Customers who Don't Pay

Prior to starting CaseySoftware, I was almost always employed by someone else working for yet another group on particular projects. These projects were for commercial, government, and internal customers, both public and private. I don't think there's anything odd or particularly special about this part of it, but there is one key thing that was always hidden from me.

When you're an employee of another company, barring significant financial difficulties, you are most likely to get paid regardless if the third party pays. When you create your own company and hire other people, you pay those people regardless of whether or not the client pays.

I realize this for exactly one reason. CaseySoftware has had a trio of customers this year who simply have decided not to pay despite admitting a) having a contracted signed to that effect, b) the changes in requirements and therefore deadline were requested and approved by them, c) the work was complete and judged satisfactory, and d) they found the work useful and actively used it for some period. The biggest question that strikes me here is “why!?”

To that question, I've spoken with a number of other small software and/or professional services companies and have found a common thread. There seems to be a sweet spot in the $3k-7k range where many companies believe they can simply not pay and suffer minimal consequences. The amount is small enough to make it cost prohibitive to involve attorneys, but large enough that it's really annoying.

So what are my options here?

  • Small claims court – I have complete documentation of contracts, feature requests, the accompanying schedule changes, along with communications, etc, so I think I would stand a reasonable case.
  • Seek mediation – This is the default and first step required in all CaseySoftware contracts. Hopefully things could be settled here as opposed to involving more attorneys
  • Blogging – Talking about the situation publicly, linking to their site, and publicly discussing their business ethics has a certain amount of appeal to it. Then again, my site has more traffic than all of theirs combined, so it would probably be end up helping their business and harm either or both of the efforts above.
  • Sell the Code – Hmmm… I find this one the most interesting. CaseySoftware grants a license to the codebases we work on, not explicity ownership unless established in advance, therefore we could probably redistribute and resell as we choose. In addition, since they never paid for the work, do they even have a valid license? [Email to attorney already sent.]