Company owing me money going into administration
 

I suspect that the answer to this question is going to be: "You can do nothing," but here goes.
A company that has employed me on a number of occasions and has paid swiftly each time suddenly stopped paying. The rumour mill began to say that the company had gone into administration but my phone calls to them produced nothing but evasion: the accounts department have gone to lunch, in a meeting etc etc. A direct question to the technical guy who was my work contact revealed that there are difficulties and 'in a few days' things will 'become clearer'.
So is there any action I can take to improve my chances of payment? My understanding is that with UK law, the tax people get first bite at the cherry and everyone else gets a proportion of what's left...after a VERY long time.

Don't know the details of UK law but here you'd be in the position of "unsecured creditor" and that puts you all the way down at the bottom of the pile. Taxes comes first, then employee wages and benefit payments owed, then secured creditors such as mortgage holders, then everyone else. Been there several times in my career, never saw a single penny of the money that was owed me. One of the major disadvantages of working as a freelance 'contractor' rather than an employee. There's not much you can do since once they have started the filing process, it would be illegal for them to jump you up in the que and go ahead and pay you the money you're owed before the other creditors. Good luck.

I think that Steve has confirmed what you suspect is true.
The only experience I've had of a bankruptcy recently was a facilities house who held a library of tape masters that I manage. Acting on a advice from a friend who had been in a similar position I arranged for the physical removal of the material before the liquidators took over because if I didn't I could probably wave goodbye to it. I suspect your invoices will have a similar status, as Steve indicates.

Phoenix
 

Yes, and the galling thing is that the company is to resurrect itself under a very similar name and carry on, without its debts. Except I can't imagine any technician working for them now.

Nick, horrible situation. I feel for you.

Have you turned up on their doorstep? If nothing else, it might at least let you find out what the full situation is.

I came away from a (vaguely) similar situation with a high spec laptop and an unopened copy of Flash MX (as it was then) in lieu of cash for a small job I had done for a client who was then unable to pay me. The guy had ignored my calls and emails for over a week so I drove the 60 miles to his office (actually his home, although I didn't know that until then). After the initial look of horror on his face had worn off he explained that he was going under and that I might as well take the goods as payment in kind as his bank accounts were frozen. No idea whether he was allowed to do that, but that was his problem, not mine!

I'd rather have had the cash but I sold the gear on eBay and ended up making a couple of quid more to cover the petrol used to get to his office.

If you turn up on the doorstep you never know, you may be able to see the boss and agree something off the record with him for when the new company starts up (I wish I could do that with my credit cards). Long shot, but what have you got to lose?

Good luck, Nick. Hope it works out.

Steve: dumb question, did I miss something? Historically wages to employees have been BELOW secured creditors in Canada, in terms of the order of payout. Has that recently changed?

You may be right. I've had two such situations happen to me, once when I lived in the States and once here in Canada. In the Stateside case, Utah in the late 80's, I and some of my co-workers took it to court to contest whether we were contractors or defacto employees because contractors were definitely unsecured and the last to get paid. It was a fairly substantial amount, around $8000 in my case, and it made a big difference whether one was (in American HR terminology) a W2 employee or a 1099 contractor. I could have sworn regular employees owed back wages were in number 2 position ahead of the secured creditors but it's possible I'm not remembering correctly - I do know for sure contractors were ordinary unsecured creditors and not likely to see a penny. Unfortunately it turned out the court ruled we were not employees and sure enough I never did see any of the money I was owed. In the Canadian case, it was clear that I was not an employee and the amount owed wasn't signifigant in any case so I didn't bother researching it further. I knew the cost of an attorney would be greater than the amount I was owed anyway.

Assuming they haven't gone into receivership, the best thing would be to go in person and don't leave until someone discusses your outstanding invoice. If they're just about to go under, chances are that they don't have any funds, but if they're just having cash flow problems perhaps you can come up with a number of staged payments.

I've had one company going into liquidation owing me money, I just had to write it off. Fortunately, it was only a few hundred pounds, but I know one small company losing £12,000 when a production company went under.

I suspect this will be an increasing problem for the next while.

Although it would be wrong to name the company concerned in this forum, the BECTU magazine has a column each month devoted to naming and shaming non-payers.

Ian, many thanks for the advice and I think that despite my non-confrontational nature I might well have followed your lead in marching up and making a nuisance of myself, if the company were smaller than it is.

It still bloody rankles that these people can get away with it, though.

Oh, Brian I was writing this while you were posting yours. The company in question has gone into administration...I wonder if that is quite the same as going into receivership.

And this is why I encourge everyone to set up a payment schedule with a written contract BEFORE doing any work for anyone--individual or business.

We ALWAYS require 50% upon signing the contract. Then 30% due the day prior to principle photography--no payment, the job doesn't start. The last 20% is paid upon approval of a proof copy of the finished piece (usually posted online). No payment, all they have is a single copy web copy with an obtrusive watermark. Sometimes a DVD with the same obtrusive watermark.

Under this schedule, we've never lost any money owed us.

