Client beating me around the bush - tricky situation

Joseph

Hi all,

I've been doing freelance web design for a couple months and have never had problems with clients paying or being awkward with paying. I give very good rates and always make it clear how much it will be / what I will be doing for them.

I am not registered in any capacity - for VAT or otherwise, but I am intendending on registering soon and filing for tax etcera before the tax year is out.

Recently I gave a 5 page estimate to a client who accepted it. However the work has increased and increased on what they originally wanted and is now near 3 times the amount of the original estimate.

Anywhere else they would be paying alot more for the amount of work I've put it etc but after recieving the invoice they were very dodgy about it. They said that it didn't include VAT - as if they assumed it would and that they could claim it back. But I am not obliged to charge VAT because I have not hit the 37,500 mark and it is B2B.

They wanted me to come back with my best price, which I did including a small reduction if they purchased an extra service package along with it - pretty reasonable I though as I shouldn't have had to reduce it at all!

Now they want me to meet with their boss regarding the invoice - I am expecting he will bring up the VAT issue and that I'm not registered yet. What can I say to him? They are obviously chancing their arm at trying to get a further reduction and since this is my first experience of this situation I am not sure what to say to them to pay me!

Since getting the invoice they have continued to send me on materials for the website so I'm presuming they still want to use my services.

Any advice would be appreciated it

oldat31

I am assuming you still have all project files?

If so, then when you meet the boos make it clear that you are not vat reged and you have no need to charge vat.

Also let them know that no files will be sent to them till atleast 50% of the final price is paid.

And lastly, ALWAYS USE A CONTRACT.

Billgirlylegs

I would suggest that as per previous poster you get your deal committed to paper asap. Their top man might want to nail down the contract too, so have your preference documented. Be honest and up front about registering your business. Everybody has to start somewhere. Good luck.

Joseph

I am definately going to be using a contract for all future clients.

RE files, the website is actually live at the moment as they had a deadline for when it needed to be live and I met it. The website is essentially finished so really I want 100% of the price.

Any recommendations of what I should say to the boss if he asks me to reduce it other than I am not VAT registered?

Trojan

Deaddude wrote: »

Any recommendations of what I should say to the boss if he asks me to reduce it other than I am not VAT registered?

Something like "This price includes all relevant taxes. I am not charging VAT on the advice of my accountant, which means a 21% saving in cash flow for you." or words to that effect might work. Edit: I'm suggesting here that you actually speak to your accountant and get his/her advice on this subject, rather than just claiming you have.

Is the issue he's afraid that you will drop a 21% bill on top of what you've quoted? Ask him "what are your concerns here?" and see what comes up. Not charging VAT if not registered is a fairly normal part of business - you could get your accountant to ring him to assuage his concerns.

Trojan

Deaddude wrote: »

RE files, the website is actually live at the moment as they had a deadline for when it needed to be live and I met it. The website is essentially finished so really I want 100% of the price.

Is it live, and under your control, or live and under their control? You could consider putting up a neutral hosting page until the bill is met.

civis_liberalis

If you do what Trojan suggests 2 posts up it should sort it out if they are being reasonable.

Failing that, explaining that you intent to take the site offline in x amount of time if you are not paid for your work should get some movement, as Trojan suggested basically.

I don't envy people in your line of business. It's hard to balance your need for good relations with your customers and a need to be paid in full and on time.

It seems you need to factor in this type of carry on with most things in the current economic climate.

EDIT: Btw, nice website Trojan.

Joseph

Thanks for the advice I will say that, and yes I have full control of the site and files etcera.

I really want to avoid saying that the site will be taken off if not paid within a certain amount of working days because my gut tells me that will just reil him up so leaving that to a last resort

mathepac

Trojan wrote: »

Something like "This price includes all relevant taxes. I am not charging VAT on the advice of my accountant, which means a 21% saving in cash flow for you." or words to that effect might work...

Bad idea IMHO. Why complicate the situation by telling lies or making up weird nonsensical stories?

