way to end that. There’s a really good talk by Mike Monteiro called “F*ck you. Pay me.” that covers this very topic that every maker who works for hire should watch.
Some basic paper work; an invoice describing the work and the terms is a good place to start. Not that complicated, and a lot of samples on this internet. Work does not begin until it's agreed to and signed.
Indeed, putting things on paper is essential. In some situations and depending on where in the world you are, an oral contract can have weight in court though. And a contract doesn't necessarily have to be super formal, sometimes an email with you saying 'it will cost x', and the client responding 'sure, sounds good, please make it' is more than enough to be a binding agreement in the eyes of a court (but as with all these things depends on where you are in the world).
He assumes that because a written agreement should ALWAYS be in place, period. even if it's as simple as an email saying "The job is X, you will pay Y, and I will deliver on Z date" with written confirmation back. You have that and there's not much they can do against you in court, so long as you held up your end of the bargin. Most people businesses know this, and will generally back down the second you get a court date.
...now you will sometimes get a person refusing to pay still, which is a HASSLE to deal with, but generally won't end well for them when the sheriff shows up with a warrant. Unless they're really, really rich. Always be wary of working with anyone who can afford a team of lawyers, at least until you're big enough to afford your own.
@@JorenVaes
Saw a video on Lehto’s Law where a judge decided an email (may have been text?) reply with a single character, a thumbs up emoji, was a binding contract! 🤷♂️
@@grahamstretch6863 that’s pretty much what happened with Elon Musk and Twitter. Elon tweeted saying he would buy Twitter for $52.40 a share, Twitter said deal and boom legal contract
Sadly, sometimes it can cost more to get a small claims court judgement than the amount you're trying to recover from the client.
I'm a commission painter, someone stiffed me on a for a £200 paint job, so I took them to small claims court.
So, it cost me £35 to file a claim, the court ordered them to pay, but they ignored the order, so I had to pay another £85 to have the court enforce the order.... and when you factor in the actual time it took, actually going to the hearing etc, it took months of back and forth to recover less than half of what I was owed.
Lesson learned... from that point on it was half up front, half on completion and no models would be returned until payment was made in full....and if payment wasn't made within 30 days of completion, I'd sell the models to recoup my costs.
What was the reason you were only able to recover half? Your expenses such as court fees should have been added to the claim.
I would eat the cost just to be a nuisance to them and make them see what a pain it can be to try to rip people off. It would be about the principle for me at that point. Then I would ask if I could use them as a reference haha
In many locations all necessary fees are to be paid by the offender
@@bardsamok9221 In England and Wales which is where I'm assuming Watermelonhelmet is as they mention £s you can add the court costs and your time in preparing the claim to the claim itself.
All those extra losses should be calculated into your judgement. But it's also about making sure people aren't just getting away with it,
When I was last in California the limit for Small Claims Court was $10,000. Being awarded monetary damages in court may only be half the battle. If the defendant refuses to pay the amount awarded by the court it is then up to you to try to enforce the court order. That can be a lot more legally complicated and difficult. One strategy would be to garnish the wages of a debtor. Otherwise, it could involve getting a court order to seize assets (carried out by the Sheriff) which can then be auctioned to pay for the award.
Yep. I won a case in SC and the guy didn't pay. I ended up having the sheriff garnish the rent his two tenants were paying him, so he lost his house because he couldn't pay the mortgage. He really should've just paid me.
@@mytruckownsitAre you okay?
@@mytruckownsityou've already well "loosed" it m8 😅
@@mytruckownsitwhat kind of blathering idiocy are you spouting and why?
@@mytruckownsitHey buddy. You just blow in from Stupid Town?
I had a customer who refused to pay because the person who made the order no longer worked at their company. I sent a collection agency to get the money on my behalf and I got my money and the company had to pay the collection agency another 10% for their fee. It was a very satisfying experience to see those idiots get their comeuppance.
If you had a family member that ordered something and then disappeared, how would you feel if asked to foot the bill? Before calling them idiots think what it's like from their point of view. I hope it was a fair amount of money for a fair amount of work and not extortion
Haven’t heard that before!
@@rickysmyth ......it was a company dingus, not someone's grandparent who tripped down a flight of stairs.
@@rickysmyth Yeah I don't work for the mob so that analogy makes no sense. That company made an order and signed an agreement. Do you work for that company? You remind me of them.
One of the unfortunate things that people forget is that your employees represent your business.
Your employees are YOUR problem. You finish out the agreements they made while working for you and then go after the employee for the money.
Unless the supplier and employee were working together to screw the buyer, there's zero reason not to pay. And that's going to be something for a court to decide, not the employer because they don't feel like it.
I've taken people to small claims court. I've received judgement from the judge with his admonishment that all the judges can give is judgement. Getting your money is a completely separate thing. With judgement you can then begin the long process of retrieving money. Such as garnishing wages, seizing bank account, or seizing property. The easy part is getting a small claims judgement. The real work begins after small claims.
