Invoices (owed to me) always late; also late on deliverables (me to them); past monies disputes; being strongarmed

Question

Let me expand on the title as it is directly relevant:

I am 26 and this is my first contracting experience, being contracted by this company. The only stipulation is $70 an hour. This is in Australia, all amounts are $AUD.

I was not the first to be late (me being late on deliverable items, my employer being late on invoice payments). In-fact, for the first few months I was not only on-time but ahead of schedule for all milestones and independent tasks while invoices were routinely weeks or months late. Living paycheque to paycheque at the time, and still am, this is a serious issue for me. I was in dire straights at the time and so didn't raise a challenge as they were getting paid eventually; I still am but to a slightly lesser extent.

Fast forward 6 months and I have been tasked with overtaking a new project, one in which this small company has routinely mismanaged to the detriment of some ~$220,000 in losses. The project is building a financial application, I have restarted it from the ground up. All of this has been known and in-scope since my takeover of it; and the project's previous losses were due to their own mismanagement (by those previous in-charge as well as this company) as well as both parties ignoring my advice concerning how to run and maintain said application; a point I have been loud and clear about numerous times to which the response has been "don't worry about it", or "we'll fix it later", or "it's not your concern". Fine, but at that time I wasn't in charge of the project.

I am doing essentially 4 people's job on this project: (1) frontend developer (2) backend developer (3) devops (4) infrastructure/qa/testing for a rate of $70 an hour, one which I am happy with at this stage. I have outstanding invoices of ~$11,000 at this stage, one of which is 2 weeks overdue. It was due on the 1st of this month. I asked why it had not been paid as follows:

Might I also inquire as to the status of my 01.011 invoice. As you know I unfortunately live paycheque to paycheque, having to sell my car, camera, half of what I own, and a majority of my portfolio when mutual officer of said company did not deliver on their promise of $250,000, and the deal with party mutual officer organised a deal with ran away with $70,000 they owed us

The reply was that we should talk about that face-to-face:

If you want to have this chat then I suggest we do it face to face

I am unsure if that is an attempt to dodge, or strongarm me in real life so as to avoid written word.

With all of this said, I have missed almost every milestone on this financial application by a fortnight thus far due to the care required to not bleed money and develop the application properly, points I have made to the company numerous times via their past losses. They dismiss these as they did before, "it's not a concern" etc. However, they also demand I guarantee it's correctness so this is a catch-22.

The work is being done but at a slower pace than they unrealistically demand or appreciate and I have foolishly given optimistic deadlines for things which the company has passed onto others which when missed I am sure embarrassed/embarasses them.

With all of this said how do I challenge the yet-again late paid invoice, growing friction of past monies unpaid, and seemingly endless strong arming over me for deliverables that I cannot guarantee correctness of before they are tested/developed properly.

They are hiring new staff now as I am in the office and can see and hear the interviews, I also corrected numerous mistakes relevant to my field on their interview quiz which I found amusing, so they seemingly have money but not being paid on time is extremely demotivating and literally forces me to swap tasks as I am living paycheque to paycheque and require money to survive.

I am at my wits end.

Answer 1

No you don't strongarm or anything like that. You just politely send your invoice and ignore anything that doesn't include payment. Don't enter into a dialogue, they already know the issue.

This puts the ball squarely into their court to resolve the issue and get what they need.

Don't wait until they have a replacement.

Lastly never give excuses like living hand-to-mouth for needing money, it weakens any negotiating position you have. People who don't pay promptly are unlikely to feel sorry for you.

Answer 2

Get a lawyer. Now. Take copies of all paperwork.

They will probably advise you to stop work until all outstanding payments are made.

"If you want to have this chat then I suggest we do it face to face"

Yes - they're trying to avoid further paper trail.

I have foolishly given optimistic deadlines for things

Yes, that was a mistake. Learn from it before you lose your credibility.

seemingly endless strong arming over me for deliverables that I cannot guarantee correctness of before they are tested/developed properly

Don't give in. They'll only complain more loudly later when things break and may use this as an excuse to withhold payments (might be a contractual breach).

