Help Please!! Contract payments not being paid

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andyandyandy
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Help Please!! Contract payments not being paid

Post by andyandyandy » Thu Jul 26, 2018 11:18 am

Bogleheads,

I work in IT as a contractor for a Govt Client. I have a Corp to Corp relation
with another Prime vendor and end client is Govt.

3-4 months back Prime Vendor stopped paying payments and on multiple requests they release little bit of money.
But its piling up and currently 45 days of payments is overdue and 45 days still to be billed or becoming overdue soon( 3 months wroth of billing with them close to 50K)
I have been very patient and met various Management People but all that I hear is assurance but no payments.

I have been working with them for 2 years and this happens now when company ownership changed.

I don't want to rush and loose my temper and trying to stay calm.Can anybody please input how best to deal with Prime Vendor?

Appreciate your help very much!
Thank you!

PS: All contractor with them are currently affected - not just me!

FeesR-BullNotBullish
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Re: Help Please!! Contract payments not being paid

Post by FeesR-BullNotBullish » Thu Jul 26, 2018 11:51 am

I've had that issue a couple times in my contracting business but to a lesser extent. When I get fed up, I let client know that I will stop sending deliverables pending payment. Client then finds a way to pay real fast.

Are you in a position to stop sending deliverables? If your client still doesn't pay, are there different clients you can start doing business with to generate a new source of cash flow? Personally, I'd focus on developing that new source of cash flow first and foremost and then fight to get what's owed to me.

FreemanB
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Re: Help Please!! Contract payments not being paid

Post by FreemanB » Thu Jul 26, 2018 11:54 am

So the prime contractor's company was bought/sold/changed somehow? I'm no expert, but my guess would be that's delayed the billing to the government, and the Prime is trying to hold off on payments until they start receiving the money from the government. I've seen that before, and of course, it hurts the smaller subs a lot more than it hurts the larger Prime. I would hope they could give you some more concrete assurances as to when the payments would be made, but the people you are talking to may not really have any idea either. Unless you have some kind of critical leverage(Critical Employee A has to stop work due to not being paid on X date), you may just have to wait it out. Yes, it sucks, but any other path is likely to be more damaging in the long run.

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dm200
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Re: Help Please!! Contract payments not being paid

Post by dm200 » Thu Jul 26, 2018 12:08 pm

FeesR-BullNotBullish wrote:
Thu Jul 26, 2018 11:51 am
I've had that issue a couple times in my contracting business but to a lesser extent. When I get fed up, I let client know that I will stop sending deliverables pending payment. Client then finds a way to pay real fast.

Are you in a position to stop sending deliverables? If your client still doesn't pay, are there different clients you can start doing business with to generate a new source of cash flow? Personally, I'd focus on developing that new source of cash flow first and foremost and then fight to get what's owed to me.
That might get someone's attention.

Are there any other contractors in a similar situation? if so, see if they are getting paid.

Theseus
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Re: Help Please!! Contract payments not being paid

Post by Theseus » Thu Jul 26, 2018 12:11 pm

Do you have a subcontract with them or just a consulting agreement? Check to see the payment terms. Usually it will say you get paid within x days after they get paid. That's how most small government contractors will do it. Also check to see if you incorporated language around late payment penalty and interest in your terms. I had that happen to me once and as soon as I sent an email that the per our contract the interest in the amount of $$$$ has accrued the payment was deposited within a day.

If they have been already paid, it is illegal for them to withhold your payments. They can get in serious trouble for that. I forget which FAR it is, but many government contracts will incorporate specific FAR that cites prompt payment to their subcontractors.

pp300
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Re: Help Please!! Contract payments not being paid

Post by pp300 » Thu Jul 26, 2018 1:38 pm

I've an S-Corp (IT consulting) and have been in such kind of situation before.
Payments will get piled up in no time, so the way I figured it out is by holding on to timesheets. See if you can stop sending timesheets to your prime vendor. You might leverage this to change your prime vendor too. Timesheets are what I or Prime vendor use to create invoices.

Topic Author
andyandyandy
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Re: Help Please!! Contract payments not being paid

Post by andyandyandy » Thu Jul 26, 2018 3:53 pm

FeesR-BullNotBullish wrote:
Thu Jul 26, 2018 11:51 am
I've had that issue a couple times in my contracting business but to a lesser extent. When I get fed up, I let client know that I will stop sending deliverables pending payment. Client then finds a way to pay real fast.

Are you in a position to stop sending deliverables? If your client still doesn't pay, are there different clients you can start doing business with to generate a new source of cash flow? Personally, I'd focus on developing that new source of cash flow first and foremost and then fight to get what's owed to me.

Thank you! Some input:

1) There are more team members and its a support role. All are affected though!
2) I am starting to find another positions!

