Broken client

One of Codematics clients appears to have gone bust. This is a new and painful experience. The value at stake is over 10% of annual turnover. There may be a work-around, so it may not have too big of an impact.

I have had suspicions for a while and been putting them under as much pressure as commerically possible. Anyway I squeezed a few pennies out of them before they declared themselves titsup.

Recently, after 10 years self employment I have been contemplating considering permie work. This makes that option even more appealing. To be honest I don’t think I would make a good employee, ‘hard to manage’ is the phrase that comes to mind. But everytime its VAT return time I start wondering.

It would appear that this client has had the opportunity to make a rather well planned exit into a new company, so I’m assuming the administrators will be offering us 10p in the pound or less – nice! As I understand it there is likely to be little comeback on the directors, unless they made some obvious blunder. The more I look at it the more certain I am they wont have.

Anyone else been through this misery?

When I was at college training in joinery, one of the lecturers mentioned that being able to do lapped dovetails was good, but the key skill for a self employed tradesman was how to use the small claims court to get money owed. I don’t recall such wisdom from my software development training.

As I mentioned there may be an option the reduce the pain, but I’m not holding my breath, and I won’t be able to relax till the cash is clear in the bank.

The silver lining is that they won’t ever be suing me for messing anything up, and they wont be looking for free support going forward!

 cheers

Simon

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4 Responses to “Broken client”

  1. Marcus Says:

    I’ve also been freelancing for a touch over decade. I’ve had a couple of permanent job offers from clients in that time also. But similar to yourself, I make a lousy employee and enjoy the flexibility of freelancing too much.

    The worst I’ve had payment wise was to chase one client for 6 months before being paid (management consultants – go figure). And while I’ve never feared not being paid by a Bank/Fin you do sometimes have to be patient with their ‘processes’.

    A friend of mine is a builder who has been stiffed a few times. When it occurs it always on the last payment and always for a couple of grand – about the amount it takes to knock on the door of the Magistrate’s Court.

    “VAT return time”
    My wife handles the accounts and submits the quarterly GST (VAT equivalent) return. I wouldn’t be able to do it without her support.

    Good luck getting what you can from this client, although it doesn’t sound promising.

    Cheers – Marcus

  2. Dennis Wallentin Says:

    Simon,

    It’s a …. whenever a situation like the one You face with the customer.

    During the years I’ve been there myself for a couple of cases. In two cases I got help from some employees to get the money but in the other cases the outcome was less then 0…

    The model I apply whenever it’s possible is the following:
    25 % of the total price is paid when the agreement have been signed
    25 % of the total price when around 50 % of the work is done.
    25 % of the total price when around 75 % of the work is done.
    The remaining 25 % when the customer has confirmed that the solution(s) works as expected.

    Here in Sweden we can sell the invoices to standalone companies but it costs around 10 % of the total invoice(s) amount. I have used it myself when my present cashflow was small and I needed the money (VAT is one huge driving force…)

    You’re 100 % right when You says that self employment comes with the price of being “hard to manage”, especially after +10 years and in the age of 40+ or so.

    Anyway, what is true is that after rain comes sunshine so let’s hope for the best :)

    Kind regards,
    Dennis

  3. Biggus Dickus Says:

    Simon:

    You should try getting job after 25 years on my own !!??!! (I worked alone in the commodities business for a boss in another city who left me alone for 3 years before i started to do this). The idea scares the s**t out of me.

    The only time I ever had a recievables problem (let alone being “stiffed” by bankruptcy) was when I lived in the U.S. for a couple of years. In that environment I found I had to have my hands around everyone’s throat to get paid ;-)…..one of the BIG reasons we came back to Canada (that and Healthcare).

    Fact is that to prevent this problem I have cultivated LARGE clients over the years. There are several obvious advantages to that but I also think that:

    1. They are less likely to go bankrupt overnight
    2. They’ll pay you off to go away
    3. They are unlikely to sue a little guy because it isn’t worth their while (I do carry 1.5 mil E&O insurance though just in case)
    4. They tend to find me reasonably priced compared to the “BIG Ripoff Consulting” firms

    But I have always kept the risk of client bankruptcy in mind and as a result have TRIED to keep my billings current. If necessary I would pause work for a client (preferrably without them figuring it out) until they are current and would keep the billing tight. Easy to say but harder to practise.

    I’m sure you’ll survive Simon, please don’t bail yet (although all those mouths to feed must be a factor ;-))

    Dick

  4. Simon Says:

    Dick no plans to bail.
    re permie job, I think it would be too cruel for the poor fool who would (try to) be my boss.
    10 years of only having to keep my customers happy, I couldn’t do the corporate bs, even if I wanted to.
    re all those mouths – some might make good chimney sweeps if needs must! (they like climbing and being covered in muck).
    Expect a Codematic web site revamp, and more postings!
    (should I add to the risk by investing time and effort in 2007 skills?? (joke – of course not!!)

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