I am at my wits end

Get a lawyer. Initially you just need them to write a letter demanding payment and to advise you on the next steps. Shouldn't be too expensive at this stage.

Answer 3

Living paycheck to paycheck on contract work is nuts

I am 26 and this is my first contracting experience. I was not the first to be late (me being late on deliverable items, my employer being late on invoice payments). Living paycheque to paycheque at the time, and still am, this is a serious issue for me. I was in dire straights at the time...

So you're new to contracting. I get it. The thing about contracting is that the coin seems to be huge compared to being a full-time employee. But this is an illusion. And you have made huge assumptions to the contrary, due to your inexperience.

The very fact that you're using the term "paycheque to paycheque" displays how unequipped you are to live the contractor life. You don't get a paycheck at all. This is a contractor relationship. There are three tiers of contracting:

• Regular employee - lowest salary, highest benefits, low risk of late paychecks, and they handle taxes.
• Contract agency work - mid salary, low benefits, low risk of late or missing paychecks, and they handle taxes.
• Self-contracting. Highest salary, no benefits, high risk of late or missing payments, and taxes are all on you.

Note the middle position of "contract agency". You are an employee of the contract agency, and they take the brunt of the risk in dealing with the company. They can mitigate this in two ways (you cannot): First the agency is watching the business angles and if a company is insolvent, they simply won't send you. Second, the company dare not stiff them, or they'll be blacklisted among all contract agencies.

You're in a perilous position, possibly not by accident: fair chance the company can't work through an agency because their credit's no good. If their company is failing, that's one thing: but if they're a startup, you're being paid all wrong: your compensation should be largely in equity.

When you deal direct, you're a businessman not an employee

This.

"Might I also inquire as to the status of my 01.011 invoice. As you know I unfortunately live paycheque to paycheque, having to sell my car, camera, half of what I own, and a majority of my portfolio when mutual officer of said company did not deliver on their promise of $250,000, and the deal with party mutual officer organised a deal with ran away with $70,000 they owed us..."

The reply was that we should talk about that face-to-face:

Uh, yeah. The officer was trying to save you the humiliation of having something like this captured in writing where it could be seen by all of management, and certainly will be seen as the company high management, strategists and lawyers the moment you threaten litigation, and in actual litigation fully open to discovery and publication.

It's humiliating because your personal finances aren't any of their business. Your rant about the other company says you're bad at business, and selling your possessions says you're bad at life.

Billing cycles

I am doing essentially 4 people's job on this project: (1) frontend developer (2) backend developer (3) devops (4) infrastructure/qa/testing for a rate of $70 an hour, one which I am happy with at this stage. I have outstanding invoices of ~$11,000 at this stage, one of which is 2 weeks overdue. It was due on the 1st of this month. I asked why it had not been paid as follows:

$11,000 sounds like 160 hours, or a typical 4-week period. Is this billable hours for December or November? Because it's way too soon for December to be late. Can't bill til the end of the month, and need to give them 30 days to pay, and if they take longer than that, it's a minor infraction. You're a vendor not an employee, so you get paid with the vendors.

In fact, if they're in financial trouble and are slow to pay other vendors, then they must pay you slow also. If they gave you preferential treatment, and subsequently declared bankruptcy, you could have to give the money back for being paid out-of-turn. That actually happened to us.

That there, is another difference between contracting and paychecks.

Your performance is a bigger problem than you know

I have missed almost every milestone on this financial application by a fortnight thus far due to [complex excuse which blame-shifts onto company]... catch-22... I have foolishly given optimistic deadlines... seemingly endless strong arming over me for deliverables...

Well, that paints a somewhat clearer picture. They are not confident in your work. They are asking "What if you fail?" You aren't thinking about this at all; you think the money is yours to keep; you literally call it a paycheck. In their mind it is payment for a deliverable.

