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Question about accounts receivable for programming work

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  • User profile image
    10000001

    Hypothetically, say your software biz did several tens of thousands of dollars for a well known Silicon Valley start-up with well documented and published VC funding. Everything was fine and approved, but suddenly the payments are late and out of sync with the terms of the contract. They literally owe you a sh1t ton of money.

    Generally speaking, how long should you wait after accounts receivable notifies them of the infringement before you sick the lawyer on them?

    Keep in mind that people at your biz have the code base to something that's featured on tech blogs. The fact that they would risk something like that probably means that they're close to being suicidal business-wise, or worse they're fvcking insolvent or some sh1t like that.

    How long is too long to be polite after lapses in payments occur?

  • User profile image
    cbae

    Can't find a decent CEO and can't get your customers to pay you. Why do this to yourself, Beer? You should quit and get into another line of work. Maybe you can become a Hollywood screenwriter.

  • User profile image
    10000001

    Please stick to the question. How long after a payment lapse is too long to extract money through the legal system?

    If it hypothetically goes to bankruptcy, you would want first dibs on reimbursement as a creditor.

    The catch 22 here is that if you do that, you won't be able to make any more money from that company or their Big Tree synonymic investment firm because the executive leadership will resent the actions taken to extract money from said company.

  • User profile image
    cbae

    I think you answered your own question. Just bend over and take it like a man.

  • User profile image
    lensman

    Your real question is what does your terms and conditions say? You should enforce what they say to the letter. If a business cannot live up to the terms and conditions you both agreed upon at the start of the process they represent a risk to your continued existence. Unless you are independently wealthy continuing to do business with such a firm will cost you money without any hope of ever seeing it.  Stay professional and do not threaten to "expose them".  Doing so opens yourself to liabilities you probably do not wish.

    If you have no terms and conditions, you should not be in business.

     

     

     

  • User profile image
    10000001

    @lensman:


    Keep in mind this is all hypothetical and that any similarities to any real situation is purely coincidental.

    In this hypothetical situation there is a signed agreement that the Silicon Valley VC backed company has violated the payment schedule part of on is what an increasingly growing level.

    As stated, the reason for this dilemma is the publicly stated VC funding behind the company. Normally without that one would assume the company is insolvent and would start collections immediately.

    The problem here is that any type of collections action may block 6 figures or more of potential revenue. This from a hypothetical team that really doesn't have their act together. Silicon Valley VCs don't exactly invest in the most qualified people though you would never know that unless you dealt with them. A lot of them are young adults and kids and their ideas are just plain stupid and have no chance at creating real value(of course you can't tell them that). They book first class tickets and buy sports cars just because. But VCs love them.

    So these young people may be incompetent to a certain extent, but they may still be good for the money and then some. There is no legal way to get information on their financial situation as they are not a publicly traded company, and any invasive questioning will be seen badly.

    So hypothetically, you can not be that terse with them for those reasons.

    At what point do you say 6 figures of more income is not worth it on this account, lets grab what we can while we can?

  • User profile image
    blaster

    These issues are supposed to be explicitly spelled out in the contract.  It seems you refer to progressive payments, as a product is developed and meets certain milestones, payments are made.  Not meeting contractual requirements puts that party in breach of that contract.  

    In this case I wouldn't wait too long before sending a "letter of concern" about the delinquent payments.  Give them the option, pay up, or no deal, using more PC language of course.  Their response, or lack of, would indicate the next course of action.  Be firm, let them know the consequences of failing to honor the contract.  Namely, they won't be getting a complete product after spending someone else's cash on it.  And let the funding source know what is going on.  If they really believe in that investment, you can squeeze from both sides.

    But be prepared to drop them and move on.  I mean you're not being paid now, what makes you think they will make good in the future?  More than once I have seen that "too good to be true" client in the bankruptcy page of the local business section.

    And frankly, I don't care who they are.  We have an agreement, negotiated in good faith, honor that agreement, or the whole world will find out, eventually.

     

  • User profile image
    10000001

    These issues are supposed to be explicitly spelled out in the contract.  It seems you refer to progressive payments, as a product is developed and meets certain milestones, payments are made.

