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Advice on first time being burned

Fal Grunt

Titanium
Joined
Aug 5, 2010
Location
Medina OH
I've had my shop now 12 years, and 6 of that it has been my "full time" job.

In that 12 years, this is the first time I have been burned by a non-paying customer. Well, they sorta paid.

In July of 2021 a company approached me to do some really strange work, in an industry that I have never done work in before. They spent several weeks trying to find a shop to manufacture the small quantity, very specialty work, in a VERY short lead time. Ie, 4 parts, completely bastard everything, worthless drawing, they don't know exactly what it is they need, but they needed it two weeks ago.

I have a policy that new customers pay 50% upfront and 50% on completion. That worked fine for them because they didn't have time to formally submit everything and get a PO made. They paid the 50% down with a CC and I got started. I got the parts done, early, (worked over July 4th weekend and on July 4th) and told them to make the payment and they could pick up the parts. To save the 3% CC fee they asked if they could bring a check. No problem. They bring a check for the full amount, pick up the parts, no issues.

Beginning of December they reach out and say that they need another batch of parts made. A different bastard part, same conditions. They say it has to be run through a PO this time. I submit a quote, but since they are a repeat customer, terms are now payment on completion. They say great. Even after some issues with their worthless drawing and specs I get the parts made.

Here is where I am an idiot, and everything falls apart. They are about 45 minutes away, and I happened to be driving by. So I dropped off the parts, saving them an hour and a half drive. The guy I deal with isn't there. No-one else knows anything about the parts. So I call the guy and he says yea great, leave them with so and so. It's a Friday afternoon, no-one is there to cut me a check.

Some of you are either laughing or yelling at the computer screen like a bad horror movie.

In some ways I lucked out a little bit. The companies AP department reached out to me for a W-9, so they gave me their own information. When the invoice got to be 2 weeks late I called and explained who I was and the woman on the phone was very polite and apologized for the payment not being made. Seems the guy who wrote the PO and ordered the parts marked them as delivered, but did not submit the invoice. I emailed her another copy of the invoice, and while on the phone she confirmed that she received the invoice. She said they would run a check the next batch and have it out to me.

2 weeks later I still had not received payment. So I sent emails out again and she responded that she had no invoice and even included a nice screen shot of her computer system showing that there was no invoice due. I had started to email her back that she was incompetent and I don't enter invoices into their systems, that's her job, and she confirmed she had the invoice so clearly she didn't do her job. My wife intervened and typed her a short and terse email in AP/AR jargon explaining that she was incompetent and didn't do her job, but in business speak. I got an email that afternoon that a check would be cut the next run(probably friday).

The following monday a check arrives in the mail. Hooray.

But wait....

There's more!

The check is for just over half of the invoiced amount.

I have found as I have gotten older my patience has rapidly evaporated. People's incompetency and general stupidity has pushed me to the point where I am 100% full boil instantly. I spend probably more time than reasonable double, triple, and sometimes quadruple checking my work. Verifying all aspects to guarantee that my work, or whatever I am doing is correct. When I make a mistake I am proactive, I take care of it before anyone knows it exists. When I fail to identify a mistake before someone else identifies the mistake, when that mistake is identified, everything in my life comes to a stop until that mistake is corrected.

Immediately upon looking at the check I am pissed, beyond pissed. I bent over backwards to get this company what they needed, I was a nice guy and went out of my way to save them an hour and a half drive, I did the work that half a dozen machine shops wouldn't attempt, and they screwed me. I already had my phone out trying to decide whether to call in a tactical missile strike or nuke the whole place into oblivion and walk away from it all together. My wife took the check from me and looked it over.

Thirty seconds later she says, this is a deduction, they deducted from your invoice.

WTF does that mean!

It means they think you owe them money, so they deducted that from your invoice.

Sure enough we sat down at the computer and looked up the two previous invoices for this company, and low and behold, they deducted the two previous invoice amounts from this invoice.

So, now, what the heck do I do? My wife once again saved my hide and wrote another email to the AP lady explaining that they had an unauthorized deduction without providing any backup or explanation, and further the deduction was not approved and never discussed and they would need to submit full payment.

That was monday. No one is responding to phone calls or answering emails. The "Operations Manager" who I usually communicate with is not answering his phone, AP lady is not answering her phone, and no one that I have email addresses for are responding.

My wife explained to me that the AP People are like robots. Stupid robots I asked? They just process the information. If the information they are given is incomplete or incorrect, it still gets processed. Hmmm stupid programmer then. No, they just work within the confines of their task. Some companies give their AP department a lot of room to look at and do things, other companies do not. She thinks once they look to provide backup, they will find that there is none, and make complete payment.

