Many of the posts in my blog are written from clients’ / buyers’ standpoint, this one is different – I am switching sides to take a look at one of the most painful issues of working with small business clients (and sometimes large clients as well) – not being paid for your services. A few weeks ago I talked with an old friend of mine who is an owner of small software development firm based in Russia. He told me that his business would’ve been extremely profitable and vastly successful if he was always paid for his services. I was shocked to hear that typically he gets paid for not more than 70% of the services he delivers. Alex’s company sells to a variety of clients in Western Europe, United States, and locally in Russia. He told me that his local clients are the worst with government clients refusing to pay being a most common scenario.
Well, there is nothing I can offer in terms of advice in dealing with Russian government clients. But they are not the only ones, many “legitimate” businesses in Europe and the States follow the suit and are late or delinquent with payments to their vendors. One of the cases described by Alex involved a fairly large South Carolina based company, that used all kind of excuses to explain increase in past due balances, and then when unpaid amount was about to kill the vendor, the company switched the tune – accusing the vendor in all kind of issues ranging from late deliveries to stealing IP. This situation, a reputable US company playing dirty tricks, was somewhat new for Alex. It caught him off-guard and almost put him out of business.