Last night I received a piece of official looking mail. At first, I suspected it might be a solicitation disguised as government mail.
Turns out I was wrong.
It was a bankruptcy notice.
After carefully scrutinizing three pages of paperwork, I finally located the name of the business in question: it is (was) one of my clients.
I received the bankruptcy notice because I still have two invoices outstanding with this client and can file a claim if I choose.
Obviously, the news came as a shock since I finished my last project for them about 5 or 6 weeks ago.
And they had already paid me for four previous projects I had done for them this year. So I had no reason to worry about getting paid — or so I thought.
In this economy, anything is possible… including your client going bankrupt.
Now, more than ever before, it is important to get paid up front. Even with clients who have been reliable in the past, it may still be a good rule to follow.
-Ryan M. Healy
P.S. Want to protect yourself from getting ripped off? Then please take a moment to learn How to Spot a Con Man.
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Ouch, that sucks man!
What are you going to do about it? File against them or just let it go?
Jeremy Reeves
http://www.controlbeatingcopy.com
About half an hour ago, I got off the phone with a potential client and business partner. I turned him down because he didn’t even want to invest in paid traffic.
It was a good move.
This is DK Fynn, by the way.
Wow man. That sucks, sorry that happened. I’ve been stiffed but have never received a bankruptcy notice.
Sorry to hear this Ryan. That %?@~* Sucks!
It might be a good policy to put everybody on cash until this economic mess blows over. The banks have really tightened up the credit market… So, why should you still extend credit freely?
There is a business winning headline for a copy writer.
My Regular Client Goes Bankrupt
Probably not aye.
Wow, Ryan, the right words are difficult to find.
I guess maybe I should employ my own advice from the last topic and “call a spade a spade”…
THAT SUCKS!
And I truly feel for you.
I know the required hours, the sleepless nights, and ALL that goes in to composing great marketing copy and for a company to take advantage of your good will and trustworthiness is – well, you summed it up very succinctly, “in this economy, anything is possible”.
A very painful lesson learned here – but your new terms and conditions “payment up front from here on in” is going to be a necessary addition to everone’s (newly re-written) contracts.
Sorry this happened to you, Ryan.
I’m hearing of this happening more and more. Even credit checks don’t appear to have much predictive power as to who will go under.
If you can’t get everything paid up front, then at least get “half before, half after” or staged payments at key milestones.
Ian
Hey Ryan…Tony here.
You want I should get my brothers Guido and Pauly to go by dese peeples house?
You know…make a little bidness trip and a little offer day can’t refuse?
Say da woid…
Sorry to hear that bro!
No matter what the economy, I make it a rule to get EVERYTHING up front as far as my fee goes.
Bet you do the same now… there nothing like the crucible of experience to force these changes.
Be well,
Mike Morgan
Reminds me of what I used to tell people who asked me to loan them money (happens a lot).
I simply told them that I have a deal with the bank: The bank doesn’t fix computers — and in exchange, I don’t loan people money.
Tough lesson; thanks for sharing it. It gives further weight to words said almost 400 years ago: “Neither a borrower nor a lender be” (William Shakespeare).
Best regards,
Tom
Thanks for all the comments. I appreciate them.
@Jeremy – I’ll probably just let it go. I may have more to say on this in the future.
@Dean – Good copy does not a business make. This particular client has given me a testimonial. Futhermore, why would they hire me multiple times if it wasn’t profitable for them? The fact is, the business climate has changed such that some simply won’t make it.
@Mike – Yeah, I’ve made it a practice to get full payment up front for new clients — but I haven’t enforced that with regular clients.
If somebody has proven themselves trustworthy, I have assumed they will continue to be trustworthy. But times are a changin’.
I never even considered requiring pre-pay till my business coach recommended it this summer. I still didn’t do it. Then I was talking with Alex Mandossian about some work we’re going to be doing together and he said I should too. It feels weird to change that for current clients.
This is transcription & editing stuff. I’ve always just invoiced. But collections are getting to be a bit of a hassle, some more than others, and with my outsource team I’ve got payroll twice a month.
Maybe the time has come. When you think about it, I’ve always paid up front for graphics, classes, teleseminars, etc. Why not for our own services?
Becki
Yep, it stinks.
You already know the cure.
I’m like Mike. I don’t write a word until I’m paid in full 100% upfront.
Tina Lorenz taught me this and I’m thankful for it.
There’s no reason to not file a claim. As an unsecured creditor, you get paid last but you never know. They may have enough cash and assets that eventually you’ll get paid.
Just because they declare bankruptcy doesn’t mean they will fold completely.
And if they do keep the doors open, during bankruptcy they have strict guidelines to follow. You may still be able to keep working for them on a fee paid up front basis.