No deliverable, no payment. That is their job -- it is literally their fiduciary duty to shareholders. So their correct response, given low confidence in you, is to stall and drag out your payments - so if your project collapses, they haven't paid you the money. Not only is that legal, but --

Oh, I bet that hasn't crossed your mind: If the project fails, you may have to give the money back. By admitting you live "paycheck to paycheck" and have liquidated much of your attachable assets, you've told them "I can't give you the money back, so any more prepayments you give me are unrecoverable". And your boss could have pretended that was a non-issue, but then you gone done left a paper trail. That's why he was facepalm/SMH...

So now, to get any more prepayments, you may face extreme scrutiny about your project progress, so they may assess the probability of you finishing. And now we have

not being paid on time is extremely demotivating and literally forces me to swap tasks

I am due to show a demo of the app tomorrow but still have not been paid, given this is the case should I just tell them I am not demoing it?

*cringe* See how that's just shooting yourself in the foot? Their whole fear is that your project is lost in the weeds and that it will ultimately fail. And there you are... slowing down, canceling demos, and fulfilling all of their fears! You are literally telling them "I can't get it done!"

SMH, of all the things to cancel for not being paid... canceling a code shipment, maybe... canceling a feature request meeting, maybe... but canceling the demo!!!???

All I can think to say is, "Don't quit your day job, kid".

Honestly, the smartest thing is go all-in on this task and Get It Done. Get the milestones back on schedule, spend 16 hours a day fueled by ramen and Mountain Dew, deliver it and call it DONEZZZ.

Maybe the thug life is not for you

A bunch of the things you are vociferously complaining about are actually perfectly normal happenstances and risks for independent contractors.

yet-again late paid invoice, growing friction of past monies unpaid, and seemingly endless strong arming over me for deliverables that I cannot guarantee correctness of before they are tested/developed properly.

Collections is a fifth job you also have, because independent contractors are their own collection agents. And that makes collection an extra challenge, because you need to be diplomatic to stay on the contract. (unless you hire it out or sell the debt).

Selling the debt to a collector is an interesting thought exercise. It nicely "third-parties" the problem; you don't have to be the "heavy". However, it forces you to document the debt: review the contract, make sure the contract is tight, your billable hours are correct, if the company is solvent and collectible, etc. If you missed something important, it'll come up there.

while invoices were routinely weeks or months late. Living paycheque to paycheque at the time, and still am, this is a serious issue for me.

Again, slow pay is normal life for an independent contractor. The reason people are thinking "gold plated yacht" is we can't comprehend how you can be desperate while making $70/hr, unless you have a huge boat mortgage or have a horrible vice. But of course, you're not making $70/hour, are you?

My point is, living paycheck to paycheck is incompatible with the independent contractor life. For 95% of people, "paycheck to paycheck" is a "mental complex" including some very subconscious stuff about wealth and worth: no matter what they do they cannot retain capital. Those people NEED paychecks and cannot function on intermittent income. If that's you, forget being a contractor.

extremely demotivating and literally forces me to

Yeah, that's another deal-breaker for contractors. You have to be a self-starter. You have to push through that. Your view toward "forces me to swap tasks to survive" doesn't work either. You have to have our life in order such that you can do the tasks contracted.

"Going employee" may be your best bet

Because the rules for employee paychecks are completely different than for contract work. Failing to make payroll is VERY serious business; failing to pay a vendor is a joke (as you know).

Well they quite literally have no other person in their entire company who even understands what I am doing let alone able to do it, I know that comes across as arrogant but this is highly domain specific knowledge for which their other devs are not employed or expected to know, if I ceased work they wouldn't be able to move ahead at all.

I don't find that arrogant at all. Lots of companies have poor bus factor. This is their fault, and you get to exploit it.

But "I'm indispensable" only goes so far. "But they need my work so bad!" Quoting: The project is building a financial application, I have restarted it from the ground up. Oh, snap: they didn't need the last guy's work so bad!

Once upon a time I believed I could have a job there, and in-fact was offered once and then another time the senior developer said they should get me on-board but this culture has left a bad taste in my mouth.