Tell the truth - the project grew beyond the original spec, you're not VAT-registered because you don't need to be, all pricing quoted was ex VAT and you need paying, now please. If he needs a tax-reference to book the invoices against give him your PPSN.

Hopefully you have protected yourself by including the standard reservation of title to the goods supplied statement on your invoices and protected your intellectual property rights by copyrighting all the work you produced for them.

Tell Mr Bossman that today is payment day and that if no payment is forthcoming you will need to minimise your losses and protect your work by removing it from the ISP's servers - (you have left back-doors and stuff in the code that allow you to disable the site haven't you?).

dbran

Hi

This is slightly a tricky situation but I believe you will need to go into the meeting with the the boss without any prejudgements and dont assume that will end in conflict. You of course need to be prepared for it just dont assume it. As mentioned above he may be worried that you will try to increase the fee by 21%. You may even decide to discount your work but get paid and also get a happy customer who will recommend you to other potential customers. Just play it by ear....

As regards not registering for VAT, as I would expect your quote did not mention VAT and you are not registered for VAT, you should stick to your guns and say that that is the price you quoted. It is common practice when quoting for someone who is VAT registered to quote net of VAT and if they are not VAT registered to quote inclusive of VAT. So in this regard they would be chancing their arm if they go down this route.

As regards the fact that the job went over budget I am afraid this is your fault. Once you became aware that the project was going to go over budget you should have made them aware of this fact and issued a new quote. In that way they would be able to decide that they either wanted the bells and whistles or they did not as it was too expensive. Because you said nothing they may have thought it was all included in the original quote. You have made the mistake of wanting to please the client more then wanting too make a decent living and this I am afraid is a lesson to learn.

Best of luck with it and post to let us know what happened.


Kind Regards


dbran

oldat31

mathepac wrote: »

Bad idea IMHO. Why complicate the situation by telling lies or making up weird nonsensical stories?

Tell the truth - the project grew beyond the original spec, you're not VAT-registered because you don't need to be, all pricing quoted was ex VAT and you need paying, now please. If he needs a tax-reference to book the invoices against give him your PPSN.

Hopefully you have protected yourself by including the standard reservation of title to the goods supplied statement on your invoices and protected your intellectual property rights by copyrighting all the work you produced for them.

Tell Mr Bossman that today is payment day and that if no payment is forthcoming you will need to minimise your losses and protect your work by removing it from the ISP's servers - (you have left back-doors and stuff in the code that allow you to disable the site haven't you?).

You cant copyright a website beyond putting a copyright for the site owners on it. As in "Copyright 2010 company name" and maybe something in the code.

The work belongs to the client once the bill is met.

Thats why you always use a contract

Trojan

mathepac wrote: »

Bad idea IMHO. Why complicate the situation by telling lies or making up weird nonsensical stories?

What I said there is neither a lie or a nonsensical story. It is perfectly normal for an accountant to recommend to their clients, particularly in their first year or two of trading, to not register for VAT. It is also true that the client will have a 21% saving in cash flow - if VAT is not charged, then they do not need to reclaim it later, thus saving that cash. In business, cashflow is crucial, so this could be significant.

Trojan

dbran wrote: »

As regards not registering for VAT, as I would expect your quote did not mention VAT and you are not registered for VAT, you should stick to your guns and say that that is the price you quoted. It is common practice when quoting for someone who is VAT registered to quote net of VAT and if they are not VAT registered to quote inclusive of VAT.

+1 on that. We issue quotes excluding VAT (with a note to that effect on the bottom of the quotation). This is good practice because some clients do not need to pay VAT - in our case one was a Swiss organisation. AFAIK EU customers who have a registered VAT number for their own country don't have to pay either. Talk to your accountant.

dbran wrote: »

As regards the fact that the job went over budget I am afraid this is your fault. Once you became aware that the project was going to go over budget you should have made them aware of this fact and issued a new quote. In that way they would be able to decide that they either wanted the bells and whistles or they did not as it was too expensive. Because you said nothing they may have thought it was all included in the original quote. You have made the mistake of wanting to please the client more then wanting too make a decent living and this I am afraid is a lesson to learn.

