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    15 Replies Latest reply on Feb 16, 2012 5:51 PM by jaybally

    Client has not paid...

    mindspin Wayfarer

      Hello - I run a small food brokering company.  I have a client that I have worked with since I started my company 5 years ago.  They are currently my largest client.  Unfortunately they have fallen way behind on their payments.  They have not paid me in 5 months and currently owe me over $400,000.  I manage a big piece of business for them and have 3 years left on my contract.  Over those 3 years I will make another $2 - $3 million, so I can't just walk away. 


      The reason that they have not paid me, is that they have mismanaged their finances and they ran into a major cash flow crunch.  What options do I have in collecting what's owed to me, without jeopardizing future business with them. 


      Your advice is greatly appreciated.


      Thank you.

        • Client has not paid...
          kingwholesales1 Wayfarer

          Wow that's a tough one. It really sounds like its time to sit down with them face to face and be straight up with them. I know your future is on the line with them financialy but from what you wrote it looks like business is already turning south. I would before getting the lawyers involved here. Sit down and have a very serious meeting and not leave until they agree to pony up some money or trade over to you some of their real estate property for the 400,000 the owe.

            • Client has not paid...
              mindspin Wayfarer

              Thanks.  I did have a sit down with them and they walked me through their financials and explained to me that they will pay me as soon as they are able to.  They have a very seasonal business.  In the winter they go in the red and then make up for it in the summer.  My concern is that they are so behind that when you add what they owe me to what I will earn over the coming months, it may be insurmountable.


              This is my first time having to deal with something like this.  If I have to go the legal route, what are my options?  What type of lawyer should I consult with?


              Again, thanks.

            • Client has not paid...
              amspcs Ranger

              Before I got into the payment processing business many years ago, I was in the business consulting business with a specializadtion in A/R.  So I've heard many stories like this one in the past, and I like to think I know a little of what I speak about..


              I don't necessary disagree with all of the advise given so far on this issue.  But I DO have a problem with the notions I'm hearing, like  of operating out of fear that the debtor is going to be offended, that the creditor is going to lose a good account and all future earnings and therefore has no choice but to continue to provide goods without getting paid,and the debtor states he will pay "as soon as he can", and similar absurdities.


              You are on the raod to ruin.  Please consider the following:


              You obviously have a bad situation here, and your hope that things will get better if you are patient and wait it is a potential landmine.  The longer you wait, things will likely get worse, much worse, not better.  Understand that if this debtor is in trouble with you, he's in trouble with a lot of other creditors as well, and the longer you wait and grow the problem, the further back you are pushed in the demand line.  If he can't pay  you $400,000 today when you are at the beginning of the demand chain and this debor is in trouble with 10 accounts, what makes you think it'll be any easier to collect $800,000 in six months when you are at the end of the demand line and the debtor how has 20 creditors hounding him?  See what I'm saying.  If (big if) things do work out in the future...great.   You're STILL going to have to drastically change your business relationship with this client unless you look forward to repeating this fiasco again in the future, so face it:  These creditors are going to have to deal with some major changes in  your relationship which they may or may not like.  If they don't like them, better they don't like them with  your money in YOUR pocket instead of theirs.  So you owe it to yourself and  your family to do what you need to protect your assets immediately while you still can.


              Another thing I don't like:  The excuses that they mis-managed their cash flow and their business is seasonal and so on and so forth.  Not that any of this is invalid or untrue, mind you.  But the fact is:  Those are THEIR problems, not  yours  This is important:  This is BUSINESS, not personal.  You have a business to operate as well, so they (not you) need to find a way to enable some sort of satisfactory  compromise arrangement with you in order to allow you to operate your business.  Perhaps not payment in full, but SOMETIHING with a definite  timeable. That may requre securing additional financing elsewhere, somebody mortgaging their home, or whatever.   Again, their problem, not  yours. This means a DEFINITE course

              of immediate action....'"ill pay you when I can whenever that may be" is NOT an acceptable businesslike course of acttion. 


              As far as them being offended and yanking their business from you....wait a minute please.  You are open to compromise or alternate accomodations depite having a contract, and you are allowing them to continue to stay in business without paying you at the risk of YOUR business.....and for this they are going to be offended????  They should drop to their knees and kiss  your feet for the misguided kindness  you've shown them thus far.  And if they don't and do in fact take offense...gues what, you won't lose anything you haven't lost already.  Some business relationships are just not meant to be.  As much as  you'd like the big future payday you speak of, also consider the more likely outcome of your losing everything you own today by getting deeper and deeper into this mess.


              Should you hire a lawyer, or wait?  Yes, hire one today.  If they are already into you for $400,000, y ou need to stake your claim to assetts TODAY before 20 other credits get in line in front of you to do the same, or they declare b/r and you lose everything.  Again, business, not personal.  They might not like it, but as a BUSINESSperson you owe it to yourself and your family to do the prudent BUSIHNESS  thing and take steps to protect your assets before it is too late.  If they are business people as well, they will understand from a business standpoint--in act, they'd probably do the same.  If they don't, then just accept the reality that these are not competent business people and you certainly don't need to place your financial future in their hands.


              One final note:  Your contract doesn't contain anything about getting paid?   Number one on  your to-do list today:  Get a new attorney. 

              • Client has not paid...
                She'sMyPA Wayfarer

                At this point any forced pursuit will probably jeopardize future business. Unless, you are willing to waive and/or wait for your money. In the future I would make it a habit to get payment upfront, if not at minimum partial payment. I would attempt to negotiate partial payments that I could get immediately. If not, you may not have any alternative, but to seek legal assistance. Perhaps, you can notify the client in advance as a courtesy, to soften the blow. Make sure you state that your business associates have force the matter and state they feel there is no other choice, but to pursue legal assistance. State that you really feel bad about this and will do everything possible to make this a smooth transition. Hopefully the client will understand they really owe the money and will hold no grudges.

                • Re: Client has not paid...
                  Ed Napier - Attorney At Law Newbie

                  AMSPCS gave you some great advice.  One thing I am going to add - get a personal guarantee from each of the owners/managers/principals that each is joint and severally liable for all debts.  Also, a forum selection clause is very important.

                  • Re: Client has not paid...
                    Bridge Navigator

                    So, it's been six months.  Give us an update - any luck collecting?  If so, how?


                    Hope it all worked out for the best.

                    • Re: Client has not paid...
                      wujixian001 Newbie

                      i am sorry to hear this,hope the client will refund the money soon

                      • Re: Client has not paid...
                        jaybally Adventurer

                        I hope your problem has been solved by now.  If not, we'd be happy to tailor a solution.  Feel free to contact me at your leisure. 

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