That seriously stinks–you have my sympathies.
I have either a deposit check or cc info in hand before I start writing. Not fail-safe but pretty close. But that doesn’t work with my steady university client, magazines, or book publishers.
In 2008 I got burned by one client for a small amount, but collected $900 from a magazine that had stiffed me in ‘07, and I didn’t think I was ever getting paid for that one.
Ryan, sorry to hear about this. You really have my sympathy.
Fortunately I learned this lesson a verrrrry long time ago. I almost went down the tubes because of it. Don’t trust anybody as far as cash is concerned. Cash upfront or no deal. First pay then play. In any business.
An old saying ” You ask for credit, I no give, you get angry. I give credit, you no pay, I get angry. Better you get angry.”
Methinks it will be a disaster if Paypal, Moneybookers, etc. go the same way. That will leave a lot of bruises.
Thank you for the additional comments.
@Tommy – I like that old saying. Makes me laugh. :-)
Ryan,
Sucks dude.
100% upfront payment from new clients is almost a requirement nowadays.
I learned that lesson the hard way too. :(
And you’re right, the times are a changin’…as marketers we need to adapt, or flounder like a fish out of water.
If anyone isn’t taking 100% payment upfront after reading this post…well…
Joseph Ratliff
Another Dan Kennedyism for you Ryan…
“All news is good news”
He talks about this in depth in his Wealth Attraction seminar.
It’s pretty much just a spin off of the whole Napoleon Hill “Within every adversity lies the seed of an equivalent or greater benefit.”
You now have a deeper understanding of why it’s in your best interest to get paid like Taco Bell.
Give me the money and I’ll give you the taco.
I know asking for money is one of the biggest hurdles for copywriters to overcome. And as nice as it’d be to be Gary Bencivenga and ask for $25,000 for any project you do and get it all up front…
…it’s not always palatable for clients to pony up all the money upfront for you, especially if you’ve been lenient about when you get paid early in the relationship.
A proposition I think can be a win-win for you and the client is 50% up front to secure the date and the other 50% upon delivery.
In my book that’s fair. If you’ve built up your value to the client they shouldn’t begrudge your upfront fee. Of course it always help to choose clients who aren’t direct marketing virgins — clients you don’t have to educate on why copywriting is so valuable.
Our dream clients are people who can write the copy themselves but are way too busy to do it.
And one last Kennedyism for anyone working for anyone less than a boardroom, agora or healthy directions type client.
“If the client you’re thinking about working with can’t supply you at least three names of people who’ve either written for them before or done a deal with em and would cheerfully do it again… what makes you think you’re gonna be the first.”
Big time mailers know their bread is buttered by copy so the last thing they want to do is get a rep of being shady when it comes time for compensation for a job well done.
Joe bidniz on the other hand might not. Watch your back and your front.
Great learning experience Ryan and your doing what you said you’d do in this deal has chalked up points on the good karma chart.
You’ve been paid an invaluable lesson and you’re money will come back to you if not by this client, by some unexpected opportunity down the road.
Be confident you’ll be rewarded for being a stand up guy and this road bump can’t set you back.
Note Taking Nerd #2
http://www.mynotetakingnerd.wordpress.com
Ryan,
In addition to being a copywriter I am a lawyer. The notice you received was probably for a “341 Creditors Meeting.”
This is a meeting held before the Trustee in bankrutcy at which creditors may appear and ask the debtor (in this case, your now-former-client) questions about the company’s finances.
Most creditors do not appear because once someone files a Chapter 7 bankruptcy, it usually means there are no assets to pay the debts or that there are very few assets left.
If there are any assets, the first to get paid is the Trustee (who can take fees out of the remaining assets), then the IRS or other governmental agencies, followed by the secured creditors. Unsecured creditors (such as you) are last in line, and you can probably guess what being last in line means.
Consequently, it’s not really worth your while to pursue your claim or to appear at the 341 hearing.
Your time amounts to money and time spent pursuing any claims you have will not be well spent.
I’m sorry you are going to get stiffed on the money still owed you. But, particularly in the current economy, it’s going to continue to happen.
So your advice to get paid in full in advance (if you can) is good advice.
@Joseph – That’s what makes this particular case so interesting. It was a client who had already paid me for 4 projects… so I relaxed and didn’t demand payment up front (as I do with new clients).
@Note Taking Nerd – “Give me the money and I’ll give you the taco.” Nice.
@James – Yes, I believe it was a creditors’ meeting. It’s being held in Florida, so there’s no way I’m going.
On a positive note, I am in touch with my contact’s replacement… so there may be hope I will get paid. We’ll see.
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