You're wrong. The culture didn't leave a bad taste in your mouth, your inexperience with contracting did. And to be blunt, the problems with you as a contractor are your fault, because of your wildly, comically misplaced expectations - which are merely due to inexperience.

Contracting just ... let's just say "is not what you expected". The employee relationship will likely be a happier one by far. Money destroys relationships, and that's the crux of the problem here.

I need this money, and I am going to be seeking employment elsewhere. If they offer me a job I'll have strict terms but that's not on my mind at the moment.

No, if you want to succeed, you'll take a contrite internal attitude, clean up your external attitude, present your amazing work as your resume, and admit to your boss, somewhat contritely, that contracting isn't what you expected and hiring on as an employee may be the better way to go. I.E. frame it as "you were right". And then smile when the boss says "I told ya so", coz that's the sound of you winning.

Answer 4

As you don't see a future with this company any more, your focus is now square on recovering the money, and you have one thing going for you - the work you've done so far.

While I can't imagine that this will end without going to court, there is one thing to try first, and for that you need to send an email to the company which, more or less, follows:

Given the lack of payment for outstanding invoices totaling XYZ I am immediately ceasing any future work due to non-payment. This also means I cannot carry out the demo scheduled for tomorrow until the account is brought up to date. Additionally not doing so in 14 days will result in me taking legal action to recover the amount due, with statutory interest (if applicable).

Any further communication must be in written or email form, either addressed to [Put your physical address here] or delivered by email to [[email protected]]. Please acknowledge receipt of this letter.

Make sure that 14 days meet statutory times in your country (you may need to up this to a month), put the title of the message as "Letter before action" and send a hard copy by post as soon as you can - with tracked delivery, requiring a signature. And then stop doing any work.

If they come back and say that they really need the demo, you can cut a deal, like say that you will do the demo if they pay you half of the owed sum before start time, and rest in 4 installments over course of 1 month, or whatever works for you.

If you don't come to any agreement like that, and the time of the letter will expire, then you go and hire a lawyer to take the claim to court for you. Keep in mind that if they decide to dig their heels in, this process will take months until you will see anything from it. So it's always best to cut a deal, even if you were to give them a discount on the total amount they have to pay you.

And in the future, I would not recommend sticking to the contractor work, at least without getting a lot firmer backbone, as this is not extremely uncommon in the life of a contractor, especially if you over promise and under deliver.

UPDATE: Regarding shutting down comms until payment is made.

I saw some people recommend to not talk with them until payment is made. This is something I would strongly advise against. By shutting the comms (as that's what you do when you reduce them to "I don't talk to you until you pay me) you are giving them only 2 choices.

1. Write you off as a lost cause. They will for sure not pay you anything in that case, and you will have to go through courts to see any money. As I read your circumstances, this is not something you can afford right now, and they know it too, which greatly weakens the chances that at some point they will "blink" and pay up, so you will almost certainly have to go through courts to recover any money (and that's assuming that you will win).

2. Suddenly have change of heart and decide to pay up all the money owed to you, in full, right away. I can only see this happening if the work you are withholding is mission-critical, and by getting it - in its current shape (as that's what they would be paying for, not for any improvements but the exact state the work is now) would make them lose substantially more money than they owe you. It doesn't sound like your work fits that bill, so going this route seems unlikely. And by shutting up communications until paid, you are effectively killing any idea of a deal, as I can't stress enough how I think, it would be better for you to give them 20-30% cut, and get paid the rest, given all the circumstances.

So proceed carefully if you decide to break off the comms until payment. And know that once you do it, there is no coming back until either 1 or 2 happens.

Answer 5

You say your invoice has not been paid for two weeks. Unfortunately for you, that's a common situation. It is probably not due to dissatisfaction with your work, but to a business process at your customer company's accounts-payable department. In the USA anyway, many companies pay invoices "net 30", meaning they pay 30 calendar days after the invoice is presented. They treat contractors the same as office-supply vendors or the power company in this respect.

