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Very late payments on no formal contract

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    Very late payments on no formal contract

    Hello,

    I'm working remotely with a client in the UK. My client is a Private limited Company, I am working via my own Private limited Company. My client is a small two man operation with no IP or non-director assets I'm aware of.

    I completed two pieces of fixed price work with the client, which resulted in my client winning a public sector bid. The payment of the fixed price invoices was paid on time. After the bid was won, we agreed via email terms for my work fulfilling the new bid including a day rate and payment terms. We did not sign a written contract.

    I have worked on this project since the start of May 2019. Each day, or half day, I work I upload a record of the day worked to a timelog sheet in a shared wiki.

    In a phone call I offered "a couple of weeks flexibility" over the due date of my May invoice to align with a late stage payment from the public sector client to my end client. This payment from the public sector client was due by the end of June, but was not paid on time.

    Early July I said that I could no longer accommodate this flexibility, and my client assured me the payment would happen within 2 weeks. My client paid me 1/4 of my first invoice as a partial payment one week after I emailed them I needed payment. I was concerned at the time it took them a week to have enough money to only pay part of what they owed me.

    I continued work for them the next week, being assured that the public sector payment was only two weeks away and I would be paid in full when this happened. This week however I was copied in on an email stating that the public sector client was delaying payment further (due to unhappiness with a deliverable, but not the quality of my work) and the civil servant cautioned to not expect acceptance of the deliverable to happen within the previously expected timeline.

    This has made me extremely anxious.

    I emailed my client saying I would continue working the last two days in August trying to remediate the feedback in the deliverable, but otherwise would have to down tools in August as my first invoice was now 50+ days overdue, and my second invoice now also overdue. My client called empathising with me and stating they would seek loans and overdrafts to pay me asap to get me working again.

    The stage payment from the public sector was for £20k, I am now owed over £30k.

    I've managed to stay on amicable terms with my client and would like to complete the project if I'm paid on time, however I worry I've extended too much trust and credit.

    I'm worried that my client is unable to pay my invoices on time, especially as they money they are due, is less that the money they owe me.

    Is my client trading while insolvent? Am I able to recover debts if they declare bankruptcy? My client is still emailing me about progress they are making in other areas, even though I declared I've downed tools.

    Thoughts?

    #2
    Originally posted by itconsultantuk View Post
    Hello,

    I'm working remotely with a client in the UK. My client is a Private limited Company, I am working via my own Private limited Company. My client is a small two man operation with no IP or non-director assets I'm aware of.

    I completed two pieces of fixed price work with the client, which resulted in my client winning a public sector bid. The payment of the fixed price invoices was paid on time. After the bid was won, we agreed via email terms for my work fulfilling the new bid including a day rate and payment terms. We did not sign a written contract.

    I have worked on this project since the start of May 2019. Each day, or half day, I work I upload a record of the day worked to a timelog sheet in a shared wiki.

    In a phone call I offered "a couple of weeks flexibility" over the due date of my May invoice to align with a late stage payment from the public sector client to my end client. This payment from the public sector client was due by the end of June, but was not paid on time.

    Early July I said that I could no longer accommodate this flexibility, and my client assured me the payment would happen within 2 weeks. My client paid me 1/4 of my first invoice as a partial payment one week after I emailed them I needed payment. I was concerned at the time it took them a week to have enough money to only pay part of what they owed me.

    I continued work for them the next week, being assured that the public sector payment was only two weeks away and I would be paid in full when this happened. This week however I was copied in on an email stating that the public sector client was delaying payment further (due to unhappiness with a deliverable, but not the quality of my work) and the civil servant cautioned to not expect acceptance of the deliverable to happen within the previously expected timeline.

    This has made me extremely anxious.

    I emailed my client saying I would continue working the last two days in August trying to remediate the feedback in the deliverable, but otherwise would have to down tools in August as my first invoice was now 50+ days overdue, and my second invoice now also overdue. My client called empathising with me and stating they would seek loans and overdrafts to pay me asap to get me working again.