Jay, it's nice for you that you are able to do this. But in the labour market over here it just wouldn't do. From time immemorial it's been: you get the phone call, you do the work, you submit your invoice and you wait. Start to haggle about money up front and you're listening to dial tone.
I think that your work is in bigger chunks than mine...I can be working for five different clients in one week.

I suspect you're right, which is why Jay's advice is sound.

Any reasonable client should understand and be sympathetic to the fact that in this current economic climate freelancers cannot afford to take risks with cash flow - especially when dealing with smaller, limited liability customers.

I also require between 30% and 50% up front and then staged payments, typically on completion of principal photography and prior to delivery, depending on the value/cost to me/duration of the project. If a client is not able or willing to agree to that then my risk increases and so does the price I quote them. Yes, I've lost opportunities because of this, but very few. Depending on how you put it to them, you can make it sound like a great deal: "Regular price £2500, but if you pay 50% up front it's only £2000!". Doesn't always work, though!

I make a judgment on whether I am even willing to accept the commission if a client cannot agree to a payment up front but this year alone I have made videos for prestigious clients such as IBM, Tesco, Debenhams and New Look, none of who are likely to go down the pan in the immediate future (ha! famous last words!). They would not entertain up front payments but I judged the risk to be worth it, considering the kudos of having them as referenceable clients.

I know it's easier said than done, Nick, and I'm guessing that you might be in a different part of the market to me? Having said that, if you talk to your regular clients in advance and tell them that you are considering introducing these measures until the economy sorts itself out, you never know, they might go along with it. I would also argue that it makes you look more professional than your competitors (but again, I don't know what it is you're doing for your clients, Nick, so I might just be talking rubbish).

Failing all of that, a tin of paint stripper on the bosses Merc is a great way to relieve your frustration (JOKE, before anyone tells me I'm irresponsible).

Best of luck.

Ian . . .

Ah, just seen what you do. I can understand that it might be tough for you to do the up front thing when you're probably dealing with the bigger production houses.

Out of interest have you contacted BECTU and asked for a bad debt form? Might be worth it.

I don't think any UK production companies pay in advance for their freelance crews. Certainly the broadcasters don't.

Production companies themselves commonly get staged payments in order to cover production costs like hiring crews. Although, I heard the other day that ITV (I assume the network) doesn't pay anything until they get delivery of the completed programme, so production companies will either have to borrow or already have their own funds to cover the production costs. Or, perhaps this just happens with programmes commissioned from the large production companies

BECTU can be good in recovering outstanding invoices.

Agreed, Bryan. I am an exception though! I pay my crew half up front and half on the day for which I enjoy reduced rates. But I am a very small production house!

Ian, I like the way you work! And you're in the next county to me!! If your regular soundman is unavailable you know that I'm only an email away.

Nick, I work with clients whose budgets range from $500 to... whatever it takes. Certainly there are those who baulk, but that tells me they probably had no intention to pay in the first place.

Let me ask you, how many goods and/or services do you buy there and pay only after they've sent you an invoice?

Well, all I can say is that I know of no other freelance sound recordist or cameraman who charges for daily work up front. If a big chunk of work comes along lasting over a week, then naturally an invoice would go in at the end of each week but the vast majority of work that I do is for a single day or perhaps two or three. If I were to ask for a proportion of money in advance the work would go elsewhere, because that is the way that the business works in the wonderful world of casual labour in this corner of the market. Now, if every technician banded together and decided to change the way things happen that would be different...ah yes: remember the unions? But in the present climate that is unlikely to happen, as we have been divided and conquered and anyone who sticks his head over the parapet is likely to suffer.
Perhaps I am in a situation similar to that of the plumber who recently did some work at my house. He came, worked and sent an invoice - which I paid straight away.

Most housebuilders get paid in arrears. If you have dealt with UK builders you would understand why!
This is a question of scale isn't it?
If I do a day shooting followed by a day or so of editing I expect to get paid after the job and I don't have a contract.
If it's a higher value production over a longer period I expect to have a contract and a cashflow ie staged payments with something upfront.
It sounds like Nick is working a day or so at a time. A bit here and a bit there. Often at short notice. It wouldn't be efficient to exchange contracts and make upfront payments. By the same token his exposure to risk shouldn't be too high ie maybe 2 or 3 days revenue.
I hope I'm not speaking out of turn Nick. I just seems like people are talking about different scenarios.
(BTW I should have read your last post properly before posting this :-)

It doesn't take a lot of time, advance notice, or meetings with an attorney to have a binding contract. It can be as simple as a one or two paragraph 'deal memo' in letter form and signed by both parties, outlining what is to be done when, how much it will cost, and when it is to be paid. It would be wise to get at least that much in writing even for your 1 day shoot, 1 day edit scenario.

Richard, you are in the right of it when you say that my situation is very often answering the phone to be asked if I am available the next day - that's how my sort of work goes. And you are equally right in observing that this obviously puts negotiating contracts out of play. The company that is defaulting in its payments to me had been using me for over five years and owes me for five days scattered over a month. I suppose that I am partially at fault because rumours had begun to circulate about the company and I ignored them - you never think that it will happen to yourself!
The point that you have picked up on, Richard, is that the area in which I and others work just doesn't and never has negotiated contracts for the odd day here and there - even being booked for a solid week wouldn't trigger a request from a technician for any formal sort of agreement: it would be haggled out over the phone with the production manager. Yes - a verbal agreement is worth only the paper it is printed on! And I guess that in the present climate we all might have to mend our ways and be a damned sight more cautious. I've learned a lesson, certainly.