It's obviously a big problem for you to wait a whole month to get paid net 30. You need the money sooner. Businesses call this a cash flow crunch. It's a real problem for you. And, it probably has been a problem for your customer company in the past: they've heard of it.

For a two-week-overdue payment issue, please do not threaten your customer by saying you'll withhold deliverables or bring legal action. If your payment were two months overdue the situation would be entirely different.

Edit Keep in mind that legal action takes forever. In most cases it's all about money, not trying to persuade somebody to do the right thing.

Instead, try telling them you have a cash-flow crunch, and ask for at least partial payment right away. If you can have a word with the accounts-payable person, you can ask what it would take for them to pay your bill quicker. In your mind don't tie a two-week slow payment to the quality of your work.

For the future, a contractor's answer to this is to put the words "net 7" on the invoice, and to try to get their preferred payment terms mentioned in the contract. And, a wise contractor always introduces themselves to the accounts-payable person: a face with a name is a good way to get them to pay attention to your invoices.

Answer 6

Can you do the demo without giving them the code? This would show you have the work done. If they ask for the code, you say "we should talk about the payment issues first". Be firm, state that you have done your part and you need them to do theirs. Otherwise it makes no sense for you to put more effort into the project. Be polite and nice.

If the issue of your late delivery comes up, tell them you had to put in extra work because of THEIR wish for correctness and that this has been communicated, say nothing more.

For the long term I would recommend finding new clients, but maybe you can drag this out for a while until you get paid properly.

Last company that tried this stunt on me ended up paying everything and soon after without a developer and I didn't regret it ever! ;)

Answer 7

In addition to other answers here, I will add that this is a normal situation in companies. It is a pain for us as contractors. But that is why in the future you must add a clause to the contract, such as:

Invoices shall be paid within fifteen (15) days of receiving it by email or in person, otherwise interests will apply starting from day sixteen (16) at a rate of 0,1% a day until the day the payment is made. Interests, if any, will be detailed a subsequent bill.

You might want to consult a lawyer.

Answer 8

This is a bit more general than your current situation, but I think it generally fits. You need to

• get a lawyer
• draw up a proper enforceable contract for any future employment that includes
  • Clear rules on when payment happens (bound to deliverable or monthly independent of whether you deliver on time)
  • Clear rules on what happens if payment is not on time, e.g. additional late fees automatically incurred per week late or the like, no further deliverable handed out etc.
• enforce that contract if any situation arises with the help of your lawyer

In short, "Fuck you, pay me": https://www.youtube.com/watch?v=jVkLVRt6c1U This talk very much applies to freelancers of all trades.

As for the current situation point one also applies, get a lawyer and find out how you can enforce which portion of your salary and whether you can withhold work in your legal jurisdiction under your current contract until they do pay you or how you alternatively get out of that contract.

And note that this is a two-way street. Getting a proper contract and understanding it properly with a lawyer should also make clear to you what you get into when signing such a contract and what being behind on deliverables means for your future payments.

Answer 9

Talk to them. Then, if they don't pay you, talk to a lawyer.

The first step to resolving this situation would be to talk to them about getting paid. If this works, great, you've gotten paid.

If it doesn't work, however, consider talking to a lawyer. $11,000 is no joke, and a lawsuit to recover that much money is entirely justifiable. As a contractor, you should have a formal contract that you have both agreed to, and failing to pay you the money would be a breach of contract that would entitle you to damages.

Obviously, if you do sue them, don't ask them for a letter of reference. Regardless of the outcome, however, I would recommend dusting off your resume and beginning to look for a new job. Ideally, you'll have found one before you begin suing them over breach of contract.

Answer 10

Rough napkin math: They owe you $11k, at $70/hr. $11000/70 = 157 hours, or roughly 4 weeks (at 40 hours per week), or roughly 1 month.

Check your contract. On what schedule does it say you should be paid? If it says monthly, I'm not sure you have a case. If it says less than monthly, you have a problem.