Topic Author
andyandyandy
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Joined: Sat Jan 18, 2014 11:36 am

Re: Help Please!! Contract payments not being paid

Post by andyandyandy » Thu Jul 26, 2018 3:55 pm

FreemanB wrote:
Thu Jul 26, 2018 11:54 am
So the prime contractor's company was bought/sold/changed somehow? I'm no expert, but my guess would be that's delayed the billing to the government, and the Prime is trying to hold off on payments until they start receiving the money from the government. I've seen that before, and of course, it hurts the smaller subs a lot more than it hurts the larger Prime. I would hope they could give you some more concrete assurances as to when the payments would be made, but the people you are talking to may not really have any idea either. Unless you have some kind of critical leverage(Critical Employee A has to stop work due to not being paid on X date), you may just have to wait it out. Yes, it sucks, but any other path is likely to be more damaging in the long run.
Thanks!!We tried to get concrete assurance but attitude has been lousy :(

Topic Author
andyandyandy
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Re: Help Please!! Contract payments not being paid

Post by andyandyandy » Thu Jul 26, 2018 4:04 pm

Theseus wrote:
Thu Jul 26, 2018 12:11 pm
Do you have a subcontract with them or just a consulting agreement? Check to see the payment terms. Usually it will say you get paid within x days after they get paid. That's how most small government contractors will do it. Also check to see if you incorporated language around late payment penalty and interest in your terms. I had that happen to me once and as soon as I sent an email that the per our contract the interest in the amount of $$$$ has accrued the payment was deposited within a day.

If they have been already paid, it is illegal for them to withhold your payments. They can get in serious trouble for that. I forget which FAR it is, but many government contracts will incorporate specific FAR that cites prompt payment to their subcontractors.
Thanks!Payment terms are 30 days!

IngognitoUSA
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Re: Help Please!! Contract payments not being paid

Post by IngognitoUSA » Thu Jul 26, 2018 4:51 pm

Depends how big the prime vendor is, if it is a smallish shop they might be collecting payment from Client and stiffing you before they declare bankruptcy. Or, some of them sell their invoices and bail out. If the prime vendor is large, then ask the Client what to do, this can be very disruptive to the Client if many consultants are in similar boat.

Topic Author
andyandyandy
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Re: Help Please!! Contract payments not being paid

Post by andyandyandy » Thu Jul 26, 2018 5:23 pm

IngognitoUSA wrote:
Thu Jul 26, 2018 4:51 pm
Depends how big the prime vendor is, if it is a smallish shop they might be collecting payment from Client and stiffing you before they declare bankruptcy. Or, some of them sell their invoices and bail out. If the prime vendor is large, then ask the Client what to do, this can be very disruptive to the Client if many consultants are in similar boat.
Thanks! Company size is about 200 (Employees + Contractor).
I don't know how many contractors total. I would atleast 50+

Spirit Rider
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Re: Help Please!! Contract payments not being paid

Post by Spirit Rider » Thu Jul 26, 2018 5:51 pm

This is not unusual and in my experience Fortune 500 companies are the worst.

I had one client who paid the highest rates, but would use their ICs as a line of credit. If cash flow was low they might stop paying halfway through the quarter with a big check on the first of the quarter.

nordsteve
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Re: Help Please!! Contract payments not being paid

Post by nordsteve » Sun Jul 29, 2018 4:30 pm

Might want to go read about the Axium Ensembles Chimes bankruptcy. Have several consultant friends who lost $$$ in that debacle.

proud2serve
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Re: Help Please!! Contract payments not being paid

Post by proud2serve » Sun Jul 29, 2018 5:13 pm

Contact the Government Contracting Officer and let that individual know you are a sub on the Government contract and the Prime is not paying their subs.

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LadyGeek
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Re: Help Please!! Contract payments not being paid

Post by LadyGeek » Sun Jul 29, 2018 7:26 pm

This thread is now in the Personal Finance (Not Investing) forum (employment contract).

andyandyandy - I removed a duplicate post.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

freebeer
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Re: Help Please!! Contract payments not being paid

Post by freebeer » Sun Jul 29, 2018 7:38 pm

proud2serve wrote:
Sun Jul 29, 2018 5:13 pm
Contact the Government Contracting Officer and let that individual know you are a sub on the Government contract and the Prime is not paying their subs.
I would urge against this without at least warning the prime who after all is who hired you, not the government, who hired them. My perspective is that you are in a business creditor position and while it sucks it is part of what going IC route implies, and it's a no-no to bug that business customers unless truly no alternative (the butcher doesn't show up and bug diners at a restaurant even if they havent been paid). If you have reason to believe there is real insolvency risk vs just ownership change process snafus then I would go to a senior person and says you need a hard date to get paid off within next 30 days and not even hint about going to govt unless you don't get that date or they miss it

proud2serve
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Re: Help Please!! Contract payments not being paid

Post by proud2serve » Sun Jul 29, 2018 8:15 pm

I thought the OP already tried this with meeting various management personnel but got nowhere.

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