Owed Money From A Charity

[TheLoser]

Good Evening Everyone

A client of mine was instructed by a large community centre which is a registered charity to undertake a considerable amount of work on the building. It was valued in the tens of thousands of pounds.

His limited company obtained 50% deposit up front to cover a lot of costs and mitigate their losses should the worst happen, something they do with all new clients.

What was absolutely not made clear before starting was their financial ability to pay the remaining 50% upon completion.

They were told verbally by the centre manager that they had the funds to pay the balance on completion without issue.

It has transpired they are getting the project paid for in grants and never had the funds to pay the remaining £50,000 only the first half.

They are wholly reliant on whomever they are getting this grant from to pay the balance and here is the crux of the issue - the grant provider doesn’t appear to be forthcoming and the centre never had a backup plan should they not get the funds.

Now their tune had changed to “you’ll get paid whenever we get some money” with no timeframe.

My client did not give any payment terms other than 50% up front and the balance on completion. Their completion was weeks ago and £50,000 is having a serious impact on their operations…

Where do they stand legally with it being a charity?

Many thanks

 

[JEREMY HAWKE]

I find that the charity bosses are on more money than me and it frankly pisses me off

So I would speak to @Steve Thornbury to see if his people can recover your debt

 

[Mark T Jones]

The starting point is to be absolutely clear on the legal entity you are dealing with

Beyond that, it's a standard collection procedure- either do it their self or get an agent in

 

[TheLoser]

The starting point is to be absolutely clear on the legal entity you are dealing with

Beyond that, it's a standard collection procedure- either do it their self or get an agent in

Hi Mark

It is a registered charity. Their details were checked against the government database before taking on the project.

It is the Charity that gave the go ahead and instructed them they can start.

I believe they have also gone through all the emails back and forth (a lot as you can imagine) and at no point does it say they would have to wait an unspecified amount of time for final payment. There is reference to them signing the funders paperwork and “getting the funds to do the job before you commence” so they took from this and the 50% upfront payment ability that they had the funds for the whole project available..

 

[Mark T Jones]

My personal starting point would be a face-to-face meeting at which it's made perfectly clear that payment is now due and that you intend to commence legal proceedings if a sensible proposal isn't forthcoming. Followed by a letter confirming any arrangements made.

If nothing is forthcoming, LBA and court

 

[fisicx]

Did the contract explicitly state payment on completion? Do the terms make it clear what would happen if payment wasn’t made?

 

[Newchodge]

It is not your job to worry about where the money comes from, that is the job of the Charity . There is no reason to treat a charity any differently to any other client. They entered into a contract which requires they pay £X. They haven't paid, you start legal proceedings.

It would be different if, before the contract was agreed, they had said 'we are dependent on getting funds fromY, and we will not be able to pay until we receive those funds' and the supplier had agreed to those terms.

 

[MikeJ]

Quite amazing that anyone would take on a £100k contract without checking the funds were in place.

 

[WaveJumper]

All of the above and as always the devil is in the detail, the contract is with the Charity the slight fly in the ointment for me would be did those funding the charity actual agree to the works taking place, specs, costs etc etc not directly the contractors problem (of course) but having dealt with building premises for several Shop Mobility schemes over the years anything to do with a Charity always proved to be a pain in the backside, unfortunately those running them are pretty clueless about business related matters.

A face to face meeting is the first step

 

[WaveJumper]

I should add those running these schemes normally have their hearts in the right place ....... but business decision are another matter altogether

 

[TheLoser]

Quite amazing that anyone would take on a £100k contract without checking the funds were in place.

They have emails there saying that the funds have been approved and they can pay the deposit invoice and start the project. They were delaying giving my client the start because they hadn’t had confirmation from their funder yet.

What would you do in that instance? Ask for a copy of their bank statement?

Not intending to be funny, there is only so far you can go in good faith.

 

[Newchodge]

They have emails there saying that the funds have been approved and they can pay the deposit invoice and start the project. They were delaying giving my client the start because they hadn’t had confirmation from their funder yet.

What would you do in that instance? Ask for a copy of their bank statement?

Not intending to be funny, there is only so far you can go in good faith.

Why would you want a copy of their bank statement. It is irrelevant why they haven't paid.

 

[Mark T Jones]

To be clear, you need (ideally before going legal) to know ehat their stance is going to be

Will they ask for time to pay?
Will they contest the whole amount?
Will they challenge the work done?

What you don't need to do is guess at their response or worse, think up a defence for them.

From experience, the best way to extract how they will respond is a 'polite but formal' meeting.

 

[Lisa Thomas]

Why would you want a copy of their bank statement. It is irrelevant why they haven't paid.

I think OP meant up front to prove they would be able to pay the 50% balance.

 

[Lisa Thomas]

I would treat them like any other debtor, however the problem seems to be here is that you can't get blood out of a stone, so any recovery proceedings might be costly and not result in payment...

Seems to me like your client is probably in their hands unless they have physical assets with a material value that could be seized by a CEO if your client obtains a CCJ.

 

[Newchodge]

To be clear, you need (ideally before going legal) to know ehat their stance is going to be

Will they ask for time to pay?
Will they contest the whole amount?
Will they challenge the work done?

What you don't need to do is guess at their response or worse, think up a defence for them.

From experience, the best way to extract how they will respond is a 'polite but formal' meeting.

I don't think they can contest the whole amount or challenge the work done when theyhave said

Now their tune had changed to “you’ll get paid whenever we get some money” with no timeframe.

 

[ethical PR]

Good Evening Everyone

A client of mine was instructed by a large community centre which is a registered charity to undertake a considerable amount of work on the building. It was valued in the tens of thousands of pounds.

His limited company obtained 50% deposit up front to cover a lot of costs and mitigate their losses should the worst happen, something they do with all new clients.

What was absolutely not made clear before starting was their financial ability to pay the remaining 50% upon completion.

They were told verbally by the centre manager that they had the funds to pay the balance on completion without issue.

It has transpired they are getting the project paid for in grants and never had the funds to pay the remaining £50,000 only the first half.

They are wholly reliant on whomever they are getting this grant from to pay the balance and here is the crux of the issue - the grant provider doesn’t appear to be forthcoming and the centre never had a backup plan should they not get the funds.

Now their tune had changed to “you’ll get paid whenever we get some money” with no timeframe.

My client did not give any payment terms other than 50% up front and the balance on completion. Their completion was weeks ago and £50,000 is having a serious impact on their operations…

Where do they stand legally with it being a charity?

Many thanks

It would seem beyond odd that your 'client' wouldn't have had a proper contract in place for stage payments for that size of contract which included payment terms.

And that they wouldn't have credit checked them before taking on the contract.

As others have said he needs to now take action to recovery .

What's your role with this client ?

 

[TheLoser]

Hi Everyone,

Many thanks for everyone’s input it was greatly appreciated.

My client reports that they have since had an email from the charity confirming that their funding partner has made the payment and that they will see full payment by close on Monday..

Thanks again everyone

 

[WaveJumper]

Good news thanks for the update