    Hypothetically, the contract does not tie payments to milestones of any kind, and hypothetically the payments are structured and dated in the contract and those dates have hypothetically been missed by +1 Month.

    In this case I wouldn't wait too long before sending a "letter of concern" about the delinquent payments.

    Hypothetically this has already been done, and hypothetically, this is being put off or a response that accounts payable is on top of this is returned.

    But be prepared to drop them and move on.

    Getting VC funding is extremely hard, and the next best thing is getting the money from the people they did fund. It's not easy to put a business in the path of the flow of money from a VC as you would build a hydro-electric dam. I'm not talking angels like techcoast angels or whatever. I mean real VCs from Sand Hill Road, ect...

    It's so hard as a matter of fact that it's worth crowd-sourcing an answer on.

  • User profile image
    spivonious

    @10000001: They "hypothetically" owe you money. I don't know of any specifics in the law, but I'd give them the benefit of the doubt and give them some time to get the payments to you. After 2-3 months late I'd stop work and demand payment. If you still don't get anything, then it's time to get the lawyers involved. It's not your problem that they can't get any VC.

  • User profile image
    10000001

    @spivonious:

    2-3 months is too much to keep doing payroll for a company that hypothetically stopped paying its bills.

    If you still don't get anything, then it's time to get the lawyers involved. It's not your problem that they can't get any VC.

    They're hypothetically on Series D VC money. There are only 2 hypothetical exits from a hypothetical series D situation, IPO and acquisition.

    So hypothetically, they have the money, somewhere, unless they really are going bankrupt. I think that the problem, barring a cataclysmic bankruptcy, would be that they simply don't have their sh1t together, or that they are budgeted and they are blowing the budget on god knows what preppy bullshit that turtleneck sweater Stanford people hypothetically buy.

    There may not be a magic bullet here, but I thought I would take a stab at it anyway.

  • User profile image
    cbae

    It's a good thing that it's all hypothetical.

  • User profile image
    PaoloM

    And for an hypothetical good laugh to the Nth disadventure of hypothetical Chris Rondot.

  • User profile image
    Dr Herbie

    @10000001: Of course you could try just phoning them and having a chat about the situation.  This should be your first recourse.  Only if an informal inquiry gets you nowhere should you start with formalities like letters and lawyers.

    Our customers are sometimes late with their payments.  A phone call and a polite enquiry are usually all that's needed to get the wheels moving again.

    Herbie

  • User profile image
    10000001

    @Dr Herbie:

    Of course you could try just phoning them and having a chat about the situation.  This should be your first recourse.

    This is America, people are bad here on purpose and have no shame. Even if they graduated from Harvard or Stanford. There are multi-millionaires here that won't tip a gym valet or owe 20 months of back pay to their pool man. Steve Jobs was a billionaire and wouldn't pay child support to his impoverished kid and ex for years. (god rest his soul)

    That's just how America is. A British person would feel some shame. An American person congratulates themselves on the breadth and scope of their own crapulence.

    Unfortunately graduates here from ivy league schools feel that they deserve some type of pass from society, and I think that these people we credited are the very same. 

    I think that if any of this hypothetical situation continues, an attorney will file a complaint with the state and the court will relieve us and that we will also tell the world exactly how they do business in the blogosphere.

  • User profile image
    Dr Herbie

    @10000001: This was pretty much the type of reply I was expecting from you.

    You are a joke, Chris. No-one here takes you seriously any more, I just wonder why you bother.

    Herbie

  • User profile image
    10000001

    You don't know what the purpose of this post is?

    -----INSERT SELF DEFENSE HERE----

    Please, continue with your script. 

  • User profile image
    ManipUni

    If you had stuck with OSS you wouldn't have this issue. 

  • User profile image
    10000001

    Manip, I have lost my free kinect from a conference on a plane, but I am such a sucessful doctor, I would like to beg and plead to Microsoft to send me another or i will simply never experience the prohibitively expensive $89 wonder that is Microsoft kinect. Can you tell me where to send the email? 

    No joking. The billing issue has nothing to do with operating systems. it has everything to do with the shitty attitude of Silicon Valley and the fact they think that business rules do not apply to them.

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