I do not think for a second that they will.

So my immediate thought is Small Claims court. Any thoughts, opinions, experiences? Is it worth my time? When they get a summons will they show up with a big shot lawyer? Maybe... at this point they are going to spend the money they owe me one way or another.
 

camscan

Titanium
Joined
Sep 5, 2011
Location
Norfolk
I've had my shop now 12 years, and 6 of that it has been my "full time" job.

In that 12 years, this is the first time I have been burned by a non-paying customer. Well, they sorta paid.

In July of 2021 a company approached me to do some really strange work, in an industry that I have never done work in before. They spent several weeks trying to find a shop to manufacture the small quantity, very specialty work, in a VERY short lead time. Ie, 4 parts, completely bastard everything, worthless drawing, they don't know exactly what it is they need, but they needed it two weeks ago.

I have a policy that new customers pay 50% upfront and 50% on completion. That worked fine for them because they didn't have time to formally submit everything and get a PO made. They paid the 50% down with a CC and I got started. I got the parts done, early, (worked over July 4th weekend and on July 4th) and told them to make the payment and they could pick up the parts. To save the 3% CC fee they asked if they could bring a check. No problem. They bring a check for the full amount, pick up the parts, no issues.

Beginning of December they reach out and say that they need another batch of parts made. A different bastard part, same conditions. They say it has to be run through a PO this time. I submit a quote, but since they are a repeat customer, terms are now payment on completion. They say great. Even after some issues with their worthless drawing and specs I get the parts made.

Here is where I am an idiot, and everything falls apart. They are about 45 minutes away, and I happened to be driving by. So I dropped off the parts, saving them an hour and a half drive. The guy I deal with isn't there. No-one else knows anything about the parts. So I call the guy and he says yea great, leave them with so and so. It's a Friday afternoon, no-one is there to cut me a check.

Some of you are either laughing or yelling at the computer screen like a bad horror movie.

In some ways I lucked out a little bit. The companies AP department reached out to me for a W-9, so they gave me their own information. When the invoice got to be 2 weeks late I called and explained who I was and the woman on the phone was very polite and apologized for the payment not being made. Seems the guy who wrote the PO and ordered the parts marked them as delivered, but did not submit the invoice. I emailed her another copy of the invoice, and while on the phone she confirmed that she received the invoice. She said they would run a check the next batch and have it out to me.

2 weeks later I still had not received payment. So I sent emails out again and she responded that she had no invoice and even included a nice screen shot of her computer system showing that there was no invoice due. I had started to email her back that she was incompetent and I don't enter invoices into their systems, that's her job, and she confirmed she had the invoice so clearly she didn't do her job. My wife intervened and typed her a short and terse email in AP/AR jargon explaining that she was incompetent and didn't do her job, but in business speak. I got an email that afternoon that a check would be cut the next run(probably friday).

The following monday a check arrives in the mail. Hooray.

But wait....

There's more!

The check is for just over half of the invoiced amount.

I have found as I have gotten older my patience has rapidly evaporated. People's incompetency and general stupidity has pushed me to the point where I am 100% full boil instantly. I spend probably more time than reasonable double, triple, and sometimes quadruple checking my work. Verifying all aspects to guarantee that my work, or whatever I am doing is correct. When I make a mistake I am proactive, I take care of it before anyone knows it exists. When I fail to identify a mistake before someone else identifies the mistake, when that mistake is identified, everything in my life comes to a stop until that mistake is corrected.

Immediately upon looking at the check I am pissed, beyond pissed. I bent over backwards to get this company what they needed, I was a nice guy and went out of my way to save them an hour and a half drive, I did the work that half a dozen machine shops wouldn't attempt, and they screwed me. I already had my phone out trying to decide whether to call in a tactical missile strike or nuke the whole place into oblivion and walk away from it all together. My wife took the check from me and looked it over.

Thirty seconds later she says, this is a deduction, they deducted from your invoice.

WTF does that mean!

It means they think you owe them money, so they deducted that from your invoice.

Sure enough we sat down at the computer and looked up the two previous invoices for this company, and low and behold, they deducted the two previous invoice amounts from this invoice.

So, now, what the heck do I do? My wife once again saved my hide and wrote another email to the AP lady explaining that they had an unauthorized deduction without providing any backup or explanation, and further the deduction was not approved and never discussed and they would need to submit full payment.