Can confirm. Have pulled websites myself, although I usually leave the site up and turn the front page into a blog about clients who do not pay their bills.
Got out of IT because it's too much of a pain the ass dealing with people when it comes to payment for work and the excuses they give. Usually along the lines of "But working on a computer isn't a real job". Yep, deposit is always a must. Sad how many humans will get you to do the job then try and rip you off, and genuinely cannot see the problem.
They very much see the problem. You're entirely too kind to attribute to someone literally robbing you the benefit of the doubt by justifying it with "they genuinely do not feel like I earned it or didn't work enough to warrant the agreed price." And while it speaks to your kind and upstanding character, we just do not live in a world where you can realistically apply your good qualities to anyone else. People almost without fail take kindness for weakness. And it doesn't matter about their feelings about how you managed getting the work done. As long as you provide whatever it is the agreement calls for, they are responsible for payment in full, even if you just went home, rubbed a lamp, and had you djinni produce the service or finished product while you played video games and ate Doritos. Sad we live in such a world, but it is always refreshing to find folks like you that are truly good, kind individuals still willing to give others a chance, whether warranted or not.
Tip from a business lawyer friend of mine.. never do that to their page. You immediately set yourself up for slander and them having grounds for a countersuit against your claim in court. "Just because its true, doesn't mean its right" was his words when came to this specifically and risk of slander countersuits. As a web design company owner, we leave the clients site up purely out of good faith, leaving the client defenseless in court as to why they haven't paid up. By instead changing it to a blog about nonpayment, you are doing 2 things, denying the client business as their website now isn't operational, but also setting yourself up for them to be able to claim that lack of business may be worth more than what they even owed you in the first place, resulting in YOU paying THEM (and any legal fees) to put their site back online. Also why when people say they do web design without a contract, I cringe. If its not on paper, its not defensible. (Also don't create your own contracts, sit with a lawyer to help draw one up.. even free contract templates online are many times VERY weakly written)
If your not happy with leaving the clients site as is until claims can be handled, take it down fully, as you should have it written into the contract as disciplinary action for non payment. Othewise.. leave it alone and protect YOURSELF from giving the client ammunition to use against you.
@@MattWeberI agree 100% on leaving the web page alone, as tempting as it may be. You want the judge to view you as the good guy & injured party, not the client.
25+ years in IT, also currently looking for something else. Work/Life Balance is balls in that business and so is dealing with haggling/slow pay customers.
Lack of accountability leads to a deterioration of society. And a society of sociopaths who can't understand why their incorrect actions are incorrect will crumble because they can't hold themselves to the rigor of truth, logic, and reason
This is a great subject to discuss. I’m a construction lawyer and can’t tell you how often people are stiffed. I’m also an artist, and even worse is the assumption that artists should just do stuff for free. ‘Cause, you know, it’s not really work. (Eye roll). Edited for spelling.
I just cannot imagine someone says work on a computer is “not real work.” I just don’t know how one can think in such a way.
@@stevendebettencourt7651 There are tons of people who are ready to tell you that any work that does not involve physical labor, or standing at an assembly line, or any other form of work that dares to be even a little bit enjoyable on the part of the worker, is not "real work" and therefore not worthy of recompense. One must be miserable while performing one's job, to be truly "working"!
I've had that situation, most times a gentle reminder that a commission is a contract gets the money. A couple of times I've sold the painting on the open market, people will pay surprisingly well for a nice painting of a random person they've never met.
@@stevendebettencourt7651 I can imagine it easily, as clients and the general public don't understand the labor between each step that leads to the final product. And so they have a false understanding of the time/effort and assume. Something like changing a garage door can be a victim to this sense of devaluation.
I think the biggest problem people trying to get their start is being afraid to firmly say no because they are afraid this is the "big break" they need, FYI it's not. I'm an HVAC/R tech and I turn down work all the time but I remember my first client on my own he wanted to pay 100% on delivery and I could have gone out and bought $6000 worth of equipment to install at this guy's house but if he refused to pay after it would have killed me so I politely refused and said no I can't do business that way and at a minimum I need cost of equipment up front he tried to argue giving me this tough guy "this is how it's going to work, you do the job and I pay you" nope you can pay me for the equipment up front and the labor upon delivery or you can purchase your own equipment and I'll install it, if that's not ok we can't do business.
As a mechanic, the best advice I got as far as tools was if you need something for a job, get it at Harbor Freight. If you use it enough and it finally breaks then get the nicer one. I have so much Pittsburgh, Icon, and Husky stuff and it has all held up pretty well.
You guys are getting tools? When I started as a mechanic we got a stick and a rock, and we had to share the rock.
@@SuperDriver379
Let me guess, you lived in t’ shoebox in t’ middle o’ street and had to walk to school in the snow bare feet, both ways uphill, 2 miles there and 3 miles back!
Harbor Freight: when it absolutely positively has to work once.