Again spot on. This is scope creep of the worst kind. You don't buy a car and then ask the dealer to give you leather seats instead of cloth at no extra cost. You will learn to nail down the specification and deliver to that specification - if the client wants something else you can quote separately for the change. Sometimes it's possible to implement change requests for no cost, and other times the change request changes the nature of the project entirely.

Best of luck with this, and if nothing else, have a brief chat with your accountant.

Winnieacre

One other issue that might be causing concern to Bossman is that the company may have thought that they were deaing with an experienced freelancer (I'm not suggesting for a moment that you don't have the relevant experience of course!) and would therefore have expected your turnover to have exceeded the registration threshold. This could lead to concerns around your experience in the area in building solutions and then dealing with any issues arising afterwards etc. Have they asked if you have professional insurance in place?

It may be that Bossman just wants to eyeball you and be reassured that they are dealing with a professional who will be around if problems arise or further work is needed on the site.

Winnie

Mr. Presentable

Go to the meeting assuming nothing. Ask if he is satisfied with the work. Ask to be paid. If there is a request to discount from the client advise he agreed to 100% of work for 100% payment. If he digs in tell him

a) You still own the website until paid for in full

b) You are prepared, if necessary to take down said website

c) And, as you have control of the domain, you are in a position to put "awaiting payment" on the domain as a placeholder

Micilin Muc

While I know this isn't on topic, I have a good tip for ensuring payments are paid on time. I give my clients a 5% "discount" for payments made within 15 working days. You could state your own discount in your contracts.

Joseph

Just on the over-budget issue, I was working per page and it was extremely clear that it would cost more by the estimate so I don't really think they have a leg to stand on in that aspect.

mathepac

oldat31 wrote: »

... The work belongs to the client once the bill is met. ...

The bill hasn't been "met" and OP is experiencing problems getting it met, which IMHO is the whole point of the thread.

Your assertions about IP and copyright protection are not correct.

Trojan wrote: »

What I said there is neither a lie or a nonsensical story. ...

"... I am not charging VAT on the advice of my accountant... " There is no detail in the thread where OP has the conversation with the accountant or where the advice is issued. The word "accountant" seems to crop up for the first time in your original post.

If I'm correct, then for OP to relate to the client a piece of professional advice they did not receive, during a conversation that did not take place with a person who might or might not exist is, IMHO, a lie.

If you deem this post OT then so be it, take it down. However, my point is that if OP follows your original advice they will be lying to their client, IMHO.

oldat31

mathepac wrote: »

Your assertions about IP and copyright protection are not correct.

How else can a website be copyrighted?

You cannot copyright code, and unless you pay for a copyright on each image then all you have is the meta tag copyright and the footer copyright.

And also what I ment was, the designer has no right to copyright work to himself that has been paid for by a client, so unless he is going to forget about the payment and keep the site for himself, then a copyright is no good to him.

Also OP forgot to ask. Whos name is the domain registered in? Yours or your clients?

GerardKeating

Deaddude wrote: »

Thanks for the advice I will say that, and yes I have full control of the site and files etcera.

I really want to avoid saying that the site will be taken off if not paid within a certain amount of working days because my gut tells me that will just reil him up so leaving that to a last resort

If you warn them in advance that you have the power to take down the site, they will just change the passwords on you and lock you out if you give them the time.

Also if you take down the site, they might try to charge you with some form of thief or hacking.

TheCostumeShop.ie: Ronan

Just thinking form the bosses point of view, go into the meeting and reiterate the value add that your work will be bringing. If they agreed a three page site and now for example you have included a blog where they can update company news and increase SERPS then re-sell him why that was a great idea to do and why its worth the money. Chances are he just wants re-assurance and you to talk him through why his decision was a good one / how to use the site.

One key tip is if your feeling pressured or they are pressing for discounts saying nothing can often be the best approach. Don't make decisions under stress you'll regret later. Tell him you appreciate his time and that you'll think about his proposal.

