Client Disappeared After Project Completion
Hello everyone,
I run a software agency in India, and last year I took on a client from the USA for an app development project. We successfully completed the development, and for the last two months, my developer also went above and beyond by assisting them with content retrieval via third-party APIs, even though that was outside the project scope—just a gesture of goodwill.
However, just as we were finalizing things—only minor tweaks and bug fixes remained—the client informed us that they no longer needed the app. Apparently, another agency had convinced them to pivot from the web app to a mobile app instead, claiming it would save them money.
The problem I’m facing is that I’ve only received 60% of the total project fee. According to our contract, the next 20% was tied to a module that was fully developed, while the final 20% was designated as “After Acceptance.” The client claims they can’t afford to pay for something they won’t use. In response, I flexibly proposed they could pay the outstanding amount in three installments over three months, which they accepted.
On February 15, I sent an invoice for the first installment, and they promised to test the app before releasing the payment. A month has passed, and I’ve heard nothing back—they’ve stopped responding to both emails and messages on Skype.
I need your advice:
- What actions can I take to recover my payment in this situation? Any strategic steps you recommend?
- How can I better structure future contracts to prevent similar issues?
Any insights from fellow agency owners and freelancers who have navigated similar challenges would be greatly appreciated. Thank you!
3 Comments
I’m sorry to hear that you’re experiencing this situation. Here are some steps and strategies you might consider:
1. Recovery Steps:
Connect with Them Again: Before taking any drastic measures, consider reaching out one more time. A phone call or video chat may be more effective than emails. They might respond better to a direct conversation.
Send a Formal Demand Letter: If they continue to ghost you, draft a formal demand letter stating the amount owed and referencing the terms of your contract. This demonstrates professionalism and seriousness about the matter.
Document Everything: Keep a detailed record of all communications (emails, messages, calls). This documentation is crucial if you need to escalate the matter.
Explore Mediation: See if a neutral third party can mediate the situation. Sometimes, having another person involved can help facilitate communication.
Consider Legal Action: If the amount owed is significant, it might be worth consulting a lawyer to discuss a potential claim. A lawyer can guide you on the best course of action and the feasibility of pursuing it.
Leverage Social Media: If appropriate, consider raising the issue on professional networks or platforms (without being defamatory). Sometimes public visibility can encourage a response.
2. Future Contract Structuring:
Milestone Payments: Structure payment terms around clear milestones instead of percentage completion. This way, you receive part of the payment as each significant deliverable is completed.
Clear Terms for Cancellation: Include specific terms regarding project cancellation in your contract. Detail the payment obligations even if the client decides to discontinue.
Deposit Fee: Require a non-refundable deposit before starting any work, which adds a layer of security to your agreement.
Late Payment Clauses: Implement late payment penalties in your contracts. This can motivate clients to pay on time and help offset the risk of loss if they don’t.
Client Vetting: Consider establishing a screening process for potential clients to ensure their financial stability and willingness to follow through on commitments.
Exit Clause: Include an exit clause that outlines consequences for both parties should one decide to terminate the project. This helps set expectations and responsibilities.
Building strong client relationships is essential, but protecting your business interests is equally important. Hopefully, these strategies will assist you in both recovering your payment and preventing future issues. Good luck!
Hi there,
I’m really sorry to hear about your experience; it’s unfortunately a situation many agency owners face. Here are some thoughts that might help with both your immediate concerns and future endeavors.
**For recovering your payment:**
1. **Follow-Up Communication:** Consider sending a formal letter (or email) clearly stating the terms of the contract and the current status of payment. Highlight your previous attempts to communicate and express disappointment in their lack of response. Sometimes, formal documentation can trigger a response.
2. **Leverage Social Media:** If your communications continue to go unanswered, a gentle public reminder on social media channels can sometimes prompt clients to re-engage. However, be careful not to cross the line into public shaming.
3. **Mediation or Small Claims:** Depending on the payment amount and local laws, you could explore mediation services or small claims court as a last resort. It can be a lengthy process but might incentivize the client to settle.
**For future contracts:**
1. **Milestone Payments:** Structure your contracts with defined milestones that include payment upon completion of each phase. This not only ensures cash flow throughout the project but also provides clear expectations for both parties.
2. **Usage Rights Clause:** Incorporate a clause that states payment is due regardless of whether the final product is used. This establishes that your work has intrinsic value, even if the client decides to pivot.
3. **Retainer Fees:** Consider implementing a retainer model for ongoing support, which can serve
Great post and thank you for sharing this challenging experience. It highlights a common yet tricky situation many agencies face—client payment disputes after project completion. Here are some strategies that might help both in recovery and future contract structuring:
For recovery, consider starting with a formal demand letter outlining the contract terms and the unpaid balance. If that doesn’t work, you might explore legal options, especially if the amount justifies it—consulting a legal professional familiar with international contracts could be beneficial. Sometimes, engaging a third-party mediator or using platforms like Upwork or other freelancing dispute resolution services (if applicable) can also be effective.
Going forward, to mitigate such risks, I recommend including clear milestones with linked payments, especially for post-acceptance work. Also, consider adding clauses that specify interest or penalties for late payments, and perhaps a clause that allows you to withhold further work until payments are settled. It can also help to increase upfront deposits—common practice is 30-50% at project start—and implement more detailed acceptance criteria to avoid ambiguity.
Your gesture of goodwill demonstrates professionalism, but balancing trust with contractual safeguards is key. It’s unfortunate to face this, but learning from it will strengthen your future agreements. Wishing you the best in resolving this, and thanks for sparking such a valuable discussion!