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Context:

I'm currently helping out my friend, who is full on into creating his own cryptocurrencies business, by creating simple landing pages for him, installing WordPress, etc. As we are friends (not that close but still), we do not have any contract or anything written down on paper.

Problem:

Once we decide on the payment for the work I'll be doing for him, I do my part and deliver the code or whatever it is. He often stresses how much time is important to him and asks me to do my work as fast as I can (I'm working a regular job and helping him after hours, which he is aware of). But then, when I deliver, he makes me wait for the payment for weeks. His explanation is usually something along the lines of:

As you know I keep most of my funds in cryptocurrencies, so often it's not that easy to just get the money out. You wouldn't understand how complex the process is as you do not do that yourself and I'm also very busy with complex market analysis.

I already confronted him once and asked him to decide on some fixed date on which I can expect my payment when we discuss any new work, so that I can plan my expenses accordingly - even if that would take a bit of time because of him keeping money in whatever places. He got very agitated and started asking me if I don't trust him and telling me he always keeps his word but I didn't get any unequivocal response. It's hard for me to believe that it always takes him so long to get money. He lives in a nice big house and has a wife and a kid, so I'd imagine he has plenty of expenses during the month - both expected and unexpected.

What is more, very recently I started working on a new website and we both agreed on a payment which is considerably higher than the previous ones. A few days into the project, he told me he gave my phone number to his business manager who will contact me from now on as he is very busy an doesn't have much time, implying that from now on we won't be discussing project details directly. I'm slowly losing my trust in him and I'm worried about receiving my payment in any reasonable amount of time, if at all.

Question:

What can I do to make sure I will get paid in a reasonable amount of time? I get the feeling he is very sensitive about this topic. Even though our cooperation isn't going very smoothly, I'd prefer to stay on a good terms with him and possibly work together again in the future, but I'm ready to drop the cooperation if necessary.

  • 2
    Comments are not for extended discussion; this conversation has been moved to chat. – Masked Man Jun 16 '18 at 5:57
  • What does "helping out my friend, who is ... creating his own cryptocurrencies business" mean? Are you a paid or unpaid contractor? cofounder? employee #2? Are you accepting deferred compensation? You need to set things out in writing. – smci Sep 12 '18 at 1:01
79

we do not have any contract or anything written down on paper

This is not just the context, it's part of the problem.

Don't get me wrong, not every favor you do a friend should be documented. But what you're doing now is much more than just a favor.

You need to reevaluate what "friend" means in this context.

As you know I keep most of my funds in cryptocurrencies so often it's not that easy to just get the money out

Not your circus, not your monkeys. Your friend can have his money stuffed under his mattress, in a bank account or invested in cryptocurrency. It doesn't matter. When he needs to pay a bill, that bill needs to be paid. End of story.

However, I do understand that you're lenient towards a friend. Even if you're eventually okay with a delayed payment, there is a dramatic shift in your involvement here.

Currently, you are at your friend's mercy. He pays you when he sees fit (and he clearly isn't bothered to solve this quickly). You have no way of forcing him to pay you, since there is nothing that documents his requirement to pay you.

What you should do, is draft a contractual agreement of the amount to be paid, and by when it should be paid. If your friend needs a delay, and you agree to it, then you're still free to grant him that delay.
But this way, you get a say in things. You need to agree to that delay. If your friend delays too long, or it becomes clear that his delayed payments are unwarranted, then you have the contract to force him to pay.

Don't wait until an issue arises. Document everything in cases an issue arises in the future.

He got very agitated and started asking me if I don't trust him

"Trust me" is not a valid justification. If anything, it is cause for concern if he has nothing to reassure you with other than asking for your blind trust.

and telling me he always keeps his word but I didn't get any unequivocal response.

The fact that he didn't pay you by the agreed upon date proves that he doesn't keep his word. The cause for the delay might not be his fault (e.g. unexpected circumstances), but he still didn't keep his word.

Your friend is essentially arguing that just because he didn't knowingly lie to you, he's not responsible for failing to deliver on something he said he'd deliver.

he told me he gave my phone number to his business manager who will contact me from now on as he is very busy an doesn't have much time, implying that from now on we won't be discussing project details directly

This is a major red flag. He's expanding the business (adding a business manager layer between him and you) yet still not paying the initial costs of the business. He is effectively insulating himself from you and your outstanding bills.

Question:

What can I do to make sure I will get paid in a reasonable amount of time. I get the feeling he is very sensitive about this topic. Even though our cooperation isn't going very smoothly I'd prefer to stay on a good terms with him and possibly work together again in the future, but I'm ready to drop the cooperation if necessary.

For the future, always draft a contract.

For the existing payment, you're not guaranteed to get it. If the relationship deteriorates, he's liable to outright refuse any future payment that he's not legally obligated to pay (which is why the contract is so important).

