from Hacker News

One of our clients hasn't paid us $130k – or "Why Every Contract Clause Matters"

by wkirby on 12/11/24, 7:06 PM with 43 comments

• by _fjg8 on 12/11/24, 7:21 PM

  A contract is only worth as much as you’re willing to enforce it. If you’re not willing to enforce your contract, the clauses don’t matter.

  If you’re stuck in the bureaucracy: escape it. Their rules aren’t serving you so why obey them? Escalate to their legal department, send a certified letter about your impending legal action against them. Enforce your contract.

• by raminf on 12/11/24, 7:32 PM

  Back when I was consulting, I always made sure to stay in touch separately with three people:

  a) The internal project owner. Usually a VP or Director.

  b) The owner's assistant/gatekeeper, who made sure they saw and signed documents.

  c) The accounts payable person who actually pushed the button that cut the checks <- The most important one if you want to get paid on time.

  I also never did more than Net-30 (and often Net-7). Things went smoothly with the larger companies (once everything was signed). Startups and medium-size ones, though, had no problem stiffing you on a bill if their funding was wobbly. Those were often payable on invoice, or upfront retainer.

  Still got screwed multiple times. My own damn fault for taking on projects just because they sounded cool.

• by IronWolve on 12/11/24, 7:10 PM

  Find the manager or replacement manager who bought it, who owns it inside the corp. If the internal cost owner left the company, the PO department might be emailing them for confirmation with no replies.

  Send an email/letter to their legal department asking for help to resolve the matter, if they can call the PO department and resolve it, and say its been 6 months and they are in breach of contract. Be nice.

• by Max-Ganz-II on 12/11/24, 7:37 PM

  Similar problem.

  Just worked for six months for a client.

  Contract is one month of monthly savings made in AWS bill.

  They have not paid, and in fact terminated the contract early to avoid payment - "the savings do not occur until AWS reservations end, contract has been ended now, so savings have not occurred". The savings are going to occur, and then the client will keep those savings.

  Turns out the contract also contains what looks like a poison pill, to prevent the counter-party (me) having recourse to court at all, no matter what the client does.

  Also the entire contract is confidential, so I in theory can't say a word about any of it.

• by JeremyBarbosa on 12/11/24, 7:36 PM

  I am a bit confused by this for multiple reasons:

  - $130k is a large amount, why would your contracts save such a huge payment until the end instead of spreading it out over the six months of the engagement?

  - Is apsis really just doing nothing and waiting? I get the contract might not have a clause on late fees or whatever, but that doesn't stop them from paying a lawyer ~$200 to send a letter demanding payment. That should get any large company moving.

  - How many contracts has apsis closed because this is a somewhat standard practice at large companies in the sense that they will take any float time they can get. I remember one company my dad worked with in construction would mail checks the slowest way possible just to get a week of float!

• by xyst on 12/11/24, 7:33 PM

  > It’s a company you’ve heard of. Multinational. Publicly traded. Hundreds of billions of dollars in market cap.

  Wonder if legal action would get them to pay up faster. Contract is breached. Once legal gets the letter, then it gets escalated internally.

  Companies like this tend to just pay up (especially when wrong) rather than spend 10X in lawyer billables fighting/arguing it in court and getting their reputation dragged through the mud (bad optics such as “multibillion dollar company is stiffing vendors, who’s next? Possible bad quarter?” Then automated traders recognize SELL signal and company stonk drops)

• by binarymax on 12/11/24, 7:29 PM

  "all we can do is sit here and keep waiting"

  You talk to your lawyer and send them something very strongly worded, and if they still don't pay you take them to court.

• by demarq on 12/11/24, 7:32 PM

  this sucks, I think small and medium business should have a government escrow service. And it should be made law that:

  A) Business over a certain size have to contract some quota from small and medium business

  B) That any and all payments should be made through this escrow

  So if BigCorp doesn't pay the little guy, Little guy get's paid and the matter is between government and BigCorp.

• by calmbonsai on 12/11/24, 7:42 PM

  "Contractually they’re in breach. But it doesn’t matter."

  It does matter. The payment is net-60 and it's been net-180. This goes well beyond reasonable error/omission into overt negligence.

  If your client can't figure out how to do a wire transfer that's on them. It doesn't matter how big/small they are, if they're that incompetent, you're likely not the only vendor in this situation and they know it.

  1) You've been in long-term structural breach on an objective brass-tacks issue. Immediately completely "out-source" this former client-vendor relationship to a 3rd party--likely a law firm.

  2) Write off this engagement and those funds. Even if you win judgment, you'll still have to collect on it and the collection costs themselves can be exorbitant and years-long time-consuming.

  3) If/When you file suit (but not before hand), publicly "out" this company in a single post linking the publicly available information about the lawsuit then shut-up about the entire affair until the jurisprudence has completed--likely over a year.

  Good luck.

• by lifeisstillgood on 12/11/24, 7:56 PM

  Every so often a politician comes up with some idea of special legislation to force large companies to pay invoices within X days or gather 2x base rate interest on the bill

  These always fail. Mostly because it’s pretty much impossible to define the various parameters but really because … if we want to get paid by a company larger than us we take the chance it will all work out … and gift people free credit for months

  my longest time to collect on invoice was 9 months and it took me two years to recover from the debt tailspin that went into (if I ever did)

  Good luck getting it to work out.

  One day there will be the legal backup. It might make it socially unacceptable

• by oidar on 12/11/24, 9:23 PM

  Why did you guys keep working after the first invoice went unpaid?

• by in_a_society on 12/11/24, 7:32 PM

  This is a standard playbook at large organizations with finance departments. CFO 2 companies ago used to literally coach people on extending payments and delaying. Best case scenario for them, you never get aggressive enough to actually collect. Repeat that at scale across many vendors and suddenly their entire P&L looks substantially better.

• by rtkwe on 12/11/24, 7:32 PM

  At a certain point the answer is just lawyers or at least the threat thereof to kick this into an actual problem for the client rather than a passive issue. Hard to say if it's worth it without knowing what other steps have been taken or how critical this client is to the business but if it's becoming a financial risk it's probably about time to escalate this to a level beyond a passive aggressive blog post.

  Even without specific clauses there are legal remedies for breach of contract you just have to be willing/able to use them.

• by beanjuiceII on 12/11/24, 7:17 PM

  of course every clause matters, thats why its a contract

• by sparrish on 12/11/24, 8:47 PM

  Knew a contractor that finally received a check from the US DoD 10 years after the invoice was due - 100k+

  Don't be the guy that waits that long to get paid. Get a lawyer.

  Don't be the guy who doesn't pay your bills.