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Ask Slashdot: How To Collect Payments From a Multinational Company?
An anonymous reader writes "I run a small dev shop focused on web development, based in Europe. For the past six years we've had lots of successful projects with clients from CEE, Western Europe and the U.S. One of our main clients was based in the U.S. We started working for them in 2008, while they were a 'promising start-up' and everything went smoothly until they were bought by a multinational corp. We couldn't be happier to work for such a big player in the market, andwe even managed to get by with huge payment delays (3-4 months on a monthly contract), but now, after more than two years working for them, I have the feeling we're getting left out. We have six-month-old unpaid invoices and we're getting bounced between the E.U. and U.S. departments every time we try to talk to them. What can a small company do to fight a big corporation that's NASDAQ listed and has an army of lawyers? They've been getting a lot of bad press lately so I don't think that will scare them either."
Name and shame.
And point out that they're costing jobs by not paying invoices.
So there I was, scribbling down some notes off the PC screen by hand, when I reached for the keyboard and Ctrl-S'd.
Send them an invoice with the maximum late payment penalty that the law AT BOTH SIDES allows, with a giant red statement that they're half a year late, and send it it to the person responsible, with a clear explanation of how much each increased payment delay costs.
If they delay you even one month beyond that, send a new invoice with the expected increase, and cc: it with a copy of all the others you've sent to the person responsible, their manager, accounts receivable, and the office of the president.
StoneCypher is Full of BS
have an attorney in the usa draft them a letter asking for a simple explanation along with a detailed sequence of events.
this will mean they will ask their own attorney to give a response.
their own attorney will tell them they better avoid legal issues over a startup purchase. how would google look if it didnt pay off youtube debt holders when buying the site?
File a lien against them, and make sure you inform Dun and Bradstreet of the lien.
They do business in EU, as do you. The solution should be obvious. Drag them into court.
I've been in IT at a major corp and had a supplier that I worked with personally come to me due to non-payment. I had to go pretty far up my chain of command before I found someone who would apply pressure to finance to pay up on the contract that they signed and approved. Had I not been there to facilitate it would have taken even longer, if they got paid at all. The supplier was international so they got a runaround. Wish I had a better answer, but finance depts sometimes like to collect interest on their bank accounts even at the expense of the company's reputation.
http://en.wikipedia.org/wiki/Lien
It might be too late and you'll need the assistance of an attorney familiar with international contracts. But the next time the board of directors flies that company jet into St. Moritz, its yours.
Have gnu, will travel.
Keep in mind that this is a huge bad sign. Either they don't have the money, they are too disorganized to pay some small fry, or they are just bad people. Any which way that is not how to run a business.
A potentially similar sign came shortly before the big sub prime disaster. A guy had money in a Big Euro Bank money market fund which, in theory, will return your money in about 24 hours. So a really good deal came up on a house (house prices were about to crash but hadn't yet) and he needed a big down payment of a million dollars. So he goes to his guy and says, "Withdraw a million." the guy invokes some obscure clause and says NO. He freaks out and then demands all his money. They say they can delay something like 30 or 90 days and they do. So it turns out to be fortunate and he misses out on the house and eventually gets his money. But when I told this to a person I know who is a huge trader he just told me I was wrong wrong wrong, the Big Euro Bank was probably the most sound bank in the world and that they were old and had a huge reputation and wouldn't screw someone like that in a million years. He went on to say my money market friend was probably lying to cover up the fact that he was out of money, not the bank. Needless to say that bank went right to the brink and without government intervention would have died.
The take-away is that either the people who are handling your account are incompetent, are mean, or that you now have a valuable insight into a company on the brink.
What you need to do is to go onto Slashdot and ask for legal strategy advice.
For several years, I also ran a software business in Europe. When we started, our attorney had one bit of advice: never take a customer in the USA. We made exactly one exception, out of good will, and - sure enough, we regretted it.
If you are not based in the USA, it simply isn't worth the hassle and the risk. If they don't sue you (screw your contract, they'll sue you in a US court, which will claim jurisdiction using the long-arm doctrine), they'll screw you (as you are experiencing).
It doesn't help you in your situation, you're already there. However, for anyone else who may not yet have taken the plunge, don't. Ethics and law in the US reminds me of adventures in third world countries - it's just as dishonest and corrupt, only with prettier window dressing.
Enjoy life! This is not a dress rehearsal.
STOP GIVING THEM UNPAID WORK! One of two things has happened here:
1. They can't or won't pay you. By refusing to work anymore you're effectively cutting your losses by not giving them more work that won't be compensated.
2. They have their heads up their ass. They want to pay you, but they can't figure it out. In this case, not working will light a fire under their ass and they'll pay you.