Way to support China
100%. I bought a cheap $35 Black and Decker drill to begin some work on my new (old) house. I am virtually certain that a nicer drill would be “easier” or “better”. But what I don’t have is money. I can stand there all day until the screw goes in. I got nothing but time. 😂 Took longer than some of the RUclips videos that I watched, but I got the job done. Same for material, etc. If you haven’t done it, and want to try it, do it with cheap materials, and sell it if it turns out good. Then you can make something with better materials for yourself, and you can factor the price of those materials into the one that you sell. I’m learning how much entrepreneurship and frugality goes along with projects. It’s a really useful mindset that will keep you from going over-budget.
We usually do it at milestones, often in 3rds. 1/3 up front, 1/3 at completion of some stage roughly half way, and 1/3 at completion. Some clients are TERRIBLE. My wife was trying to work with one that said she burned through several artists for her project because they dident meet her vision or whatever but it seemed interesting enough to pursue and the money was theoretically good. In the contract phase she set the number of revisions for each phase (rough outlines, inking, color) but the client insisted on UNLIMITED revisions. Needless to say she did not continue with that customer.
That client was definitely toxic. It’s good to know who to walk away from, and not always easy to know at the beginning.
Never be afraid of small claims court. If you have a good case, then you'll likely get your money back. Only had to do this once (did the work, client stopped communicating and then downloaded and deleted the unpaid for CAD files from a Dropbox shared to them. They lost the case and didn't pay when ordered to, so I sent in the balifs (UK sheriffs, actually) and got all my money and costs.
As a publisher, I have developed a reputation for always paying on time and in full. Shockingly, it results in numerous artists wanting to continue working for me. I know...odd, right?
You end up receiving a lot of perks having a loyal retinue of artists that always want to work for you.
That all being said, I have had one encounter with an established, well-known, artist that never finished the agreed work. Another two delivered shoddy results not indicative of their known quality, and when I asked, they said, "You're not paying me enough to do better". Suffice it to say, they have never been employed by me again.
Some people are really dumb and refuse to put in a tiny bit more effort, as if it is all about money but not about building a good reputation in a circle.
@@IAMNOTRANAbusiness is all about money. I go home to my family or go out with friends, know all the old ladies on my walk with my dog in my neighborhood, im good on friends and fostering relationships. I'm not putting in extra non paid work so you maybe in the future might think about possibly paying me more.
I work with freelance artists on a regular basis. There's so many horror stories of people not getting paid, so I always pay in full, in advance. Sometimes if it's a big project (>$1000) we'll set checkpoints but I always make sure to pay my guys (well, girls mostly) before they start on the next section. A little generosity and a reputation for being the commissioner that always pays in full and in advance goes a long, long way in a world full of people looking to rip them off. I've done hundreds of commissions over the last 15 years and I've had a grand total of one that wasn't delivered, I consider it an investment in a sterling reputation.
I also buy comms and almost always pay full up front!
Good advice. Had to do it myself. The hard part is not winning in small claims court…the problem is collecting afterward.
That's when you apply for a sheriff to serve them and start taking stuff from their biz or home. Funny how fast the cash shows up.
Bingo! Small claims is just the first step in running out of money chasing a bad debt. Private debt collectors work well and fast in my experience.
selling the debt is one option.
That's why it's a waste of most people's time to put a lien on someone. Intimidation and embarrassing the client is much quicker
Communication is KEY. Always make sure they know what to expect and don't be afraid to lay down the rules upfront. (videographer for over 11 years)
I'm reminded of a situation that occured when I ran a photography studio. I hired a model to attend an event and during the casting process It was discussed that I would require the model to invoice the company at which point payment would be processed. (A lot of these models tend to not work for agencies and only work for independent photographers, so are not always accustomed to these things). I reminded her several times and even suggested that she send the invoice ahead of time so I could pay on the day.
She didn't bring an invoice on the day of the event and said she didn't know how to do one so emailed her a template that she could use. It took two months for her to send it. Within 30 minutes of her having sent the invoice, she went on a rampage on social media ranting about having not been paid for a job she did for me. I paid her at close of business that day, but it goes to show that it's not always the clients fault.
Wow, haven’t heard that one before!
Adam, you've always been an amazing source of information and guidance. I am so happy that you have been sharing so much throughout the years on this channel!
Appreciate that! Will pass your comment along to Adam!
@@tested Thank you so much! I believe I speak for many makers when I say Adam has been such a large inspiration. This specific video was so well timed for me personally as I have just started my own Engineering / Design company.
I agree
Hiring a big dude named Guido to visit them and politely remind them to pay their bills has worked well for certain kinds of collections. It's always worth a shot.
I'm very glad that Adam was very direct and said the only correct answer. Small claims court is the only way to solve money problems. It is definitely worth looking into the process for filing a claim in your state/jurisdiction before the need to file ever comes up. Not all areas are the same, California only allows claims up to $10,000 for individuals and $5,000 for businesses, meanwhile Texas allows claims up to $20,000 for any claim.