That was monday. No one is responding to phone calls or answering emails. The "Operations Manager" who I usually communicate with is not answering his phone, AP lady is not answering her phone, and no one that I have email addresses for are responding.

My wife explained to me that the AP People are like robots. Stupid robots I asked? They just process the information. If the information they are given is incomplete or incorrect, it still gets processed. Hmmm stupid programmer then. No, they just work within the confines of their task. Some companies give their AP department a lot of room to look at and do things, other companies do not. She thinks once they look to provide backup, they will find that there is none, and make complete payment.

I do not think for a second that they will.

So my immediate thought is Small Claims court. Any thoughts, opinions, experiences? Is it worth my time? When they get a summons will they show up with a big shot lawyer? Maybe... at this point they are going to spend the money they owe me one way or another.

Do not assume that because you think you are right(certainly seems so) that you will win. You could lose and that will cost you,including their lawyer.
 

Booze Daily

Titanium
Joined
Sep 18, 2015
Location
Ohio
It sounds to me like an accounting error. It sounds like the first 2 invoices weren't entered into your vendor acct, so when they cut you those checks it shows as a credit to your account.
Now when they entered the most recent invoice it was done properly.
Your account now shows 1 debit and 2 credits. To zero out your account they paid everything, which is your current invoice minus the 2 previous invoices.

I would talk to them calmly to get this resolved. Not worth losing sleep over it.
 

David Ferguson

Aluminum
Joined
Aug 13, 2008
Location
Paso Robles, CA
I think you need to send them a statement showing both orders, and all payments (ie, all your business with them). That statement should show that you are still owed half the amount from the last PO. I think their accounting system never got the invoice for the first job entered, so they think that first check was for the second invoice.
 

DDoug

Diamond
Joined
Oct 18, 2005
Location
NW Pa
I think you need to send them a statement showing both orders, and all payments (ie, all your business with them). That statement should show that you are still owed half the amount from the last PO. I think their accounting system never got the invoice for the first job entered, so they think that first check was for the second invoice.

NO....You need to get this all ready to send, and then have your Lawyer send it in.
 

barbter

Banned
Joined
Oct 27, 2007
Location
UK
To me....it sounds like an accountancy error.

Personally.....My first question is, did you make good money doing their work?
The second is, if this balls up didn't happen, would you be happy to proceed with them as an ongoing customer?

If yes, I'd reconcile a statement, and a letter explaining exactly what has happened, and how it has happened.
Then email it to both your purchasing contact, and the accounts asking them to PLEASE get it sorted ASAP.
 

wheelieking71

Diamond
Joined
Jan 2, 2013
Location
Gilbert, AZ
This is why nothing leaves my shop before it is paid for! Sorry Fal, I know that doesn't help.
But us little guys can't be dicking around with these stupid money games. And, I am just like you. Screw me? I go instant full-boil! :mad5:
I am probably one of the least passive people you could ever meet.

I've told this story on here before: I got over 120 days out once in the beginning, and knew where the "accounts" lady's desk was.
Happened to be right up front with a picture window. I parked my truck 8ft behind her back. I saw her sitting there when I parked.
She had been ignoring me for a while at this time.
I barged in guns blazing. Went right through the do not enter sign. Straight to her desk. And in my "big-voice" said:
"Turn around, see that truck?! If you don't cut me a check right now I'm going to park that Mother-'effer on this got-damn desk!"
By now the boss had showed up, and nicely asked her if they owed me money. She got out "yes, but" and he interrupted with "what date were we invoiced?"
She told him. And he sternly said "cut the check" and walked out. I snatched it out of her hand with a scowl. No words. And left as fast as I showed up.
That place kept sending me RFQ's occasionally for a year or two. I always rejected. They eventually got the hint.
 

kustomizingkid

Titanium
Joined
Aug 2, 2010
Location
Minnesota
Call your contact that you helped out of a jam TWICE and say hey here is the deal can you go talk to accounting. Also make it clear that there will be no more helping anyone until this issue is resolved.
 

Mebfab

Moderator
Joined
Jun 7, 2003
Location
Mebane North Carolina USA
From experience.

Document everything. Everything done by email.

Your wife has patience and experience. Have her handle it. When talking to the guy who you helped out DO NOT tell him you wont do anymore work. At this point he already suspects it but you are the guy who got him out of a jam and can do it again in the future. Remove that future and you remove his motivation.

