Small business: Doing the job but not getting paid?

Filed in Uncategorized by on July 23, 2009 0 Comments

Do the work. Get paid for the work. Even in a recession, we assume people will honor that economic code. But what happens when you’re a small business or independent contractor and clients are not paying you?

In this economy, it means trouble.

We thought about this after talking to Bill Turner, an independent software development consultant from Minneapolis and a source in our Public Insight Network. We were asking about the current employment climate and he mentioned, “My last client did not pay for two-thirds of the hours billed and the contract was canceled.”

Most consultants I know are scraping for work and are not at all confident that they will have another project any time soon after the current one ends. In addition, we need to compete on a world wide basis.

I do know people who have been told that the payments would be held 90 days. That has become increasingly common. I know of one other person who was outright not paid.

Turns out not getting paid, or getting paid slowly, is increasingly common in this economy. A Wall Street Journal blog recently posted an expert’s tips for freelancers on getting paid (Tip #1: Don’t be embarrassed to ask for your money).

I’m following up with some local experts on the issue and expect to post more on this. If you have a similar story to share post below or use this form.

Interestingly, the last tip the Journal’s expert offers is: Sue the company in small claims court.

As Turner tells, though, it’s not that easy. When it was clear the entire payment wasn’t coming, Turner told the client he couldn’t work any longer until all outstanding invoices were paid and paid in advance from then on.  He said the client threatened to sue him.

“I began the process to cancel the agreement. I hoped that might prompt him to pay, but it did not.”

My options at this point are limited. I could sue for what is due…it is a large enough amount that I would need to hire an attorney, not being valid for a small claims court dispute. The amount is too small, however, to really justify doing that.

What do you do?

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Check out the map below for other stories people in our network are telling us about the job situation around them. Then share your story.

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I'm a news junkie with particular interests in the economy and education. I covered those topics for 20 years as a reporter in Connecticut, Washington, DC, South Carolina and Minnesota. I'm at Minnesota Public Radio News now, hoping to find new w

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