Missouri limits small claims to $5,000 which is ridiculously out of date. But, if you’ve seen any of our legislators on TV, it shouldn’t surprise you.
Only way? So not true… Are you familiar with a Mechanic’s Lein or private debt collectors (my personal favorite)?
@@jeffparisse4202 The only way you're getting that lein paid is small claims court.
@@jeffparisse4202 hey, thanks for that! It’s been over six months since I completed work, so I can’t file a Mechanic’s Lien in Missouri (for a $5 fee!), but will be able to file a regular lien once I have a judgement in my favor. The law here sounds specific to the construction trade:
“Missouri Statute 429.005 et seq. grants general contractors, subcontractors, suppliers, and laborers the ability to assert a mechanic's lien for labor and materials provided to or incorporated into a property if the lien is properly filed within six months of the last date of work by the contractor/subcontractor.“
@@jeffparisse4202 For the vast majority of people a mechanic's lean is either not legal or is not possible do to what the payment is over. As for privet dept collectors that could cost FAR MORE than just going to court with a lawsuit and be far less affective that is why there is a small clams court.
I once had the glorious experience of the complete opposite of not being paid - upon seeing a commission, the client was so thrilled they insisted on paying double. I'm not saying that as a brag, but just to reaffirm that there are decent people out there who appreciate your work 🥰
Okay I Believe You
(no I don't.)
I was told from a friend that if you suspect that a new potential client is not going to pay you after you have done the job, give him an unreasonably high quote. If he accepts the quote without haggling, he wasn’t planning on paying you.
Replacing a controller for a shop. Seeing how the shop was run ( nothing but safety violations, no maintenance etc. ) got our guard up. So installed a counter for about a months use and locked the code. Sure enough the guy wanted to pay less than cost of the equipment for the job. When informed that he had a month or his equipment would stop he scoffed at us. ( the minimum wage kids he was employing would handle it ).
So a month later it shut down. Small enough Instrument community that word got out and no one would touch it.
I have a studio. I've worked with artists from all over the world and I made it a point to pay the artists and talents IMMEDIATELY upon receiving the invoice regardless of the client has paid or not. There are times when the studio has not been paid at all for months but I still made sure the artists get fed. Clients come and go but talents and artists will always remember you when you need help on a project.
It’s amazing how much of this translates to completely different fields of work, I own an earthmoving and metal fabrication business because the two are surprisingly complementary businesses and have done and experienced lots of these things over the past 2 decades.
I'm really curious, what makes the two so complimentary?
Tool libraries and maker spaces are also options when you're starting out.
Similar to your sword job, I do leatherwork, and a friend wanted me to make some boots for a cosplay. Shoes are something I've never done, but theoretically I can. The issue is getting all the measurements correctly, so I mentioned a rough estimate of like 400 dollars, but as we talked about it, we came up with the tentative plan for her to make a foam mock up that could be used for patterning, and cost of materials, because it seemed like a really fun project. Being about a learning opportunity over a money making one, it's how I've approached some friends ideas.
'I had no idea it would be so much,I won't pay'
'Oh that's alright,we can just go ahead and put it back in there'
The important thing to remember when dealing with people, no matter who it is and how close you think you are, is to _clearly_ articulate what the customer demanded and what the customer is promised in some form of signed paper. Both parties should be aware and fixate what they expect the project to result in. That way, at the end of the day when it comes to issues about payment, it is easier to see who is the troublemaker, which also makes it easier to claim something in a court.
Always remember: friendship dies the moment money is involved.
I could sit there with Adam all day in his workshop, cup of tea or coffee and just chat shop.
What a top guy. 👏🏻👏🏻👏🏻
Yeah and he would never get anything done. That is why he works alone in his shop and does not have his shop at his home. No distractions.
Yeah it would be cool just to sit there see what he is working on and chat.
I do contracting, roofing, building etc. My terms are, when the materials are delivered on site. The client pays the entire material costs at that point. Which protects them, and myself, because if i just dont show up, at the very least the customer owns the materials and has them in their possession, and I'm not out that cost if they change their mind after the materials arrive because "they found someone cheaper on labour costs" learned that the hard way once. Never again. Just my way of protecting myself, and also protecting my client. Seems to have worked for the 27 years ive been in business. Having a decent reputation helps greatly with that though.
I adopted the payment schedule espoused by the NYC Dept of Commerce (if I correctly recall that department’s name). They handled various business licensing. That schedule defined payment of 1/3 to begin, 1/3 halfway through, and the final 1/3 upon completion. That helped maintain a fund flow throughout the job and, believe me, it also helped with peace of mind. Definitely don’t begin work without a contract, and make sure your payment schedule is clearly stated, as well as a process for change-orders. Don’t nickel-and-dime clients on minor changes, but also don’t let changes that soak up lots of extra time and materials pass uncompensated. Your price structure should include reasonable things like shopping time: you are shopping for them, not yourself, so this is part of the job.
