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Take a deep, deep breath, then stand and look at some water until you've made peace with the fact that you'll never see that money. It's worth noting that you

Take a deep, deep breath, then stand and look at some water until you've made peace with the fact that you'll never see that money. It's worth noting that you can insure yourself for unpaid invoices, at which point should this situation occur again, you tell the insurer, they pay you, and they will then do all the nasty legal stuff they need to to cover their loss - and you don't have to worry about it. Not much help for this time around, but if you're working with fly-by-night outfits, it's a must. Above all, don't do anything malicious, as you could then find yourself on the end of a criminal CFAA case, which would probably mean years in jail.

gettingstiffed 11y ago
> Not much help for this time around, but if you're working with fly-by-night outfits, it's a must. Yeah, I guess in our community we don't think of funded startups as "fly-by-night" outfits, even though any bank or mainstream institution would absolutely think of them as such. I guess I had a little more confidence in the kind of person that has convinced well-known investors to give them money. FWIW I've had other founders treat me very well in going-under situations, so I know it's not everybody.
- madaxe_again 11y ago
  Totally, but even nice, well-intentioned people may find themselves in a situation where they're utterly unable to pay. If anything, that can be a harder situation if you're trying to deal with it personally, because going in guns blazing "fuck you, pay me" with someone you like isn't easy. Have been running an agency for the better part of a decade, we've grown from two to thirty-something people, and while we started with no insurance whatsoever, we now have policies coming out of the wazoo - and it's a double positive, as: a) We no longer have to deal with "bullshit" situations. More often than not we notify the insurer and let them deal with it according to our wishes. b) Because of (a), we can deflect most relationship damage that goes along with "bullshit", as it's not us being the aggressive assholes demanding payment, it's our insurers. We spend maybe £10k a year all-in on insurance, but with several £M of turnover and several £Bn of client revenue (i.e. revenue they take through their sites) in the mix, it's an absolute bargain. We've only had to make two claims - most of the time, they make situations go away (negotiated settlement, etc.) before we have to make a claim, as it's in their interest (cheaper resolution) to do so.
  - wushupork 11y ago
    Tell me more about this all-in insurance. Where would you find these types of insurance companies. I run a small digital studio and run into similar problems from time to time with startups - it's always startups.
    - madaxe_again 11y ago
      Our policies are mostly with Hiscox, brokered by Willis. Honestly, talk to a broker, you'd be amazed at what you can insure.
tptacek 11y ago
Can you actually insure receivables in practice, or is this just something we've all heard about but never actually done? My experience with receivables over my consulting career leads me to believe that any insurance you could actually acquire for them would come at a stupendously high premium.
- pmorici 11y ago
  I've never heard of invoice insurance but so called 'factoring' is a thing. Where you sell an invoice for cash now at a discount to it's face value to an investor. It achieves the same result of offloading any risk of non-payment to a third party. https://en.wikipedia.org/wiki/Factoring_(finance) https://en.wikipedia.org/wiki/Factoring_(finance)
  - tptacek 11y ago
    Right, but I was under the impression most factoring arrangements were with companies that actually sold things. I'm not sure I see how factoring, discounting, or insuring of consulting invoices could even work. It can take 6 months to get a client to the point where they recognize a payable, and at that point they still often dispute or delay over acceptance criteria. How could a financing company possibly assume those kinds of receivables?
    - notahacker 11y ago
      If there's an invoice for a non-trivial sum and a legally enforceable claim, there's a price at which someone will be willing to buy the invoice, even if that's pennies on the dollar. Obviously your invoices are discounted by less if you have proof of shipped goods, the client is a blue chip with a history of prompt past payment and the invoices aren't overdue yet. But consulting assignments with signed contracts and agreed invoicing schedules are fair game.
      - tptacek 11y ago
        I'd be interested in hearing from anyone who has ever done this with a consulting receivable, where the person they sold the receivable to wasn't a friend or colleague or something.

gettingstiffed 11y ago

> Not much help for this time around, but if you're working with fly-by-night outfits, it's a must. Yeah, I guess in our community we don't think of funded startups as "fly-by-night" outfits, even though any bank or mainstream institution would absolutely think of them as such. I guess I had a little more confidence in the kind of person that has convinced well-known investors to give them money. FWIW I've had other founders treat me very well in going-under situations, so I know it's not everybody.

madaxe_again 11y ago
Totally, but even nice, well-intentioned people may find themselves in a situation where they're utterly unable to pay. If anything, that can be a harder situation if you're trying to deal with it personally, because going in guns blazing "fuck you, pay me" with someone you like isn't easy. Have been running an agency for the better part of a decade, we've grown from two to thirty-something people, and while we started with no insurance whatsoever, we now have policies coming out of the wazoo - and it's a double positive, as: a) We no longer have to deal with "bullshit" situations. More often than not we notify the insurer and let them deal with it according to our wishes. b) Because of (a), we can deflect most relationship damage that goes along with "bullshit", as it's not us being the aggressive assholes demanding payment, it's our insurers. We spend maybe £10k a year all-in on insurance, but with several £M of turnover and several £Bn of client revenue (i.e. revenue they take through their sites) in the mix, it's an absolute bargain. We've only had to make two claims - most of the time, they make situations go away (negotiated settlement, etc.) before we have to make a claim, as it's in their interest (cheaper resolution) to do so.
- wushupork 11y ago
  Tell me more about this all-in insurance. Where would you find these types of insurance companies. I run a small digital studio and run into similar problems from time to time with startups - it's always startups.
  - madaxe_again 11y ago
    Our policies are mostly with Hiscox, brokered by Willis. Honestly, talk to a broker, you'd be amazed at what you can insure.

tptacek 11y ago

Can you actually insure receivables in practice, or is this just something we've all heard about but never actually done? My experience with receivables over my consulting career leads me to believe that any insurance you could actually acquire for them would come at a stupendously high premium.

pmorici 11y ago
I've never heard of invoice insurance but so called 'factoring' is a thing. Where you sell an invoice for cash now at a discount to it's face value to an investor. It achieves the same result of offloading any risk of non-payment to a third party. https://en.wikipedia.org/wiki/Factoring_(finance) https://en.wikipedia.org/wiki/Factoring_(finance)
- tptacek 11y ago
  Right, but I was under the impression most factoring arrangements were with companies that actually sold things. I'm not sure I see how factoring, discounting, or insuring of consulting invoices could even work. It can take 6 months to get a client to the point where they recognize a payable, and at that point they still often dispute or delay over acceptance criteria. How could a financing company possibly assume those kinds of receivables?
  - notahacker 11y ago
    If there's an invoice for a non-trivial sum and a legally enforceable claim, there's a price at which someone will be willing to buy the invoice, even if that's pennies on the dollar. Obviously your invoices are discounted by less if you have proof of shipped goods, the client is a blue chip with a history of prompt past payment and the invoices aren't overdue yet. But consulting assignments with signed contracts and agreed invoicing schedules are fair game.
    - tptacek 11y ago
      I'd be interested in hearing from anyone who has ever done this with a consulting receivable, where the person they sold the receivable to wasn't a friend or colleague or something.