Though I doubt there is much you can do legally, you could consult with a lawyer to see if there is enough documentation (e.g. emails or records) that justify a verbal agreement.


Speculation

This is just a re-framing of your story. What I say is not objectively more correct than what you say, but I'm showing you a different interpretation of the same story:

You've done work for a startup focused on a recently created business sector which has a tendency to attract people who try their luck at easy money. The company has failed to pay its bills, claiming that its capital is tied up in its own business, but is still asking you to continue work and even increase the work (since you're talking about a higher price).
Repeated requests for payment are dismissed as a lack of trust in the company's financial future. After repeated dismissal of your request for payment you are now redirected to a third party.

It seems to me that your "friend" is treating you like a salaried investor to his company. If it succeeds, you might get your money (if he wants to pay, but it won't be proportional to the financial success achieved). If it fails, you won't see any money.

He has effectively borrowed your money and is intending to either not pay it back (because of bankruptcy, or because he outright refuses and you have no contract to prove anything) or pay it back without interest. This is highly unethical.

If he is genuine and has no ill intentions, you could argue that the outstanding bills can be converted to an investment; which would entitle you to a share of the profits rather than a fixed amount. I doubt he'll ever go for it, and I have my doubts about the viability of his company (given the way he runs it), but if:

  1. You believe that the company is going to succeed (enough to want to invest in it),
  2. You don't need the money right now, and
  3. Your friend is genuinely short on money and well-intentioned

this is a possible way out of the situation. But I'm highly skeptical.

  • 23
    Plus points for using "Not your circus, not your monkeys." This is the main point. Why you're not getting paid in a timely manner is not important. – JazzmanJim Jun 15 '18 at 13:27
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    @bednarjm: It is by far the proverb I most use at work, when people start mixing responsibilities/explanations. Just to distinguish, why OP's not getting paid in time may be important if he's open to accepting a delay for a friend; but that simply doesn't mean that he should avoid documenting the agreement in the first place. OP is better off giving some leeway on an existing agreement, as opposed to trying to claim that a non-existent contract was broken. – Flater Jun 15 '18 at 13:49
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    To the OP: This is a very good answer. You are being naive and manipulated by a false friend. – Rui F Ribeiro Jun 15 '18 at 14:04
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    “he's liable to outright refuse any future payment that he's not legally obligated to pay (which is why the contract is so important).“ - For the sake of completeness, most contracts don't require a written form and are completely valid by verbal agreement (should apply here). Of course, if you can't prove that agreement exists, that's a different issue. But the distinction is important, for example recurring trades between programming work and money and an unpaid piece of programming work would be a very good indicator that there was an agreement, even if proving the specifics is hard. – DonQuiKong Jun 15 '18 at 16:56
  • This response suggests that you may want to consider payment in equities if you have doubt that money will be forthcoming anyway. Likely, the work you carried out may end up as sunk costs anyway. Getting equity, you make clear to your friend that you haven't worked for free, that that you "trust" his company idea - and if, unexpectedly, the business takes off, you even got your money. A way to keep your face, his face (and to pretend to yourself to have had a good business idea). – Captain Emacs Jun 15 '18 at 21:08
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Friendship stops when business is involved.

His excuses don’t matter even if true. If he can’t find the money to pay you, that’s his problem, not yours. So you should insist on prompt payment, and because of the payment history ask for cash on delivery for your next bit of work.

And of course he is sensitive about the topic because it involves giving his money to you. That’s his problem.

  • 7
    I would say that some "friendships" only start when business is involved, especially when the one doing the work is young and naive. – Rui F Ribeiro Jun 15 '18 at 14:04
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Business is business, friendship is friendship. Don't mix them up.

You do the work for him. You get paid from him. Simple as that.

The things you need to do? Get him sign a contract which states the rate, how much time you work every week, when you get paid after delivery, etc. Insist on him signing the contract before continue the work.

If you don't get a contract before continuing, I am afraid you'll lose both the pay/time and the friendship. Many small business/startup run by friends failed the way you described in your question.

7

I have dealt with 'clients' like this in the past.

As others have said, first get a contract.

But in my experience, for clients that behave this way, the contract still doesn't guarentee prompt payment. It just gets you the privilege of spending months in various legal processes to get your money (maybe).

So for these types of people, I always require payment up front! (at least in part)

No work is done until payment is received. If they have an out-stading bill from previous work, then no new work is started until all past due accounts are settled and payment for new work is received.

It's amazing how a "super critical, needs to be finished yesterday" task turns into "we can wait till next quarter" once their money is on the line.


Be aware: When you start demanding this from him, he will fire back at you.

You can trust me to pay!

How do I know you won't just take the money and run?

...

He will have a thousand and one reasons not to pay like this.