And if a prospective client gives you the heeby-jeebies, if you sense “tells” that they will be difficult or arrogant or unfair, listen to your instincts and don’t sign with them: hiring is a two-way street.
One thing about Small Claims Court: you need to get the judgement, but then you have to enforce the judgement (I. e., collect).
Yup, the nuts and bolts of the real world are tough.
I think it's a good idea to get paid before you ship the final product . Once it leaves you will be hard pressed to get paid. Even the most honest people get busy and can take forever to pay you.
Send pictures of the final product so they can see it before you send it. This will help head off future disputes. They are approving it by saying yep it looks good in the picture here's the payment let's get it shipped.
If they have a problem once they get it, then that's another story they may just be unreasonable or looking for some kind of discount.
If they do have a legitimate concern with your work. As my first attempt to solve the dispute I would offer to remake it paying extra attention to solving their concerns in the remake. This will prevent training your clients from thinking that they can get a discount if they nitpick your work.
That short pause and head rub was the perfect tone setter
One point I would add is to treat design as a separate job but remember that once the client has the design they can take it anywhere. So ask for some payment up front. If the client pushes back at the idea explain that the first stage of design is just exploring ideas which is useful to help the client decide what they really want. Specify an hourly rate to reach a certain point such as half a dozen sketches on a basic idea. If the client rejects all of them then they should probably look elsewhere anyway. Also consider local laws on copyright in design. In some jurisdictions work for hire automatically passes copyright to the client but in others it stays with the designer. Get to know your local laws, what constitutes copyright and design right and what means are available to protect them. It won't necessarily save you from someone who doesn't want to pay but it may add a other weapon to your arsenal.
Very wise words here!
I just found a maker space workshop that also sells memberships for permanent private work areas. All major tools are provided. Would never even have looked if it wasn't for Tested. Thank you very much.
I really miss TechShop. They had all the tools and facility
@Mindgamescc Akron makerspace has everything from cnc lasers for wood, 3D printers, sewing machines, and jewelry making equipment. Full wood and metal shops. I need to free up a Thursday to go when they have their open house.
I had a friend who I did a commission for who still hasn’t paid the last half of payment.
This is the third friend who contacted me for art, offered to pay money, and then decided not pay.
Never again
Oh no! Sorry to hear that.
It's even worse when it's a friend too, there's supposed to be a level of understanding and trust there, I know first hand how that's like
You learned your lesson the hard way but he didn't!
Next guy who tries that, just rob them from the thing again "yeah you paid for my time but not for materials" and see their face turn.
I've seen websites taken down, art shredded or returned to its maker, wooden floors ripped up, I've even seen someone take an excavator to an entire building because the client refused to pay.. when it comes to people abusing relative lawlessness in smaller business.. they gotta know its a double edged sword.
@@BorisEysbroek heh yup. All three
Maybe your "friends" weren't friends but rather shitty acquaintances?
When I did carpentry work we always had a pay schedule of 50% up front, 25% when the project was 50% and then 25% on completion. It worked out nice and if you had to buy something unexpected it can save the day.
This is very poorly written lol. I have no clue what you mean. Seems like it adds up to 125%
@@Trenz0 might want to check your math there high speed, 50+25+25= 100, I changed it just for you so you can understand better
@@ericsparkman3645 Not sure what it said before, but in my initial read it also looked like 50% + 25% + 50% + 25% = 150%. Had to do another read-through to realize that second 50% you called out was the _project_ progress, not the *payment* progress!
@@DylanBFishkeeper I’m really sorry if my response came across and snarky, it was not the best day and probably not the best time to respond.
@@Trenz0idiot lmao
This is really good advice for the UK too. In the UK Simple Procedure (Small Claims) is less than £5k and has to either address the issue or provide a monetary settlement, over a certain amount it costs about £100 to launch the claim, but you can add that to yer expenses.
Also, if yer in the UK and in this situation, I'd suggest looking for the Law Society in the area for you.
I started 3D printing for fun and i started to get DM's from the airsoft community to print adapters and all sorts of things. And i usually let them pay for the material they want and i keep the spool itself so i essentially have a overflowing amount of filaments now to pick from and now i essentially ask 10,- for smaller prints up to 30,- for larger prints and if its using up a full spool around 50-100,- depending on how big and complex it is. The reason this is the best way is because if a print fails you will always have enough filaments to finish the prints as well. And soon i am upgrading to the anycubic 12K as well and will start to print out DnD and 40k stuff as well and selling them
The 50 percent upfront is a good rule whether you take that in equipment for your job and the assignment. Also, walk away immediately if they offer you movie-credits or "reputation" as payment for whatever job you have to do for them. Would you tell your plumber - if you do a good freebie on my plumbing, I'll recommend you to so many? You'd not have a plumber in sight.
oh goodness yes. "But you'll get exposure!" yeah, like I can eat exposure or pay rent with exposure.