Moving forward, make sure that your contract contains a late payment fee. Also, make sure it specifies who is responsible for paying you and who will be held responsible for non-payment. GET A LAWYER INVOLVED TO DRAFT THIS NEW CONTRACT. Don't try to do it yourself, it won't work.
In any case, if they don't pay you within the month then you need to talk to a lawyer about suing them.
-1 disagree is not a modifier for a reason. -1 troll, flaimbait, redundant, overrated are NOT acceptable substitutes.
Im not a huge supporter of unions, but Im not seeing why I would hate that idea. I think most people would agree that if a customer treats you like crap, dropping them is a really good way to solve the problem.
Maybe next time they send a work request to you just respond "would love to do the work, but my superiors say I cannot begin work until we get at least a partial payment for the past invoices". Thats how we handled it at my past job and it always worked pretty well, both at cutting off people who truly werent going to pay and at getting money from folks who were just a bit behind the curve.
Since I didn't see a ton of comments posted by people who have experience with this, I thought I'd add one.
Delayed payment is normal. Large companies have very complex rules about how to make payments and how to process invoices. You must be extremely persistent and gracious in order to get things resolved. Each company will respond differently, but I encourage you to make use of some (if not all) of these following tactics:
1) Get a "Master Vendor Agreement" in place with the customer that states invoicing terms. This contract may take months to negotiate and require guidance from a lawyer. Once this is done, all of your projects should be addendums to this original master vendor agreement. This reduces the amount of paperwork the large multinational company has to do to validate each of your invoices and speeds them up.
2) Provide both a discount for early payment and a penalty for late payment. Annotate these discounts & payments on each invoice. If you carefully track your effort, you can know how much it costs you to track long term overdue payments. You can use this to determine how much of a discount you can offer for prompt payment.
3) Designate someone within your company as the "Accounts Receivable" person. It is their job to contact each customer with an overdue payment once per month (or week). They should very carefully take notes on all of their conversations and correspondence, but they _must_ be friendly and relaxed. The goal is to establish a positive rapport with the "accounts payable" person on the other side. It may take dozens of polite phonecalls to get routed to the correct person though, so you absolutely must be willing to put in the effort while not creating bad will.
4) Be gracious when payment is offered. Many times, companies may refuse to pay late payment fees; you can simply say, "I'll remove the late payment fee if you wire the money by tomorrow".
5) If desired, you can contact your bank to find out if they will finance your receivables. Some banks will provide you with cash up front (and charge you a fee) since they know how this process works.
6) Don't harass your point of contact until the invoice is more than a reasonable amount late. Generally, in a big company, the person who signs the contract doesn't even know the person who actually pays the bill. You want to avoid harassing your point of contact (who is usually your biggest fan) until you really need their help getting the bill paid.
7) Know your customers' "approval limits". Generally, executives at a large company will have specific approval levels - for maybe $500 they can simply file an expense report; for $2500 they have to file one form with one signature, and for more than that they have to get approval from a VP level person. If you can keep your projects small enough, you can bypass some of the challenges.
8) Once you've read lots of advice on slashdot and picked a strategy, contact a lawyer before doing anything. Most lawyers will be able to confirm whether your plans follow the law quickly. It'll only cost you a small amount.
And finally, remember, "managing receivables" is part of the cost of doing business with large companies. Factor it into your project costs.
Agreed with most of what Joce640k writes.
The most likely explanation is not malice, but that the right person hasn't done their goods receipt so A/P can release the funds. Or they made a screw-up, closed a project or a funding source by mistake, and now need to go through three levels of horror and approvals to get the funding back.
Go and see a lawyer. The charge for the few hours of work will sting but it's surely going to be much less than you're owed. Take careful note of Step 2. Well, ask the lawyer about step 2 and take careful note of what they say. If you can do so, cease your work (hopefully you've got short term work you can get your employees to do in the meantime) and let the client know politely why you're doing so. (Get the lawyer to do it; they're much better at that kind of thing, and they're not going to get emotional. As Joce640k says, businesses are run by grown-ups.) It may feel satisfying to write a screed of anger, but it doesn't get results in the business world. Go out for a drink with a friend and rant to them, if you'll feel better. But be professional in your business dealings.
If lawyer says you can go ahead and stop working on this contract until things get resolved, then l
I wouldn't advise approaching the competitor, at least until you've heard the lawyer's opinion (yes, that too could be a breach of contract on your part).
Don't try the "name and shame" game. As others point out:
* Beware of libel lawsuits. ... that will agree to publish (newspapers are afraid of libel too, and it's probably not that interesting as a story, and classifieds in a big paper/commercial site are more expensive than the lawyer option)? ...that's big enough that the company will notice?
* Where will you go for the "naming" part?
*
*
* And even if they notice, they most likely won't care.