Struggling with a Client's Non-Payment for 3 Months: How Should We Handle This?

Dear Seniors,

We are the new start-up company. One of our client companies has been continuously giving reasons for non-payment for the last 3 months. We have also waited for 3 months, but per the agreement, the client was entitled to the payment within 1 month itself. Can you please guide me on what we can do in this case?

Regards,
Manasi

Hi Manasi,

I am sorry for your conditions. Right now, you have two options:

First, if you have a legal contract with the signatures of both parties, you can take legal action in this case. Seek advice from a lawyer.

Secondly, if you do not want to pursue legal procedures, you can blacklist this client so that no other consulting company will work with them.

All the best, and I hope this advice will help you.

Regards,
Chitra

Thank you for the prompt reply. I don't want to pursue legal action right now because I have a good relationship with that client. So, I will opt for the second option. Thank you for your help. Can anybody suggest anything else? I am really in trouble right now. :(

Regards,
Manasi

Dear Manasi,

Strong follow-up is the only solution. Keep calling, drop emails, try to meet the executive in person, and establish contacts with the key decision-makers of the client company. Do this for a month, and you will get your money. Remember to be professional and don't be abusive or aggressive, but be assertive.

Regards,
Octavious

Hi Manasi,

Thank you for your message. I have been consistently following up, but every time he says he will release it by the end of January for the past two months. However, today marks the end of January, and there has been no positive response from their end. Additionally, the client company is not in the same city, making it challenging for us to have a face-to-face meeting.

I want to assure you that I will never resort to being abusive, but I am feeling tense about the situation.

Best regards

Dear Manasi,

This is a problem faced by many consultancies that deal with clients who are stationed elsewhere. I suggest you try to find out the key decision-makers of the company via some social networking site and inform them about the issue. I believe your client will release the payment upon the completion of three months of your candidate in the client's office.

Regards,
Octavious

Dear Manasi,

Please also share the company name on your social network so that other consultancies will not work with that company. By doing this, you can also profit as they will share the name of such companies, and you will be aware of them. These types of companies are always looking for new startup consultancies.

I will also post a list of blacklisted company names soon.

Regards,
Kumar

Hi Friends,

I am also an HR consultant with my own consultancy, and I have had a really bad experience. I can openly name my clients who are real cheap players, calling themselves professionals. They all think we are like brokers. The day should come when all companies understand our importance and realize that we are a helping hand for them in the business, and we are also professionals. Please find below two companies who cheated us without paying but enjoyed free services from us.

TULIP IT SERVICES - We appointed one candidate for a sales position for 54,000/- in June 2009. Till date, they have not paid our fee, and they call themselves the best company in IT services. Their office is on G N Chetty Road, opposite to Accord. The head HR lady is on leave half the time, and the assistant Raghu has no voice there. When I was 8 months pregnant, I went to their office for follow-up, but it was of no use. My daughter is now 2 years old. So, beware of Tulip...

D2E SOLUTIONS (DOWN TO EARTH): Their office is located in Guindy - Alexander Square. Very cheap players calling themselves an MNC. They introduced themselves as a Belgium-based MNC company dealing with iPhone projects. We lined up lots of candidates. We placed one girl for HR and one guy for iPhone development. The total amount was 15,000 + 38,000. Same story... gave us big promises, saying the fund has to be transferred from Belgium. If we leave all these cheap players in the market, they will spoil India's name and economy. The bylaws should be set for all these cheap players. Now, I heard that they have taken an Airtel dealership. I am wondering how a leading telecom company can give a franchise to these types of cheap players. Ultimately, everyone needs money, and they don't bother about the code of ethics.

Anyways, all must be wondering why I am emotional. That is not the case. I want to show this world how cheap people are, and someone should take the initiative to form a council or forum for HR business. In India, even beggars have associations, but unfortunately, we do not have any association where we can register ourselves, get a membership card, and set rules for MNCs. Those who are in vendor requirements should follow the protocol and sign the agreements.

Waiting for a day when we would be recognized.

Wishing you all good luck.

Veena

Didn't you take legal action to get your money back from clients who did not make the payment?

Regards,
Ashok

Hi Mansi,

I am also a consultant from Mumbai and have faced such situations many times. You have to learn from experience and make a resolution - never to work with such companies. This is only one part. You will encounter many clients in the future who will make you work on assignments but won't recruit from your consultancy - which is a waste of our hard-earned time and money.

Sometimes we are helpless as this industry does not have a support system that can assist us. There is a recruiters' association, but I don't think they provide help to small consultants.

Anyway, best of luck.