    The stage payment from the public sector was for £20k, I am now owed over £30k.

    I've managed to stay on amicable terms with my client and would like to complete the project if I'm paid on time, however I worry I've extended too much trust and credit.

    I'm worried that my client is unable to pay my invoices on time, especially as they money they are due, is less that the money they owe me.

    Is my client trading while insolvent? Am I able to recover debts if they declare bankruptcy? My client is still emailing me about progress they are making in other areas, even though I declared I've downed tools.

    Thoughts?
    NLUK will be in shortly to address this in his acerbic yet astute way. IMHO you have extended way too much credit, and are ******* exposed. I would down tools straight away and start dunning.

    The only progress you should care about is their payment of invoices on time.

    This is not Tinder you are playing, be amicable as you like, but swipe to the inbound payments section of your bank account.

    Comment


      #3
      Originally posted by itconsultantuk View Post
      Hello,

      I'm working remotely with a client in the UK. My client is a Private limited Company, I am working via my own Private limited Company. My client is a small two man operation with no IP or non-director assets I'm aware of.

      I completed two pieces of fixed price work with the client, which resulted in my client winning a public sector bid. The payment of the fixed price invoices was paid on time. After the bid was won, we agreed via email terms for my work fulfilling the new bid including a day rate and payment terms. We did not sign a written contract.

      I have worked on this project since the start of May 2019. Each day, or half day, I work I upload a record of the day worked to a timelog sheet in a shared wiki.

      In a phone call I offered "a couple of weeks flexibility" over the due date of my May invoice to align with a late stage payment from the public sector client to my end client. This payment from the public sector client was due by the end of June, but was not paid on time.

      Early July I said that I could no longer accommodate this flexibility, and my client assured me the payment would happen within 2 weeks. My client paid me 1/4 of my first invoice as a partial payment one week after I emailed them I needed payment. I was concerned at the time it took them a week to have enough money to only pay part of what they owed me.

      I continued work for them the next week, being assured that the public sector payment was only two weeks away and I would be paid in full when this happened. This week however I was copied in on an email stating that the public sector client was delaying payment further (due to unhappiness with a deliverable, but not the quality of my work) and the civil servant cautioned to not expect acceptance of the deliverable to happen within the previously expected timeline.

      This has made me extremely anxious.

      I emailed my client saying I would continue working the last two days in August trying to remediate the feedback in the deliverable, but otherwise would have to down tools in August as my first invoice was now 50+ days overdue, and my second invoice now also overdue. My client called empathising with me and stating they would seek loans and overdrafts to pay me asap to get me working again.

      The stage payment from the public sector was for £20k, I am now owed over £30k.

      I've managed to stay on amicable terms with my client and would like to complete the project if I'm paid on time, however I worry I've extended too much trust and credit.

      I'm worried that my client is unable to pay my invoices on time, especially as they money they are due, is less that the money they owe me.

      Is my client trading while insolvent? Am I able to recover debts if they declare bankruptcy? My client is still emailing me about progress they are making in other areas, even though I declared I've downed tools.

      Thoughts?
      Under most contracts, you'd be expected to complete the 'remedial work' at your own time and expense. Seeing as this is the issue with your client not getting paid by the end User, it seems to me you need to do the 'remedial work' so your client can get paid. Once this happens, you should be paid all things being equal.

      Unless you know for a fact your client is making the non payment issue up, imvho, you need to deliver the corrected work and not simply down tools. The issue here is the identified part of your deliverable that is not up to scratch(no disrespect intended), not the fact your client is not paying you.
      I couldn't give two fornicators! Yes, really!

      Comment


        #4
        Originally posted by BolshieBastard View Post
        Under most contracts, you'd be expected to complete the 'remedial work' at your own time and expense. Seeing as this is the issue with your client not getting paid by the end User, it seems to me you need to do the 'remedial work' so your client can get paid. Once this happens, you should be paid all things being equal.