For me personally if they ask for a the price to be reduced i'd ask which part of the site they like removed. But then again this can be seen as very aggressive if not phrased correctly. Another approach is to offer a reduced rate on the bill if they are insisting but in exchange future maintenance will be charged at a 20% premium above list rate etc, i've never seen a website that didn't require developer maintenance after a month.

Trojan

mathepac: It is not clear from my post, which was unfortunately hastily written in the early hours after a long day, that my implication is he goes and gets that advice. I'm sorry if I appear to be sanctioning him to go in there and say something that's not true.

However it's very, very easy for him to make that a reality - any decent accountant will give that advice in 30 seconds, and for free. In fact, this is almost an exact quote from what I said to a customer in my first year of trading, after talking to my accountant. However, I think that saying it's "a weird, nonsensical story" is, ironically, nonsensical.

Trojan

oldat31 wrote: »

You cant copyright a website beyond putting a copyright for the site owners on it. As in "Copyright 2010 company name" and maybe something in the code.

Speaking of professional advice, I think you'd need to talk to a solicitor on this issue (and I am not one), but my understanding is that if the ownership of the copyrighted work has not been sold, then the copyright belongs to the creator.

In this case, we'd be talking about the graphic design of the website, and the code. Some of these may be derivative or licenced from 3rd parties, which makes it more complex, but I'd be surprised if the OP here does not own the copyright to at least a substantial part of the work he's completed.

Again, IANAL

Joseph

Just to be very clear: I have complete control over the website. They have paid nothing - so it woud be hard to steal it

Hopefully going in for a meeting tomorrow, I've taken on board all the advice and let you know how it goes

GerardKeating

Deaddude wrote: »

Just to be very clear: I have complete control over the website. They have paid nothing - so it woud be hard to steal it

Depends, does your verbal contract with them have a retention of title clause ? if not, once it went online, ownership might have transfered to them, even if they did not pay.

Deaddude wrote: »

Hopefully going in for a meeting tomorrow, I've taken on board all the advice and let you know how it goes

please do..

John368

Deaddude

I am a one-man engineering consulatant and I am not registered for VAT. That is my choice as I am below the limit and as many of my clients are private and not business, I can have a competitive advantage over my bigger rivals who have to charge VAT. When quoting it is a good idea to state that you are not registered for VAT and thus do not charge it. I would not get an inferiority complex about not registering for VAT. If you offer a service for money you are a business - full stop. Microsoft basically does the same thing.

As others have said this is really about non-payment of bills. Some companies accounts departments do not like getting services which do not include VAT, but it is just to do with their accounting procedures and nothing to do with them regarding you as not a proper business. Look at it this way. If you messed up in some way, they would certainly know who to sue and whether you were Fred Bloggs Group Ltd with 100 staff or just plain old Fred Bloggs, working from his spare bedroom they would know who to send their solicitor's letter to just the same.

Best wishes with the meeting. I am not sure why the boss wants to see you. He probably wants to find out what sort of person you are and whether there is any way he can get a better deal. He might think that you are a tecky who he can push around or he might genuinely want to dicuss business with you. Look at it positively as others have said.

One suggestion is that you ask for 5 post-dated cheques, if they say that their cashflow is bad.

I agree with contacting your accountant. iI you do not have one, then contact one anyway. You will have to contact one at some stage anyway.

Let us know how you get on.

JOhn

Pixelcraft

John368 wrote: »

I can have a competitive advantage over my bigger rivals who have to charge VAT.

I never understand why some people think like this! you have no advantage if not registered for V.A.T. unless the client business doesn't collect any.

tricky D

oldat31 wrote: »

How else can a website be copyrighted?

You cannot copyright code, and unless you pay for a copyright on each image then all you have is the meta tag copyright and the footer copyright.

And also what I ment was, the designer has no right to copyright work to himself that has been paid for by a client, so unless he is going to forget about the payment and keep the site for himself, then a copyright is no good to him.

