Customer going under- deposit and balance payments?

[Opinion87]

Afternoon all,

Looking for some informal advice before I speak to a solicitor. One of our customers looks like they're about to go under. I know they've been having issues for a while but they've just made most of their staff redundant and it looks like they're having a bit of a fire-sale on their stock.

Our Terms of Sale/contract with them dictates they pay a 50% deposit on standard 30-day terms with the 50% balance paid before we ship the product. I'm not entirely sure what their terms are exactly with their customers but I believe it's the same as ours with 50% upfront and the balance before they ship. Current overdue to us is around £3.5k; total value of their order book is about four times that.

My concern is their customers being left high and dry having already paid their deposits. I want to approach our customer and suggest we take over the orders they have placed with us so that we can guarantee their customers receive their orders. We would collect payment directly from the customer, take what we're owed then pass the rest on to the company we're supplying. Anyone got any advice, anyone done this before etc?

Many thanks in advance!

 

[kulture]

No harm in talking. But why would they agree. the second you start this process you take away all their customers and guarantee their business fails.

 

[Newchodge]

Current overdue to us is around £3.5k; total value of their order book is about four times that.

How can anything be overdue to you if you take money in advance?

 

[obscure]

My concern is their customers being left high and dry having already paid their deposits....

Why is that your concern? Your concern should be recovering the money you are owed. Making assumptions about how your client ran their business and making promises to their clients is a great way to end up even further out of pocket. What if they have paid in full and you turn up offering to fulfil their orders?

 

[Lisa Thomas]

You may be taking on goodwill of the Company, you will have to pay for this and any IP appointed will investigate what you have done.

As the monies will likely have been lost how do you intend to recoup the lost monies for the customer?

I would steer well clear.

 

[Lisa Thomas]

Wait for the Company to go under and do a deal with the IP to buy the contracts.

 

[Opinion87]

We've already put a pause on them placing new orders because of the uncertainty surrounding their ability to pay.

How can anything be overdue to you if you take money in advance?

We invoice 50% deposit payments on 30-day terms. The average time between our deposit due dates and balance due dates is 6-9 months. There were a few overdue invoices and we set up a payment plan but this hasn't been adhered to. Admittedly we have shipped a couple of items even though the balance payment hasn't been made. This is mainly because of the product we sell...

Why is that your concern? Your concern should be recovering the money you are owed.

...the product we sell is wedding dresses. So my concern, really, stems from being a decent human being. I would hate for a bunch of people to have paid this company for their dream dress, which we've designed and made, only for the company to go under and them being left high and dry on their big day or having to shell out thousands for a replacement. Ultimately, if this company does go under, we will do our best to contact these customers and fulfil their orders, even if it ends up being at our expense. So yes, of course I'm concerned about the money, but in this situation, it isn't the be all and end all. The ideal scenario would, of course, to be paid the money we're owed via our customer, but that is looking increasingly unlikely, and for them to ship the dresses to their customer as usual, however I would like to see if there is an alternative plan should the worst happen so we don't end up in a situation like this: https://www.bbc.co.uk/news/business-46203181

 

[Mr D]

Might want to tighten up your credit facility to avoid such debts again.

 

[Opinion87]

Might want to tighten up your credit facility to avoid such debts again.

Thank you for increasing your post count. I've explained the reasons for this above.

 

[Mr D]

Thank you for increasing your post count. I've explained the reasons for this above.

You are welcome, post count doesn't come into it. Act, don't act, makes no difference to me.

 

[DavidWH]

I'm with @Mr D on this one.

Your contract is with your customer. The bride's contract is with your customer.

Your priority should be your business, and not your customers clients. If they do go bust, shipping out dresses you have never been paid for, whilst a nice gesture, isn't sound business.

@Lisa Thomas has given good advice, buy the order book... could you buy the assets (website etc) or brand, and take over the running of your customer and have it as another outlet for your dresses?

Weigh up what it will cost to fulfil the orders you won't be paid for, against the prospective future income.

 

[billybob99]

shipping out dresses you have never been paid for, whilst a nice gesture, isn't sound business.

How do you know it won't generate local PR and get publicity.

There's quite a difference between not getting a sign that says live footy shown here and a wedding dress for someones big day.

 

[Chris Ashdown]

I admire you feeling of duty, and the past is the past and irelevent

I can only suggest the best action is contact the company with your thoughts and explain your concerns, you could supply them with a printed letter and sealed envelope which if the worst happens they could post to their clients which would give them your contact details to try and sort something out

 

[Lucan Unlordly]

I heard a story once...

A young lad had passed away and 20 of his mates pooled their money to buy t-shirts featuring a photograph of the deceased to wear at the funeral. They'd ordered online and a day before they still hadn't arrived. In desperation they went to a local printer who, in light of it being a rush order, doubled the standard price.

Is that good business?

 

[Mr D]

I heard a story once...

A young lad had passed away and 20 of his mates pooled their money to buy t-shirts featuring a photograph of the deceased to wear at the funeral. They'd ordered online and a day before they still hadn't arrived. In desperation they went to a local printer who, in light of it being a rush order, doubled the standard price.

Is that good business?

Yes.

 

[DavidWH]

Pretty standard practice to charge more for quicker turnarounds.

How many of the bride's paid by credit card, and will claim the money back from them?

How many have wedding insurance they can claim off? (The wedding venue we booked, would only confirm the date once we had it)

IMHO its just a bit hasty to go fishing free wedding dresses out.

 

[alan1302]

Is that good business?

Double the price than normal...seems very good business.

 

[Chris Ashdown]

Fantastic marketing opertunity if you get thebuyers to contact the press and tell how you helped them,The great story could be worth a fantastic amount of publicity over the cost of a few dresses if handled well and professionally, imagine the story in the wedding magazines, woth many thousands

 

[billybob99]

Fantastic marketing opertunity if you get thebuyers to contact the press and tell how you helped them,The great story could be worth a fantastic amount of publicity over the cost of a few dresses if handled well and professionally, imagine the story in the wedding magazines, woth many thousands

Finally logic on this forum.

 

[Opinion87]

Fantastic marketing opertunity if you get thebuyers to contact the press and tell how you helped them,The great story could be worth a fantastic amount of publicity over the cost of a few dresses if handled well and professionally, imagine the story in the wedding magazines, woth many thousands

This has been in my mind... the positive PR could far outweigh the cost of of manufacture, which is minimal.

 

[Lucan Unlordly]

Yes.

One of the lads fathers was a committee member for a local football club that bought half a dozen new kits each season from said printer. A businessman himself he understood the need to charge more for a quick turnaround but felt that doubling the price was excessive at best, a rip off in the circumstances. The printer lost their football kit business and other clubs who knew the youngster who'd died moved to do the same.

 

[Opinion87]

Just a quick update;

After suggesting we would have to go down the legal route (was going to start with a Letter Before Action) our customer has agreed to let us take over all outstanding orders and collect payments, when they're due, directly from the end customer, which was is the best outcome I believe.

Thanks for all comments and advice.

 

[billybob99]

Just a quick update;

After suggesting we would have to go down the legal route (was going to start with a Letter Before Action) our customer has agreed to let us take over all outstanding orders and collect payments, when they're due, directly from the end customer, which was is the best outcome I believe.

Thanks for all comments and advice.

Congratulations. You know it makes sense.