Regards,
Suresh
Mumbai

Dear Veena and Suresh,

Thank you for sharing your experience. It will help me along the way. I hope I will receive my payment soon. Thanks to all who replied. Let's keep in touch. I have a long way to go. Your experiences and support will surely help me a lot in my future business endeavors.

Thanks again.

Regards,
Manasi

Dear Manasi,

I read your problem, and I know that handling this situation is very difficult for any organization, as we have already experienced this before. What we did was we asked them to provide a post-dated check for a new date that suited them. Before depositing the check in the bank on the maturity date, we informed them that we were doing so. In order to preserve their goodwill in the market, they released our payment. So, my suggestion is to do the same with your client. Perhaps this approach will resolve your issue.

Best Regards

Dear Friends,

A very interesting discussion is taking place here. Have any of us wondered why a Chartered Accountant (CA), a doctor, or a lawyer never have complaints of such nature i.e. CLIENTS NOT PAYING?

The simple reason is that they are professionals and have a strong body backing them up. Unfortunately, we have a lot of shady people in our business who proclaim themselves as experts in the field of Manpower placement, whereas they are just individuals who gather resumes, sort them, send them to clients, and expect 1 to 1.5 months of the candidate's salary. (Is this professional???)

Forget about the consultant not getting paid; what happens if your Candidate does not receive their salary after working for 1 month? What happens to the poor fellow who trusted you and left a job where he was at least secure?

My humble request is that if you cannot secure your own payment from the company, then please stop playing around with candidates' futures and refrain from entering the business of placement unless you have enough might to legally fight it out with the company (defaulters).

And in the case where your candidates do not receive their salary from their employer, have a fund to pay them and fight with the company on their behalf.

Regards,

Kumar

It often happens. The best method is to build a rapport with the higher-ups and persuade them to make the payment, citing reasons such as experiencing a cash crunch or having a long-term relationship. This is because, even in very big organizations, payments are sometimes made even after one year.

Regards,
T

Dear Friends,

Interesting discussion here...

The question (as I understand) is what you should do if someone refuses to pay for the services as agreed.

As suggested, one can:

a) do regular follow-ups

b) take a legal course

c) spread negative word, etc.

But more important is to move on and not get stuck there.

We do not have a strong professional association (and cannot have one for obvious reasons), and many times we are at the mercy of either the client or the candidate. Every time something undesired happens, we learn and are extra careful with those clients and candidates who have put us in trouble in the past.

The placement business is similar to a used car sales job. You get a commission on every unit sold. You are just transferring the product from one user to another user. If the deal is made but they refuse to give you the commission, then there is very little you can do against them. It is better to go out and find more deals.

Keep following up or take legal action (whatever suits you) and move on.

Regards,

Saurabh

Hi,

Please refrain from giving any amount to any manager. Once you do it, then it's a gone case. I never appreciate giving or taking a bribe from anyone for any cause. "Once you pay it, then it becomes a practice. Again, once you take it from any vendor, then you lose control or power over that vendor. This is my policy."

I don't know how many will agree to this.

You have a fan in me, Binu John :-)

You have said it rightly.

Only the FIRST step is in one's control—whether it's towards something for a noble cause or taking a bribe or plain murder. Once someone takes the first step, most likely it will never be noticed—whether it's in the positive or negative direction. And that gives the person more urge to move further in the same direction, especially if it's negative—until it's too late to return or even if he/she wants to return, the cost to be paid will be quite high—which in all likelihood may have been anticipated by him/her. And in the process, he/she will find/devise ways to make things happen in that direction on a bigger scale. And in the process, he/she becomes more brazen so much that they can get away with it—without being caught.

Take the case of any person in the news today [for the wrong reasons]—A. Raja, Ramalinga Raju, Kalmadi, etc., etc....the list could go on. At least Ramalinga Raju admitted in Jan 2009 when he broke the story of his fraud that it all started with a few lakhs of mismatch in annual audits when they cooked the numbers. And it's now known to all how he did it—quite ingenious one should admit—except that such a brain was used for such devious acts.

Rgds,

TS

I never support nor practice bribery. It's just what I am giving, giving my advice to offer and recover the money. Most HR professionals hint to the vendor indirectly to pay the HR a certain commission. The vendor is getting a commission for the closure. They know most vendors will never go for legal actions. They just simply harass the vendor by stopping the payment. Most recruiters do not know that 80 to 90% of managers take money in some way. Some say it directly, and some just give hints. If the company does not have finance, they can issue post-dated cheques, but they do not do so as it's part of vendor management. If your money is stuck, would you not like to recover it as early as possible? If by this approach, she recovers her money, it's totally a business.