        Unless you know for a fact your client is making the non payment issue up, imvho, you need to deliver the corrected work and not simply down tools. The issue here is the identified part of your deliverable that is not up to scratch(no disrespect intended), not the fact your client is not paying you.
        Thank you for the feedback.

        The agreement in email does not stipulate my payment being reliant on acceptance of project milestones. The agreed terms in our email exchange were "I work for the day rate used in the bid, £X/day excluding VAT. Assuming that a day is 8 hours worked, and the minimal billable amount would be a half day's work (~4 hours) at £X/2/day excluding VAT."

        My client has already received a stage payment from the public sector client according to the
        proposal I wrote. My invoice for when this public sector payment was made is still unpaid.

        There has never been a written or verbal agreement between me and my client that my payment was contingent on output or acceptance of deliverables from their public sector client. My client is the "Chief Engineer" on the project and is ultimately responsible for the quality of deliverables submitted work.

        My client has regularly given me excellent feedback on my submitted work and demonstrations.

        Do you think my client could object paying me due to this feedback from their end client?

        Comment


          #5
          I don't think you need a formal contract if you have emails agreeing the deliverables and price.
          The fact they have part paid an invouice is implicit acceptance of the quality of the deliverables.

          If they go bust you are pretty much stuffed, but it does seem like they do genuinely owe you.

          It's up to you whether you extend them any more credit.
          If you stop doing work, and start the dunning process you'll not get any repeat work. So think carefully your next moves.
          It's really down to your own risk appetite and finances though.
          See You Next Tuesday

          Comment


            #6
            Originally posted by Lance View Post
            I don't think you need a formal contract if you have emails agreeing the deliverables and price.
            The fact they have part paid an invouice is implicit acceptance of the quality of the deliverables.

            If they go bust you are pretty much stuffed, but it does seem like they do genuinely owe you.

            It's up to you whether you extend them any more credit.
            If you stop doing work, and start the dunning process you'll not get any repeat work. So think carefully your next moves.
            It's really down to your own risk appetite and finances though.
            Has the UK Contractor world gone mad? What moves are there to think about? OP hasn't been paid to the tune of a nice family car and he should worry about repeat work? The client does not pay for work. This is patently obvious.

            Comment


              #7
              Originally posted by clearedforlanding View Post
              Has the UK Contractor world gone mad? What moves are there to think about? OP hasn't been paid to the tune of a nice family car and he should worry about repeat work? The client does not pay for work. This is patently obvious.
              what would you suggest then?

              I'm not suggesting OP does continue work, just pointing out the reality.
              Only the OP knows the client well enough to know if they're being ripped off, or if the client really is struggling. We'll never be able to help identify that.

              It does seem that the OP has got themselves in a bit of a pickle though. If the end client owes less than is owed to OP. Someones business plan is basically sh1t.
              See You Next Tuesday

              Comment


                #8
                I would suggest that OP has as many amicable conversations as he likes with the client, but in parallel commence the dunning as the pre-action protocol has a schedule and the sooner that is running the better, with his level of exposure.

                Personal I would have a sit down with my client explaining that I was commencing that action for that reason.


                If the company is going tits up I would want to be in before the administrators.

                Comment


                  #9
                  Originally posted by clearedforlanding View Post
                  I would suggest that OP has as many amicable conversations as he likes with the client, but in parallel commence the dunning as the pre-action protocol has a schedule and the sooner that is running the better, with his level of exposure.

                  Personal I would have a sit down with my client explaining that I was commencing that action for that reason.


                  If the company is going tits up I would want to be in before the administrators.
                  I doubt they can afford administrators if they are that screwed. It would be a job for the official receiver.
                  This is an option to kick start the process.
                  Can I issue a winding up petition? - Company Rescue
                  See You Next Tuesday

                  Comment


                    #10
                    Originally posted by itconsultantuk View Post

                    I'm worried that my client is unable to pay my invoices on time, especially as they money they are due, is less that the money they owe me.
                    Sounds like a fine business plan they have there





                    Sent from my iPhone using Contractor UK Forum

                    Comment

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