You have one response to all of these:

If you want the quality of product and speed of delivery that I have already delivered to you and will continue to deliver. I will be paid up front and in full for my time and expertise.

If he doesn't agree to this arrangement, then you take your time and expertise to another client who will value what you can deliver.

Then you watch one of three things happen to him:
1. His business slowly implodes as he makes poorer and poorer choices about how he sources his business solutions.
2. He realizes just how valuable you are, returns a few months to years later and agrees to whatever you demand of him.
3. He learns his lesson and works with someone else of equal skill to you, and pays them upfront (and probably more than you were charging him)

  • 1
    4. (Not the OP's problem, but:) He finds a string of other equally skilled people who are foolish enough to do work without payment up front, whom he abuses until they also wise up and leave, and he continues doing that for as long as he can stay afloat / avoid prosecution. // I do agree with the basic point though. The sooner the OP puts his foot down, the better off he'll be. – Steve-O Jun 16 '18 at 14:32
  • A possible middle ground could be for OP's friend to deposit the money with a neutral third party, to be released upon delivery from OP. That should alleviate the "how do I know you won't take the money and run?" type of arguments. However, it comes with its own caveats, not least of which what happens if OP's friend claims to not be satisfied with the work done and the deliverable produced by OP, as well as the fact that such a third party will likely (should) want to be compensated for their services as well. – a CVn Jun 17 '18 at 6:46
  • @MichaelKjörling, that might be fine in the case of a new client who has been burned by contractors in the past. But in this case OP has proved that he delivers to the client. Any move to place distrust on OP would be a huge slap in the face. – Kallmanation Jun 18 '18 at 12:37
7

You're about to be ripped off. And because you don't have a contract, you'll have a hard fight to get paid.

Your 'friend' is putting a 'business manager' between you and he. The usual reason for that is to provide someone else to blame - "I'd love to pay you, but the business manager says that the work was not to spec"... It's been seen far too many times.

You need to STOP work right now, and insist on payment to date, and a valid contract and deposit for all work moving forward. Whether he gets agitated at this is not your problem.

You don't have any shares in this company; if it's successful, all you'll ever (maybe) get is paid for your work. He has a big house and a business manager that are all being paid for, but the poor sop in the corner who's doing a lot of the real work is not even getting the scraps from the table. You need to get paid fairly for your work, or you need to get out as soon as possible so that you can put your efforts towards getting a real job.

  • "put your efforts towards getting a real job" OP has already specified that they are "working in a regular job and I'm helping him after hours". – a CVn Jun 17 '18 at 6:48
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You will never get paid what you are owed. This guy is trying to build a cryptocurrencies business with very little capital. Cryptocurrencies start-ups are all over the place at the moment, so to make a go of this without any investment he has to be very smart and be a very good business person. From reading your story, he is neither, so this is going to fall apart soon.

3

Question: You are OK (or seemed to have been OK in the past) with your friend delaying your payment due to personal issues. What would your friend say if you were to delay construction of his project due to your own personal issues?

I'd try that. Just say to him one day something like "I understand how important this project is to you, and I promise I'll get it done, but this week is just a rough week for me at work so I need time to myself when I'm not working on other things". See what he says.

  • If he's OK with that, then you have an understanding: He doesn't have to pay you promptly, but you also don't have to get the work done promptly. You are essentially "volunteering" (until the money materializes that is functionally what you are doing), and your friend is getting what he paid for (i.e. he paid nothing, so he's getting as much as you are willing to provide, provided him paying nothing).

  • If he's not OK with that, then explain to him that your time is valuable. You are having a rough time at work, it's very stressful working 2 jobs (because functionally you are), and he should give you a good reason to continue stressing yourself out (even if you're not stressing yourself out, pretend like you are). Then he can either say "Sorry you're stressing yourself out, I promise I'll compensate you by X day in Y amount", in which case you hold him to that, or he'll give you another excuse. In the former case, ask for the compensation in writing. In the latter case, he's not really your friend and he's just taking advantage of you, so throw him to the wind.

2

Point out to him that you have a family to feed and a mortgage to pay (or rent, or board, or whatever). If he doesn't enable you to feed your family and pay your mortgage, then you'll need to find a job that does enable you to do those things.

In short, if he doesn't pay you, then stop working. If he needs the work do be done as quickly as possible, then he'll have to choose whether to

  • start paying you, or
  • find another victim who will work for him for free.
  • "you'll need to find a job" OP has already specified that they are "working in a regular job and I'm helping him after hours". – a CVn Jun 17 '18 at 6:50
  • And this suggests that OP needs to work two jobs to make ends meet. All the more reason why he shouldn't tolerate some tyrant ripping him off. – Dawood ibn Kareem Jun 17 '18 at 19:52

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