What happened is maddening. And entirely common before the "great resignation". Companies put the idiots in HR or accounts payable with instructions and procedures to keep them from overpaying or not even paying at all. Hence all the procedures. Now with everyone worth employing jumping ship......... its worse. They may not be trying to screw you. They may just be idiots. Or they may be trying to pay slow.

A "friend" works at a place where it is an act of congress to get a PO issued and then reconcile all the statements and invoices before sending down to payables. God forbid $.01 more then owed gets paid no matter how much effort and time it wastes. But no system is in place to prevent wholesale theft.
 

TheBigLebowski

Aluminum
Joined
Sep 9, 2018
It sounds more like incompetence than an act of malice. It's pretty common for companies to hold on to payment for as long as possible. I've been in the same boat as wheelie where a P.O that was supposed to be net 30 goes out to 90 or 120 days. The solution is to switch that customer over to COD - or every customer as he did.

Give it some more time before you proceed to small claims court, I suspect that your wife has a pretty good handle on the situation and you will get paid, it just might take another 30 or 60 days.

They could still end up being an Ok customer if you put them on COD, you are probably the only shop in town willing to do work for them - so you can charge for the PIA factor accordingly.
 

Mebfab

Moderator
Joined
Jun 7, 2003
Location
Mebane North Carolina USA
They could still end up being an Ok customer if you put them on COD, you are probably the only shop in town willing to do work for them - so you can charge for the PIA factor accordingly.

I have found this to be pretty common. Big shops wont bother with them, any one with a short fuse or busy will fire them. I have had some good customers over the years like this. Charged a premium or made them buy materials themselves and they would slow pay me on labor. When I was slow at kept work coming in.

Ultimately its your business.
 

gustafson

Diamond
Joined
Sep 4, 2002
Location
People's Republic
Don't let your anger take over

Calm persistence is most likely to get you paid

That said, I have brought this up before, 'new' 'rush' customers are a red flag

They get you thinking about how you are going to get the job done and not about how you get paid.
 

Larry Dickman

Titanium
Joined
Jan 30, 2014
Location
Temecula, Ca
Dude, Seriously, this is the oldest trick in the book. You fell for it (and so did I )

don't even waste your time, go straight to small claims and let the dice fall how they may.
 

dalmatiangirl61

Titanium
Joined
Jan 31, 2011
Location
BFE Nevada/San Marcos Tx
That was monday. No one is responding to phone calls or answering emails. The "Operations Manager" who I usually communicate with is not answering his phone, AP lady is not answering her phone, and no one that I have email addresses for are responding.

Keep in mind that a lot of people are calling in sick this week. Let the wife deal with it, and hope the right people make it back to work.
 

boosted

Stainless
Joined
Jan 4, 2014
Location
Willsonville
Stuff like this happens to me at least a few times a year. Surprised this is your first time. You know this customer better than we do, but my assumption would be that they are just inept, not that they are scamming you.

Accounting people move SLOW. It's BS because you might deal with an engineer at the company that wants (and gets) parts tomorrow, but when you need their AP team to fix something it takes weeks. One of my best customers is NET45 on everything, and we have invoices get caught in their clunky AP system with some amount of frequency. So six weeks in I don't get paid, then I start the cycle of leaving voicemails and emails. Eventually somebody will shake the invoice loose, and a check will follow. If you want to do business with mid to large size companies, having a robust line of credit to deal with cash flow issues is critical.

Sure, you can demand COD terms for everybody, but there are a lot of bigger organizations that don't even have the ability to accommodate your terms. I doubt any job shop that expects payment up front for everything is going to be able to scale very well.
 

metal-ica

Aluminum
Joined
Jan 19, 2019
I would let your wife handle it and let it go. Next time they want work quote it 3x.

1st time in 12 years isn't bad.
 

Scottl

Diamond
Joined
Nov 3, 2013
Location
Eastern Massachusetts, USA
Before you call in an attorney, send a letter to the head financial guy with an attached summary showing the timeline of work, payments, etc. and copies of all invoices.

If after 30 days you have not received a WRITTEN reply explaining why they think they are right send a second letter by certified mail notifying of an overdue balance and your intent to go to court to recover that balance plus expenses if they don't reply within thirty days.

You want to give them a chance to correct things if it is just a stupid mistake but you also want to start a document trail showing your attempts to communicate with them and any responses or lack of. Then small claims court with a stack of paper to show the judge.

Years ago I knew a plumbing contractor who sued several deadbeats. He said part of the reason such people stiff small businesses is because they think most won't bother with the time and expense of court. His goal was to make a point that he WILL sue deadbeats so other deadbeats won't try it with him.
 








 
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