In October, the New York Times published an article detailing decades of sexual harassment and abuse suffered by actresses at the hands of film mogul Harvey Weinstein. Weinstein was fired by his company and the scandal continues to grow and have far reaching implications for the company and the entire film industry. As important as it is to bring these issues to light, like all scandals, there may be people who, through no fault of their own, are affected by it. For example, imagine you’re a catering company to whom the Weinstein company owes money.
Whether it makes national headlines or not, when a company is tied up in a scandal, or legal issue, they don’t always pay their bills on time. A scandal can not only take up financial resources, but also resources of time. As lawyers and forensic accountants batten down the hatches, people working in accounts payable may be working on generating extra reports, or even instructed not to pay invoices. So how can you make sure your company gets paid, even if your client is going through the ringer?
As always, following good business practices before accepting a client is critical to being paid in a timely manner. No one can foresee a Hollywood-size scandal, but if you’re getting appropriate contact information, and checking references, as well as invoicing and following up on invoices promptly, you are much less likely to wind up not being paid due to both extraordinary and run-of-the-mill problems. Of course, you also want to make sure that any one client’s failure to pay, or failure to pay in a timely manner, does not devastate your cash flow. Good bookkeeping and accounting practices of your own will help minimize the damage that any one client can do to your bottom line.
If one of your creditors seems to be on the brink of financial ruin or bankruptcy, it’s critical that you act quickly. Once a company is in bankruptcy the chances of collecting anything typically is remote. Although it can feel like you’re piling on or adding to your client’s misery, pursuing overdue debts from a company that seems to be going under is important for the health of your own business. In these cases, hiring a collection agency is most likely the best way to pursue the debt.
Depending on the nature of the scandal, you may feel uncomfortable speaking with employees of the embattled company. However, it may be important to do so. If a scandal comes up, wait a few days and then contact your client to make sure your invoices are in the system and scheduled to be paid on a timely basis. If your customer thinks this is unusual, simply say that management wants to be more proactive with receivables and not wait until they become past due and to learn about any potential payment issues.
Approach the call as if the scandal does not exist, but of course, be ready to change your tone and tactics if your contact brings up the situation. You can, and should, empathize with the people at the company who were not responsible for the scandal and yet are directly affected. Remember, they are probably worried about the company’s financial well being and their own jobs, and also suffering through a morale problem that could go on for months at the company. While empathy is important, you need to make it clear that your firm is not going to allow the scandal to impact the previously agreed upon business terms. It goes without saying that it is not productive to insult or accuse a client, or gossip about the situation.
A trained debt collector can avoid emotional confrontations and even protect your relationship with the client if desired. In the business world, today’s scandal can easily turn into tomorrow’s business success. It’s also true that negotiations with companies undergoing legal or financial hardship are rarely simple. A commercial collection agency can protect your interests and help you navigate the complicated legal situation.
The old expression “It’s just business,” has never really been true. Businesses are made up of people and relationships and all the good and bad that comes with that. If you’re having trouble with a business relationship due to unpaid bills, whether that’s because of a scandal, or just bookkeeping, we hope you’ll consider letting The Kaplan Group help you sort it out.