Yes – twice. The first time, it knocked off the last quarter’s retainer fee. The second time, it cost me an 8-year contract with the company that got acquired.

Oh, you are so right about the M&A stuff, Cathy! That’s another area of concern. Have you had that impact you? I’ve had it happen before a project gets off the ground, but it never affected any money owed.

I read Jake’s post and was astounded that anyone would allow a client to be in arrears that much money. BTW, hysterical story, Jake (except for the writers losing out) about the dude’s exit to Mexico. 🙂

I require a deposit every time, and for smaller projects ($500 or less), I require payment in full before starting. Another potential problem to look out for (especially in our niche, Lori) are mergers & acquisitions. You can have a great contract today that is gone tomorrow when the client is acquired or merged with another organization. Great stuff, Lori and Jake!

So you’re saying he wasn’t good at budgeting, eh? 😉

That is surreal — two corporate jets? Why? clearly not to take it to Mexico when it all went sour. If it weren’t for people losing money and jobs, that would be hilarious!

But the image of a big dude in a Fiesta is funny. 🙂

The actual situation was even more surreal. Dude weighed in the neighborhood of 400 pounds, and he and his wife were apparently jammed into a Ford Fiesta or something as they headed south, which I always thought was kind of an epic image. He fancied himself a Citizen Kane, bought up a bunch of magazines and wanted to create a publishing empire. Oh, and we had two corporate jets and two full-time pilots on staff, for a company of about 100 people. It was a frickin’ blast while it lasted–really, the only corporate job I ever loved. Till it imploded, anyway.

~sizzle~ Ha!

When you have something as good as your post, Jake, you want that conversation to continue. Thanks for the getting the topic going and for such a great couple of posts yourself.

Mexico? He really ran across the border? Wow, he must have been in it up to here (hand in the air). It’s a shame you all were burned like that. It sucks that there’s no recourse for people like us other than prevention. And who can prevent that sort of meltdown?

I’m nervous at the moment as a long-time client was just billed more-than-$1,000 (much more). I won’t exhale until that deposit comes through. They should be good for it as it’s sponsored content (already paid for), but you never know anymore.

Thanks, Jake. I won’t pester my own CPA then. 🙂

I’ve seen people opining on blogs that you can deduct it, but my CPA agrees with Paula–that is *not* the case if you’re a cash business.

You’ve really hit the heart of the matter that this can happen without warning. When I was at the magazine that brought me out to AZ, we knew we were having a little bit of financial trouble, but the true status was only known to the owner and CFO, both of whom were scoundrels. By the time the you-know-what hit the fan, it was too late to warn my freelancers, and everyone in that final issue got burned. For perspective, though, there were some vendors (prepress, stuff like that) in town who were on the hook for tens of thousands. Oh, and the owner fled to Mexico, one step ahead of the feds, because he hadn’t kept current on our payroll taxes, to the tune of a quarter-million bucks. I started writing a screenplay many years ago, but can’t find the file, alas.

As far as how much money I’ll allow to be outstanding, I prefer being under $1,000 with a new client, and that’s ONLY if I’ve gotten a deposit. Clients with a track record can go higher than that, but not much.

I want to ask an accountant about that very thing, Paula. I get why we can’t claim an unpaid invoice — any Joe Shmoe could create an invoice and claim it as bad debt. But I wonder if the rules change should there be a bankruptcy notice? That seems like legitimate proof, though I suspect it doesn’t matter a lick.

Great rules you live by!