Nick, my apologies. For whatever reason, I misunderstood your situation. I did not realize you were a crew member. I thought you were the production company.

I give my crew members an advance to get them scheduled for the specific shoot day. Then I pay them at the end of the shooting day. It's neat and clean and everyone parts company in a good mood, insofar as payment is concerned.

Like Steve said, from now on, get it in writing.

Nick,

Obviously the global economic crisis is contagious. Really sucks.

Can they make any kind of good "good faith" payments (partial payments)? I don't know what they owe you, but if they can even pay $100.00 every few weeks or so, at least they are trying, you'll get SOME of your money. Sometimes people look at the total amount and just put it aside.

I'd contact the account dept. and see what you could set up. I think you'd be happy to get something, and they more inclined to get you money every now and then. Who knows. Maybe they'll resurrect or morph into another company and still use your services when the time comes. (Of coarse you'll get a contract and advance).

Best wishes.

Jonathan

Jonathan, thanks for your kind comments. I've tried to contact the accounts department and got the run around. From what little understanding I have of the law, this company having declared themselves in administration their affairs are taken over by a government official who freezes the accounts, works out who is owed what, and then in the pecking order outlined by Steve a few posts back (Tax man first, employees, secured creditors....then me), pays out what is in those accounts. So I'm no longer dealing with the Evil Ones, but a faceless bureaucrat. The brake fluid option gets more and more attractive!

Jay, your approach to crews is an example which I wish would catch on over here. More power to your elbow!

Wow, can I freelance for you?

In my neck of the woods, freelancers invoice after the job is done and typically wait 15 to 45 days to get paid. When I freelance as a shooter or editor, that's what I expect, whether I like it or not.

On the other hand, if my production company is producing the piece, I require a deposit and installments. The difference here is that a budget for producing is in the thousands of dollars and requires SIGNIFICANT cash outlay on my part whereas as a freelancer, I'm only "out" my labour and hard costs like tape.

Asking for a deposit here for "day labour" (as freelancers are often seen when hired only for one or two "shooting days") would result in the "offending" party not getting the gig. Not saying it's right, just saying we are slitting each others throats to get the job. Say what you will about the unions but at least they get paid, and scale at that.

Shaun, it may sound corny, but if I've learned one thing in life, it's the Golden Rule. I treat folks I want to be treated. It works!

When I give respect, I get it. When I treat people as equals, they work hard and are more likely to cut me some slack when I need it, or go the extra mile when it's required. I rather pay a little more and get a quality worker. It pays in the long run.

Filmmakers are only as good as the people they surround themselves with. I think that holds true in any job.

I agree wholeheartedly and I'd like to believe I treat my crews the way they would like to be treated (somedays they actually make more than I do, given the amount of work I do lining up the work in the first place...) and the majority of my clients treat me well and pay on time. Unfortunately, "on time" is 15 - 30 days.

Again, to those that treat theirs well, THANK YOU. To those that don't...

Would it had made any difference if Nick had a contract? I don't think so.
As for being paid after the event, that's the industry norm.
I can think of recent transactions that work on the same principle. In the last month or so - sailmaker, garage, crane hire, boatyard fees, club fees, film equipment purchase, microphone hire.
Many of these are big-ticket items too. So it's not just the norm in this industry.
It works on trust and reputation. There are many other industries that work on the same basis eg shipping, because it is an efficient way to do business.
It takes something dramatic like a bankruptcy to break the machine but normally it works well.
If you don't do a good job in this business you don't get hired again and the same goes if you are doing the producing.
Having said that for any kind of long term project or where I am spending money upfront I will insist on a contract and expect advance payments.

I wish!

Sadly about a third of my clients pay me within that timeframe. They are the smaller businesses - and they are the ones who are tightening their belts and aren't looking for videos at the moment. The big guys (who make up the other 2/3) take waaaay longer. 60 days is common but I have had to accept 92 days from a large UK retailer (their attitude was "we'll just use someone else" and, of course, I don't want that!).

This week I had an email from a purchasing guy at a large US company (clue: Mo*o*o**) who have asked me to quote for producing a video for them here in the UK. I was told that if I want to do business with them their terms are 75 days. THEIR terms. Not interested in MY terms. They also require me to complete a detailed Statement of Work in a proscribed format and jump through various other approval hoops before I can give them the quality service at a sensible price that they require. But I can't afford NOT to take these jobs at the moment, just on the basis that i don't like the t's & c's.

I must say that they aren't all like that. I have some big name clients who are actually very understanding and respect my terms. But they are rare beasts.

Astonishingly, the BBC is an extremely swift payer, once you have been initiated into their Byzantine accounting system. The record from my invoice being emailed to them to their money appearing in my account is 6 working days. Never more than 10, though.