This is the WORST with non-profits like schools and churches. "You can just write it off!" BUT you can't write off labor. So if you are willing to under-charge on a job you're doing for a school, church, or non-profit to build your portfolio/equipment stock DO NOT call it FREE LABOR!!! Tell them/write up a contract that the MATERIALS are a donation and the fees they are paying are for labor OR make it that the end final PRODUCT is what's donated (for instance with a website). Because you can donate materials, or a final product and write that off on taxes, but NOT labor!
@joinglegamer9898 Once had a plumber fix my shower but instead of payment he asked for a positive yelp review. I know it's not the norm but it does happen.
thanks for these videos Adam! they are GOLDEN! keep making videos about freelancing please as there is so much to learn, so many mistakes to make and so many ways to get screwed over or taken advantage of and since many freelancers are loners we don't tend to get mentorship of this level! thank you so much
Haven't watched Adam in years, but this advice can be really be taken in a lot of directions, not just for prop building! Amazing!
It seems so silly when you do small jobs and are just starting but doing official paperwork like contracts and invoices are so helpful and help especially when nightmares like not getting paid happen! They will save your butt!
You're always captivating to watch mate. I do freelance GD... and these challenges are all real. Setting expectations on both sides is a must.
These last couple videos answering real industry questions have been great. Please do more
This is great information. I work as a sound recordist, and I a lot of this advice sounds very useful to people in what I like to call the "creative services."
Wonderful, useful advice as always.
Thanks for creating and posting this segment. Years ago when I had ties to the theater and fandom communities, "creative-types" would seek me out (normally after the fact and when things went south) for this sort of advice. I hope "creative-types" watch this segment before making their deals.
Thanks for all your great videos Adam!😀
I work at a small distribution business and we sell tons of sculpting and mold making supplies to local artists, a lot of continued customers do Net30 and its great! Super helpful for artists when material costs up front are big and they need to finish the work before they can cover costs. Find local suppliers and build trust so you can work out Net30 or similar terms on supplies, can be a big help to bid jobs you cant afford up front! Also get a signed piece of paper whatever is is, contract, invoice, napkin, whatever.
While you should always get contracts in writing when you can, it's worth noting that a verbal agreement can be legally binding depending on the country/state/situation.
I built websites for people who refused to pay. Pulling the website doesn't mean much to them if it's a brand new website for a new business, but if it's an existing website with considerable traffic, replacing the entire site with a "this person does not pay their bills. If you see them, please contact them and tell them you won't spend money there because they don't treat people with respect" works if you're in control of the domain and web hosting.
A guy my father-in-law knows used to paint big signs on sheet metal saying "[name] doesn't pay their bills. Call them on [personal phone number]" and display them out the front of his shop on the way into town. Being a small town with a good bit of traffic going through (because it was on its way to another bigger town), it apparently got results.
UK-based here but still a lot of good advice in this one, thank you. I wouldn't say I'm /just/ starting out but I'm looking into going more pro so this helps a lot.
Smart guy. Always respected him.
Defiantly agree, I've done soo many jobs over my career where the payment has been essentially the purchase of a particular machine/tool or an amount of some form of consumable that i really wanted or needed.
These days tradies want profit and for you to pay for all their equipment lol
one of my very first 3D animation jobs was for a popular Rust youtuber (Stevie), it was a lot of work but he paid me very well and I was able to upgrade my GPU from a 1050Ti to an RTX 3060. I'm very lucky and thankful to still have him as a primary client but of course I've had a few that didn't want to pay or just outright cancelled the project midway because they didn't like it (even though there was near zero communication and feedback from their part).
Good and simple advice. Thanks Adam!
I know we all want to talk about revenge fantasies, but the real solution is to just be upfront about what is expected and get everything in writing. If they don't pay, you take them to court and just hand over the documents.
Thanks Adam for sharing this topic. As soon as I can I will read the answers of the others, their experiences... have a nice day
As a freelance musician, this is all too real. Unfortunately our business model is almost always, work now, get paid later, but you’d be surprised how many well to do or even PUBLIC GOVERNMENT organizations try to screw us out of money constantly. I’m waiting on a check from an engagement I did with a public university’s orchestra over 3 months ago.
Try to change the model, get pay upfront or when you show up for the gig!
@@williamlouie569 I'm in a union! They set the standards that admittedly still suck.
Great content, this is info I can actually utilize in my day to day as a small business owner. Some people make shit a pain but at least they’re not a majority but enough to have made my wallet remember it lol
On the weekend my friend needed me to build and attach a steel canopy to his truck, but with limited physical labour to lift this 100kg+ steel construction onto his truck safely, I needed a hoist. He paid for the hoist that I bolted to my shed roof... now I own a free hoist!
Everything in writing so there's no confusion. If it's a huge project get 1/3 up front, 1/3 half way thru or at some point of the completion and the final 1/3 upon completion. A contract is more enforceable in court than a verbal agreement. If the customer wants extra work done above the contract just say fine and tell them you'll write up another contract or create an addendum to the original. This is all business not personal. Protect yourself.