Here's the problem: They are paying you, yes, but not on time. That means you cannot use that money the way you want, and in particular you can't invest it or get bank interest on it yourself. The company is in essence stealing the interest you would have earned on that money if you had had it (and be assured the company themselves is making interest on that money). So don't think of it as the company isn't stealing from you, because they are.

Now, as for what you can do about it: Your deadlines are not contractually enforceable (unless they are). You told them you estimate you need X time to complete Y job. It's an estimate. If the estimate is wrong then that is at worst a fault of you being unable to estimate properly (and really as a contractor you should be better at estimating; companies will use contractor estimates to make budgets for projects, so this is important because it affects your client's bottom line). If they had issue with you not producing, they would have fired you already, and as a contractor it's way easier to terminate your employment than an employee (who has to get paid benefits and stuff), so clearly that's not the problem. So the excuse of your work being late or whatnot, doesn't apply here. With regards to not paying you, they are at fault 100%.

Now, what you should do is ask them when you are to be paid the outstanding balance, and insist on getting a hard and fast date in writing. Continue working until the agreed upon date, and then if payment is not forthcoming in full, then simply stop working, and, as other answers have said, seek legal attention. Also make sure there is some sort of penalty payment to be made if payment is not made on the agreed upon date.

As for going to meet them in person for a face to face chat, you should do it. You should also record the conversation with a voice recorder. It may or may not be admissable in court for legal proceedings and may not have legal weight held to it, but at the very least you have it for posterity and it might turn out to be useful later. With regards to getting this voice recording approved (in the case that you need the other party's approval to record the meeting; this is a thing in some locales), you can say something like "the focus of this meeting is with regards to getting my payment sorted out; to that end I'd like to record the discussion so I can take detailed notes later". If they don't agree to that, then that's a red flag that they may be trying to fleece you so guard yourself accordingly. You may want to check your local laws on recording though; in many places in the world you don't need both parties' approval to do a recording so you may not even need to have this conversation.

Upon leaving this meeting, send the interested parties an email with the contents of the meeting and make sure to either send it from your personal (or business) account or CC your personal or business account; make sure the email won't be completely lost if for whatever reason the company locks you out of your company email that they own on their servers.

You should try to focus both the meeting and the email around getting paid, when you will be paid, how much you will be paid, and so on, and you need to come out of the meeting with guidelines upon which you can draw up a payment contract. Insist that the meeting is not over until you have those details and management has to sit and continue talking with you until those details are agreed upon. Then after the meeting you should draw up the contract and have them sign it, and proceed accordingly.

As a side note, I don't know the cost of living in Australia but I assume it's relatively similar buying-power-equivalent to other countries, where something that would cost $5 USD in the US would cost around $5 AUD in Australia, on average. At $70/hr you are making roughly $130k/year. I have no idea how someone making $130k/year is living paycheque to paycheque. You need to figure out your spending habits and get those in order, because that amount of spending is seriously ridiculous.

Answer 11

Don't be afraid to talk to them about overdue invoices. Be firm and do not bring your personal condition or concerns (like "paycheck to paycheck") into the discussion.

Always work under a legal contract. My usual contract states that the client does not own the code until all invoices are paid in full.

Put your terms on every invoice. My typical terms are something like: "Invoice total is due in 30 days from date of invoice." Note that this is NOT the same as "NET 30" terms. Be very careful using "NET" terms because they imply a discount for early payment of invoices.

For clients who are less than reliable (or if I feel like the company might soon have financial problems), I will shorten up the terms to "...due in 5 days..."

Never continue to work past an overdue invoice until it is resolved.

Do not let overdue payments for work slide. If a client owes you money then promptly take them to small claims court. I'm in the U.S. but I believe it's similar for Australia. The maximum amounts vary by court so that's why it's important to not let your overdue invoices accumulate to large amounts. Here's a link to Aussie small claims basic info: NSW Local Court Small Claims You don't need a lawyer for small claims court - just your contract and invoices and other pertinent documentation. (Keep it business-like! Don't mention that you're starving or whatever. None of that is pertinent to the legal arguments.)