I have a client who is behind on his fees. He owes me £2.5k. The payroll is due, the VAT will need to be done by the end of May and his accounts are behind. The lateness is due to the client not supplying information. I've said I cant keep working for no payment, he wouldn't after all. I've said I have no choice but to cease work for now until some payment is forthcoming, even a payment on account
However I cant quite bring myself to let the HMRC penalties rack up. So I've emailed and called asking for the payroll information for April. No response. I've asked for the VAT info. No response. I've sent a reminder for the accts info (31/10/13y/e).
What should I do? I don't want to just resign as its a decent fee £4200 + VAT. However I cant continue to work without payment. I've suggested a payment plan to catch up. Again, no response.
Thanks
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Replies (16)
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he is not a decent fee
if he is not paying . Stop work now write by registered post and confirm that you will not do any further work until he has paid and that you are not responsible for any penalties/surcharges
Clear conscience
Thomas, I think you've bent over backwards to be accommodating. If the client isn't even responding, never mind paying, then I would draw the line there.
I feel your pain re not wanting penalties to start racking up, but perhaps that's the only way now for the client to realise the importance of a) giving you the info and b) paying the bill.
Engagement letter
What does your engagement letter say about timing of payments, suspending work, client's responsibilities etc?
My TOB allow me to stop work if payments fall behind. I know deep down he isn't a good client when he doesn't actually pay me. However naively.. I thought I could educate him and for two years its worked well. He was racking up thousands in penalties before I took him on.
Move on
He was racking up thousands in penalties before I took him on.
Unfortunately it will be you who is racking up the cost if you don't get paid. Agree with the rest: stop work, pursue payment, disengage, do something more productive with your time.
Not sure what the problem is. Of course you stop work until fees are paid. Clearly you must tell him that in writing. Any penalties he suffers are his problem not yours.
Free services
What should I do? I don't want to just resign as its a decent fee £4200 + VAT.
You're not getting paid, therefore you are working for free. It doesn't matter if the fee is £100 or £10,000.
If you want to get paid, I can recommend Small Claims.
Soft touch
No response to a payment plan? You are being taken advantage of and need to reset the balance of the relationship. Time to toughen up. If you are not being paid you can not be frightened of upsetting the relationship. The relationship that you believe has, hitherto, existed doesn't actually exist.
If you do not act now the problem will just grow and grow and grow . . .
You're not a slave
Nobody has to work for no pay. As others have said, an annual fee of £4,200 + VAT is only a decent fee if you are actually paid.
1. Send a final e-mail requesting payment of £x by y date, state no further work will be done without that payment and inform him you will disengage and seek legal avenues to recover the debt, if this is not met.
2. Send the same by recorded delivery letter, so that he can't use the "I didn't get your e-mail" excuse.
3. If still no payment then send a disengagement letter and request immediate payment of the full £2.5k balance.
4. After a week send a copy of the Small Claims Court form that you intend to file.
5. Give him a few more days to pay up and then if he doesn't, submit the claim form.
Soft touch
Do not let him off. I did it with one client who subsequently went bankrupt. I felt the trustee was not handling the case in the best interest of the creditors, doing deals which I felt were not at arms length and not fully investigating the case. Neither the debtor nor his wife declared a life policy which he had. I complained about the trustee's conduct and got the following reply.
As ###### was appointed Trustee, he will make the decision on all aspects of the bankruptcy. I am looking for ways to challenge this, no one can have the ultimate power. Anyone experienced a similar problem?
If you haven't got the necessary information you can't stop the penalties . Sack him & move on as the others have said. I suggest also run a check against him to see if he's set up another company. If he has it is likely he's going to phoenix the old one and you will not get paid
Agree with most of the above, except that there is no point in resigning or sacking him, as that does not improve your prospects of getting paid in the short term, and of course fatally destroys your prospects of earning more fees from him in future, however remote that prospect is.
So the key actions are to do no more work until fees are paid, and to be robust and swift in enforcing payment.
What should my next step be?
1. Recorded delivery letter - confirmation no more work will be done until a min of £x paid (or payment in full)
2. Another phonecall - I could call him at work - he is currently on a contract at my other halfs workplace (a large bank) so I could obtain his internal extension (although that feels wrong).
3. Email
I don't really understand why he's not at least sending over the accounts information that I need.
Thanks
Um . . .
I don't really understand why he's not at least sending over the accounts information that I need.
Thanks
Because he is getting someone else to do it, maybe?
Concentrate your efforts on being paid. Assume you've lost the client, because it looks like you have.
The DIY Route
Think about sending a Statutory Demand. If the client is a ltd co send it by registered post to the registered office. If by some chance the reg office is at your address you still need to send it by registered post to prove delivery BUT send a copy, by registered post, to the directors home address. If you Google Statutory Demand you will be able to download the form. We did it to a client a few years ago they paid are still clients and are as good as gold now