Tom Dutkiewicz
This sword definitely cuts both ways. Many people are reasonably skeptical about giving 50% deposits based on being burned previously by individuals who ultimately fail to deliver. At the end of the day you really need to build mutually beneficial relationships based on trust and fairness.
small claims goes both ways too fyi
As someone who commissioned a fair amount of art, a lot of artists are fickle to deal with. It's especially fun when they give you a timeline, fail to adhere to it, and then give excuses every time you ask them for updates. Before you know it, you are getting the product a full year later than expected, assuming they didn't just run off with the money.
Had this happen to a friend. Commissioned art and paid in full up front. Ended up having to chase it up for almost a year after the due date getting different excuses each time. Asked for the money back and they said they didn't have it. Eventually got something back they had clearly rushed and was not close to what was asked for. Friend ended up just accepting it and moving on, even though what they needed it for was long past.
Small claims court is up to $35,000 in Canada. I'm not sure what it is in the USA but for anyone this side of the border, it's a very viable option.
In the U.S., Small Claims Courts are state courts, not Federal. The maximum amount of an award varies greatly state to state.
between 2,500 and 25,000 depending on the state. Sometimes it depends on whether it's an individual vs a business, some have a flat rate. Many are a flat rate but have exceptions with unlimited rate, like if it's to recover personal property or an unlawfully withheld security deposit.
I had a situation like this when I was younger. Did a computer generated animation intro for a real estate company. I delivered the final product, expecting a "check in the mail". They never paid. I took them to small claims court, but the mistake I made was suing the company, not the individuals by name (it was a LLC). So they simply declared bankruptcy and disappeared.
In 2014, I had a new neighbor move next to me, I came home from work one day, and discovered she had scalped the property line because she did not like the growth that separated our properties. Long story short, I hired a surveyor, put up a fence on the new property line that neither she nor I were aware of before her cutting the bushes. She mistakenly believed she was in the right; I took her to small claims and was awarded $3500.00. But she only had to pay $25.00 every other week. A year went by, and when I saw the for-sale sign in her yard, I hired a lawyer and put a lien on her house. I got the rest of the payment after she sold her house!!!
Damn with this title after the Starfield video, I though BGS refuse to pay you LOL
When someone wont pay, ya gotta send a crew to deliver a pizza
I've been a self employed electrician for over 30 years. For most of those years, I lived in a highly religious area full of churches, seminaries, and Bible bookstores. 100% of the people I had extreme difficulty in obtaining final payment from, where the "Christians". 2 of them were pastors in local churches. I even know of a church that took delivery of a brand new piano and then refused to pay for it. It's really sad that the people who are supposed to lead by example with kindness, honesty, and truth, are sometimes the opposite.
Recently discovered this channel and the content is just incredible, keep it up Adam, big fan!
I know Jamie does his own thing and isn’t affiliated with Tested, but I would love to see him come on for a discussion on working with clients. It would be fascinating to hear them bounce their viewpoints and experiences off each other.
💯 that would be
This video was insightful, especially towards the end…my mom has owned a jewelry shop for the last 4 years but I just now received a laptop and about to take book keeping classes, I feel like we could have saved a lot on taxes because of all the materials we had to spend
the RUclips channel Accounting Stuff is THE BEST. so good so practical.
Thanks for the advice. I just watched the video of the hand clamp. I was yelling at the screen to build a jig to hold your band saw. So you can have a small table and more control.
I work in the film industry, and just hearing your advice and experiences in the field is motivating. Keep feeding us your knowledge.
Great video
It's worse when you provide a service where almost all clients are new clients. I know someone who builds fences and every client is a new adventure
Oh, really good point.
Very relatable video, Thanks for the advice dude
Good idea & wise advice. I'lll tell you I have had my underwater service business here in the PNW for almost 30 years. When I was first rolling in business (the first 5 years) I did have a few clients who would not pay. What I did was go to their house (peacefully) and get my money. I brought invoices from similar jobs to show that my prices are fair. Plus the price was what we agreed upon. Anyway, sometimes you need to show that you are a real person and not going to be robbed. :)
Very information video Adam. I do have a quick question regarding this type of situation. Would you still do a small claims court when the customer agrees to pay the amount but then doesn't pay? For example let's say 2 hours labor at $150/hour, trip charge at $100, and a $200 thermostat. That's $600 before tax, after tax for our state makes it $655.50 (9.25% in Nashville TN). On our invoice when the customer signs it, they pay within 30 days. If not then we tack on a 15% late fee. The customer agreed to pay the $655.50 they owe us but then refuses to pay. Would that be worth going to small claims court over or what would you do in that situation? Or anyone in the comments can help out too. It's not terribly often maybe once or twice a year but it is very frustrating either way. Thank you again and hope everyone has a blessed day!
Small claims court every time. That's what it's for.
@@missamo80 Good to know! We don't do the whole "pay up front" type ordeal cause most of the time it's a hassle and confuses the hell out of my accountant so wanted to make sure it still applies to that situation. Thanks again for the advice!