All of this information is wrong. Copyright is automatic on creation in favour of the creator. Original images and code produced for a website are licenced for the website to the client and the creator is free to reuse code and images as they see fit. There might be exclusive licencing and other IP models in some cases but not normally in cases like these.

John368

Pixelcraft wrote: »

I never understand why some people think like this! you have no advantage if not registered for V.A.T. unless the client business doesn't collect any.

Well I did say private clients.

Regards

John368

John368

tricky D wrote: »

All of this information is wrong. Copyright is automatic on creation in favour of the creator. Original images and code produced for a website are licenced for the website to the client and the creator is free to reuse code and images as they see fit. There might be exclusive licencing and other IP models in some cases but not normally in cases like these.

Yes Tricky, that is my understanding of copyright as well.

However, is not this discussion on copyright a bit academic, unless you have the funds to enforce your copyright ?

I would like to know if anybody here has sucessfully enforced their copyright. Or has heard of any small business which has.

Regards

John

Dixy

Pixelcraft wrote: »

I never understand why some people think like this! you have no advantage if not registered for V.A.T. unless the client business doesn't collect any.

There is a very good reason some people think like this, because its true.
I am exactly the same as John368 and did not register for VAT on start-up.
In my situation I repair PC's in direct competition with PC World's Tech Guys.
I recently fixed a customers laptop after quoting for it against PC World who quoted as well.
Their quote which included VAT on replacement parts and labour charged at the same rate, when put side by side with mine was quite a bit higher and I got the work because of it as the customer was not in a position to reclaim VAT. For start-up companies this is the best way to get a competitive pricing edge on bigger competition.
As for the OP simply explain to the company's finance department that you are fully tax compliment but not VAT registered as you are under the VAT reg limits.

Pixelcraft

I specifically pointed out that unless your client is a consumer there is no advantage. Your clients must be consumers, if it was b2b there's no advantage.

Dixy

Well none except saving myself the hassle of getting an account to sort out the VAT stuff and a company having to outlay more money upfront to claim back later. It simplifies any transaction with a commercial customer who can now ignore the VAT reclaim and write off the full amount of my invoice as a tax deductible service rendered. Simple!

Trojan

Consumer or non-profit organisation, e.g. charity (which often don't register for many reasons).

oldat31

tricky D wrote: »

All of this information is wrong. Copyright is automatic on creation in favour of the creator. Original images and code produced for a website are licenced for the website to the client and the creator is free to reuse code and images as they see fit. There might be exclusive licencing and other IP models in some cases but not normally in cases like these.

Ok so i dont understand this.

The Code of a site is subject to copyright?
HTML
CSS
PHP
and what ever else it takes to create it?


As for images, I understand that the copyright of photographs never leaves the owner of the photo unless someone buys the full rights to it.

But most web and graphic designers use stock image site, so they dont own the rights anyway.

Dixy

No 2 site are alike, even 2 site's built from the same template would be different with custom code, images, keywords and so on and as such its the OP who has created them giving him a form of copyright. He sell's that copyright with the site when its paid for.

Joseph

Just an update on this, I still haven't recieved any payment.

The boss said he'd get back to me and never did, I rang him a few days later and he asked me over the phone is that the best I could do for him (re price). He asked me to call into the office the next day (which I was unable to do).

Rang him on monday and he said he'd get back to me, rang him again today - voicemail - and he hasn't returned my call.

What is my next step?

Should I drop in a letter asking for payment within 5 days or the website will be suspended due to non payment, attaching an invoice with it? Is it acceptable to say that I want to collect the cheque (i.e. let me know when the cheque is ready to be collected).

If it does get to the stage where the website needs to be suspended, can I put a "Website suspended for non payment" notice up, given that I've given them weeks and weeks to pay ontop of this 5-day deadline?

Mr. Presentable

OK, you're not paid, but he has what he wants, a website. If you take down the website and he says you certainly won't get paid now, how are you any worse off?

You have been beyond reasonable. I'd take it down until paid.

