Another of the pitfalls of self-employment is the threat that a client will not pay for the work that you agreed to carry out for them. This is most common as the project is underway and you have not delivered any of the work. All your expenses, time and effort has resulted in nothing. In some cases, clients won’t pay at the end when all work has been sent. Here is what you can do about it.
There are many reasons why a client may not pay for work and not all of them will be to do with you.
- The work is no longer needed as the project has been shelved temporarily or permanently cancelled
- The client has ceased trading. In this case, you will need to follow a specific procedure
- They were not happy with your work and do not think it is worth paying
- They have cash flow problems and are stalling
- They simply decided not to pay you and think they can get away with it, or that you will leave it if it is of small value
This list is not exhaustive, but represents the most common reasons.
What To Do About Each of These Cases?
If the work is no longer needed, you will need to negotiate part payment but only if you have started the work. You can only reasonably charge for work you have completed.
If the client has ceased trading, you will need to apply to the organisation in charge of the winding up order. Be advised that you may not get all of your money. The reason the company has ceased trading is because its assets and income cannot cover its costs.
If the client says that they are unhappy with your work, then they may reasonably be open to negotiating a fee, especially if they wish to use your material to pass onto somebody else. You should be entitled to payment for the work you carried out. Before going to court, try to negotiate a settlement.
If the client has money problems, taking a hard line approach (threat of legal action) may go against you. If they have failed to meet your deadline on payment, you are within your rights to stop work until the bill is settled. Push for payment, but it is wise not to do any more work until the issues are resolved. Offer them plenty of choice and empathise, but make it clear that you are running a business too.
If the client is trying to defraud you, negotiation as explained above will most likely not work. Only legal action (see below) will force their hand.
What Legal Action Can You Take?
Firstly, legal action should be taken when all other avenues have been exhausted. Legal experts advise a 7-day Payment Request before considering court action.
If this fails, what you do next depends mostly on the value of the contract. For small claims court, the value of the contract must be below £750 (at July 2016); you will need to file an HMCS claim. For anything over £750, you need to file a Statutory Payment Demand. Once served, they must pay the full amount within 21 days. If this fails, you have the right to serve a winding up petition in the courts – but not before the 21-day notice.
Filing a DMCA Claim
DMCA refers to those providers of digital services. If you are a writer, artist or other creative business owner you are covered from having your work used illegally. DMCA is the Digital Millennium Copyright Act, an updated version of the (then) existing copyright laws. Extra criteria were put in to cover the growing digital economy.
Filing a DMCA is simple. You need to apply to each search engine (Google etc) and state the web address of the material and the nature of your complaint. Submit to as many as you can. If the search engine runs the site, they will take it down immediately. If it is set up by another server (for example, if you have applied to Google and it is on the Yahoo! server), it will be removed from their search rankings.