@@PrestigeAceYT Just be aware that small claims court will NOT get you the money. It will give you a judgement that you are owed the money (if the judge agrees they owe you that much) but then you will still have to collect it, which usually involves a collection agency if they continue to refuse to pay.
Sue them everytime. As it is the only way to (maybe) change their ways or at least show them you're not up for clownery.
@mwater_moon2865 Also good to know. That's the best part of life: you learn something new every day.
I Just finished building my "dream" welding shop ... Started as a mobile welding business with really old equipment and worn out rotted truck that I fixed up.... Hard work does pay off ! You just have to show up for yourself!
Fantastic advice down to the nitty gritties. Nothing rips your heart or more than non payments. 10 percent of my invoices went unpaid due to clients going bankrupt. Real life business is tough.
Bankruptcy is the worst! One of my clients went belly-up with $4k in outstanding invoices, but because it was nontangible goods it was not a priority in the payoff pecking order. It was outrageous to receive regular mailed updates from the bankruptcy attorney for FOUR YEARS and know they could have easily paid ALL their creditors and have money to spare, with the money that instead paid the attorneys.
1:00 Wish I heard this before a client dropped me out of nowhere for my vfx work. I'm sure they're using my work to pitch it to big studios (mind you this guy is one of the stunt coordinators on the John Wick movies, so trust no one, business is business)
Indeed. It's one of the harsh realities that you have to figure out what's good business. I'm a firm believer that good business is one where both parties benefit. I get a thing I want, the supplier gets paid a reasonable fee for their labour, creativity, or sometimes dealing with someone like me who's not entirely sure exactly what I want. But if that works out, the supplier's added to a list of good people to do business with. That's immensely valuable to me, because if I want a thing, I really what the thing delivered, especially on time. I also keep a list of people I'd never do business with again, and both lists get shared. That's another reality, ie it's hard to build a reputation, and very easy to destroy it.
Most important thing for both sides of the transaction is to get clear deliverables, costs, contingency payments etc in writing before you committ too much time into a project. This is also a very useful skill given the cost to bid on a job can get expensive, especially with people's time. But with everything in writing, if things go bad, it's much easier to pursue a claim for costs and compensation.
I would sue his ass to hell and back or directly talk to the big studios you think he uses your work at.
man wish this was around when I did my first movie gig, ended up getting screwed over, unpaid and name spelled incorrectly in the credits. 😭😭
Oh no!!!
@@tested I worked on Terrifier 2, I worked on the main actresses armor, I’ve accepted the loss since then, I’m partially to blame since I went in high off excitement from it being my first gig. So at least now, I know better 🥰
I admire your attention to detail when constructing a project. Keeping tolerances close and fitment tight. But tell me, when does better become the enemy of good?
Great Point Adam. I'm a ASE Certified Master Auto Repair Tech Fortunately I have A Signed Repair Order on the Car & I keep the Car Until Bill is Paid in Full. I Started Doing the 59 percent up Front & 59 Percent in Completion on Jobs of $500 or More in 1996
James Gunn when he's not busy with a movie
Being relatively new to running a small vinyl graphics business I absolutely love these types of videos, your advice is invaluable.
As someone who comissions digital artists frequently, this is the idea I like the most. Many artists ive talked to have been absolutley screwed over by the process, and thats part of why i even tell them that partial upfront payment is the best way. If they finish the work and you dont pay, theyre now out the time they spent working on your project.
What i tend to do most now is i will pay them for a draft first, see if i like it, then give them the rest then and there. This way, not only are they assured some money for work i might not like, but it also secures me in a way that I dont pay for something i end up disliking, but also get a chance to request minor tweaks as it goes along before the final product
I build prototypes for a living and have never been stiffed, but it took time to get paid on a few jobs. Key is:
1)work proposal in writing
2) in phases with upfront money to get materials and make client do preliminary admin up front (who authorized payment)
3) do what you say you will do, when you say you will do it
4) send written invoices with listed work product and make sure there are no surprises on the invoice
5) for late payments send written emails with a copy of the invoice again.
6) include late payment fees for late payments in initial contract.
A friend of mine used to regularly use the small claims court, but he always first went after the interest on the late payment as specified in the contract. The interest stated was always 8% above base rate per month and he really liked it when they didn’t pay!
This has been very useful to me. Thank you ❤
In my 40yrs of high end residential construction, the biggest cheap skates I dealt with were the people that had the most money. With rich people, its a power trip to deny or delay payment.
"Hey Sony you still owe me a Death Whistle" is the best context dependent sentence I've ever heard.
He has a new one about building more infrastructure than you need in anticipation of needing it later, and he says it's called "baby fat" in the business, so there is a clip of Adam saying "I've got about 10 racks of baby fat back there". Someone should really put an out of context montage together.
holy crap I responded to myself from 6 months ago and didn't realize it. I need to get a life.