PCPhoto

take down the site and replace it with a blank page - stating the obvious:

"website not available until it is paid for"

Lets face it - why should the website owner gain profit from it when he hasnt paid for the website.

or if you really want to give this guy a chance issue an invoice unless payment is received within 48hours (or 5 days ...whatever time you wish to give him) ... the website will be removed from its online status.

John368

Deaddude wrote: »

He asked me to call into the office the next day (which I was unable to do).

Why? A customer who owed you money asked you to call with him the next day and you turned the opportunity down - why?

Get the money from this guy, if that means sitting outside his office all day and say thank you very much and be totally polite with him (even though you think he is a crook) then change your terms and conditions with clause about suspension of website if payment not received within a certain time so that this sort of thing does not happen again.

John

dormant_co_acc

Get a look at this thread.

http://www.boards.ie/vbulletin/showthread.php?t=2055943036

A guy in the exact same position as you. He gave the debtor an ultimatum and he was paid in no time.

Stop doing the same things and expecting different results. It's clear that you're being played. As someone pointed out earlier, your quote didn't mention Vat so if they assumed it included Vat, that's their problem.

Make it clear. I've provided a service in good faith and I'd like to be paid for that service now please. If you won't, then the service will be withdrawn. Also, while the total of the invoice is disputed, the fact that you've received nothing to date is unacceptable. You won't get respect off Mr. Bossman unless you demand it.

Joseph

Circumstances prevented me from going. Am I well within my rights to give him 5 working days to make the cheque collectable by me otherwise a non-payment notice will be put on the website?

dormant_co_acc

This issue was discussed at length in the thread I provided above. You really would benefit by reading through it.

It's not something I'd advise. You're at risk of being accused of defamation.

tricky D

Deaddude wrote: »

Circumstances prevented me from going. Am I well within my rights to give him 5 working days to make the cheque collectable by me otherwise a non-payment notice will be put on the website?

Suspend the website by all means, but do not give any reason at all. Read the other thread listed above carefully to find out why this is not in your interests and can be legally dangerous.

dormant co acc is spot on.

Joseph

Cheers for the responses had a look through that thread.

I am going to drop in a letter with a notice of site suspension if the cheque is not made available for collection within a certain amount of days and if it is not I will put up a notice of site suspension without specifying that it is due to non payment.

Drafting the letter now, do not want to be too agressive in it but hopefully it will get the point across.

dormant_co_acc

Why don't you PM the OP of the other thread and ask for some pointers? S/he might even give you the template.

Let us know how you get on

tricky D

Deaddude wrote: »

....if it is not I will put up a notice of site suspension without specifying that it is due to non payment.

You're best to say nothing at all. Even saying site suspended can be interpreted by some as inferring non-payment. He could well take that badly. Remember, you're trying to get the money off him. Rightly or wrongly, you have to keep them somewhat 'sweet' and such an inference plays against your best interests.

StupidLikeAFox

"Down for Maintenance", the site is inaccessable but theres no damage done to reputations or credibility

dbran

Hi

Gee I thought that this was a duplicate thread to the other one for a bit.

Issue the warning of whatever number of days you feel appropriate. Then suspend the site, don't give any reason online.

Personally, I would give zero days warning if i have been already chasing and promised funds in the post that haven't arrived. It just gives an excuse to hold onto your money for an extra few days which you can be sure they will avail of. You will just end up suspending anyway. Just tell the guy the site has been taken down by you until you are paid. Its then their move to do something. If they want the site they will pay you. If not go legal.

Most important is that you do what you say you are going to do otherwise you will be seen to be a soft touch

Kind Regards


dbran

Joseph

Just an update on this:

I finally got a cheque, although not for the full amount - though near enough it so I'm happy enough.

I've learned some valuable lessons the hard way

delllat

Deaddude wrote: »

Just an update on this:

I finally got a cheque, although not for the full amount - though near enough it so I'm happy enough.

I've learned some valuable lessons the hard way

I would insist oin the full agreed price ,even if it means taking the site down again or threating to do so

he will be unable to profit from the site while its down so he may even send some one over immediately with an envelope of cash for you

theres no way id give him a discount after being fukd about for weeks