Hello job_connect_consultancy,
What you are suggesting to Manasi is TO BRIBE the HR person.
Rgds,
TS

Manasi,

As a startup company, you would have to bear with situations like this, especially at the beginning. You should not see that revenue as a life and death need. Keep following up with the client once in a while and continue to support the client. You would have to wait until you get a clue as to why he is deferring the payment. There should be a reason why you find the client a very good one, and your organization has a good relationship with the client. You should not get desperate for the payment. It often happens that delays are due to some constraints on the client's side. If you could help resolve them, it might open doors for more business. Be optimistic and continue your support. Understand the business dynamics better. Good luck.

Dear Manasi,

Although you have the legal contract paper, please ask for a mail reply from the concerned person. With these two things, you can email/contact the HR head and explain the issue. I believe your client will release the payment upon the completion of three months of your candidate in the client's office.

For more details, you can contact me at [Login to view].

Regards,
Manaswita Rudra
Manager HR

Dear Manasi,

Here are some steps that could help you avoid similar problems:

1. Do some background validation of each potential client through your personal network, contacts, etc.
2. Speak to other vendors or ex-employees of the organization as a whole. There is a lot of information out there that could help you.
3. Being assertive and not bending over backwards for every request from the client manager would help you in the long run.
4. Be clear on what services your firm can comfortably offer (based on an objective assessment of your own strengths). Do not take on additional work if you do not have the resources to deliver.
5. Make it a point to visit your client at least 2 times a year, even the outstation ones. This helps build trust and credibility and also puts a face to the voice on the phone. :-)
6. Lastly, see if you can partner with others to represent your firm and follow up if required.

I hope the above helps.

Thx
Shashidhar

Dear Manasi,

This delay in payment can be for two reasons. Firstly, if the company thinks that the person supplied by your firm may not stay for 3-6 months and you being new in business may not replace them free of cost (according to the clauses in the agreement). They will have faith in you after a few dealings. But this can be explained to them. Professional behavior is expected from both ends.

Secondly, if they are facing some payment crisis, you can accept payment in parts. As suggested by our Super Moderator, one can be assertive but should never be aggressive to the extent of using abusive language in any communication with a client.

Regards,
Prithvi Pal Singh

Hi,

Legal option is the last one. Take the person through whom you are dealing into confidence. Speak with him in detail. Tell him that since you are new, you would require funds, and this is very important for day-to-day operations.

Also, inform him that paying the bills in stipulated time helps in good corporate governance and relations.

Murali Prasad

One of the most commonly faced problems companies encounter is using a service and not paying for it. This situation is quite shameful and is prevalent among both big and small companies.

I do agree that, regardless of how negative the response may be, maintaining a professional image will always prove beneficial in the long run.

I was wondering if there is a common platform where one can blacklist companies. Is there a website that maintains a list of blacklisted companies for various reasons? If any of you are aware of a website or forum where we could blacklist defaulting companies, please let me know.

Dear Manasi,

As a startup, it is commendable that you are learning this early. However, unless you are prepared for advancement and partial release, things are likely to continue in this manner. Since your client is out of station, please arrange to meet with them by Monday when they will be available. Avoid weekends. Politely emphasize to them that non-payment is a serious matter and may result in legal action. Even if the situation persists, you will have no choice but to issue a notice to the client. Remember, you can always reconcile before pursuing legal action.

Regards,
Pandu Ranga

I do not know whom you are contacting. Get in touch with the top man (owner) and express your concern. Try this; it should work.

Hi Manasi,

I had faced something similar with an outstationed client. As Octavious has rightly mentioned, you've got to get in touch with the decision-makers of the company and explain the situation to them. I got my fee after I spoke to the highest authority in the company. Though it would be a little difficult, keep trying. While trying to get in touch with the higher authority, don't stop sending follow-up emails to the person with whom you are in touch. I know it's really frustrating... but don't stop trying.

Regards,
Amisha
Resource Solutions

Hi Manasi,

Treat this as a learning tool to deal with diverse situations that come across, whether it is non-payment of dues or anything related. I would also suggest you to directly approach the top managing authority. Talk to them in a very professional manner. Tell them that this will affect the future relations of the company adversely if no action is taken immediately. This will create an impact, I think. Be very genuine in your words. Finally, I always say, "Hope for the best and prepare for the worst," so that you are always well-equipped.

Regards,
Praveen Dixit
SM

I suggest having the signed agreements with the clients before picking up assignments. Sometimes, in a hurry and the need for business, this step is overlooked.

Always obtain the vacancy details from the official email address of the HR or concerned person who has assigned you the task.

Ensure you acknowledge the invoices sent and make continuous follow-ups, preferably in writing.

In this case, it is advised to only make follow-ups (FUP's).

Sometimes, you may need to share the list of such organizations on networking sites, which, in turn, prompts the organization to make payments themselves.

Regards,
Murali Prasad ES