A: The only way to assure that you will be able to pursue the end user in reference to unpaid past due debt is to have both the middle man and the end user sign any contract, purchase order or invoice at the time that the agreement is reached to provide the services. If both parties names are on that document, then you can pursue either one or both at the time the obligation is not paid. 

Without both signatures on any agreement, you are left with trying to pursue various other remedies that may be legally available by claiming that the middle man is acting only as an agent for the end user, or that the middle man, if the end user is not disclosed, is an agent for an undisclosed principal. One other possibility is to pursue the end user under an unjust enrichment theory. If the end user has not paid the middle man, then they have received a benefit without payment and were unjustly enriched.

Although you may be able to prevail on these potential theories, obviously, you are not in as strong a position as you would be if both parties had entered into and signed the original agreement.

CHEERS: A few years ago, at the beginning of the worst recession in U.S. history, a  client contacted PICB for assistance. The printer explained that his problem was not a true collection case, but more of a mediation. The printer needed help negotiating an agreement with a customer who had fallen on tough times. The customer had printed with his company for many years so he was determined to work out the balance owed. They both knew the past due debt had become a HUGE impediment and a solution was necessary if their relationship were to continue.

The printer was faced with the facts. If the customer's company closed there would be insufficient assets to satisfy the debt. If an acceptable solution could not be achieved, the customer would more than likely go out of business. The printer's customer was a true victim of the recession. Debt was substantially disproportionate to slumping sales, and cash flow trickled in slowly, eroding the ability to get a loan in a market where the banks were rarely lending. After suffering personal asset and financial losses, whatever resources were left had been used to keep the business afloat.

Generally, similar circumstances would lead you to believe this tale was a 'nightmare', or a modern day tragedy rather than a 'cheer'. Instead, both our client and his customer had a mutual goal.  With a need to reach an amicable solution, a good bargain was struck.

While this would appear to be the end of the story. . . IT ISN'T.

Last September, the customer called the printer from a hospital gurney needing a small favor. He was midway thru the payment agreement and now needed a slight extension for the payment due later that month. He was actually calling prior to his emergency multiple by-pass surgery, because he was worried that his payment would be late!

I confess, after 35 years in this business, this call surprised and shocked me. The customer is really one of those very rare and unique individuals that you cannot help but respect. He was told not to worry and to 'get well'.  The customer has since been allowed back to work and his . payments are back on track, as well.  No one doubts, he will succeed!

PS: This story proves, nice guys don't finish last, they just finish what they start!

JEERS: Back in the late 70's, when I was just beginning my career, the company I worked for represented a trade association for the sporting goods industry. The following is the ONE case that I will never forget. The details are forever etched in my memory. It was an epiphany that we all come to sooner or later: some people just CANNOT be trusted.

The case involved a small Ohio sporting goods store that had previously been in collections. In prior cases the principal immediately resolved the debt with approved payment plans. His word was always good, and his payment plans were always honored. His reputation in our office had been good. The sporting goods store however was floundering. Like most businesses of the times (this was before the big box era) the store had its' financial ups & downs. The store had grown too rapidly and it's rapid growth impacted the cash flow negatively. At the time, we were emerging from a deep recession. Like today, banks were not offering very many loans to small businesses. The customer continued to struggle.

One day we had 4 clients place the store for collection with each amount being substantially large. Demand was made by phone, with faxes and emails yet to be invented. Snail mail was the alternative. Shortly after the call was made, the owners sister in law called to request more time for payment explaining that her brother in law and his entire family had been in a tragic accident.  She stated that the entire family was currently hospitalized and their son had died in the accident. Her own sister was in a coma.

Naturally, an agreement was made to give the the owner time to grieve and recover. 30 days later, the sister in law claimed he still hadn't been allowed to return to work. While he had just recently been released from the hospital, he had remained at the hospital to be with his comatose wife. The clients all agreed to wait another 30 days and when contacted again, the story remained the same. 

When asked who was operating the business, as day to day operations continued, the sister in law claimed there was a family attorney but she didn't know his name and would call me back. She then started ducking calls . . . and suspicions rose! I contacted the State of Ohio to determine if their corporate filings listed an attorney as their statutory agent, and, as luck would have it, there was. I contacted the lawyer and explained the situation. While I respected the fact that the owner was going through a terrible tragedy, the company had to resolve its debts before creditors shut the business down. The attorney burst out laughing, asking where I had gotten such an outlandish notion regarding the horrible events that had I had been told happened. This was my moment of realization, and while I felt really stupid, the tables were turned. The debtor was given 72 hours to wire the entire balance owed or the creditors were forming a committee to shut him down. The cases were all paid, and my clients all had a good laugh despite payment taking longer than normal.

PS: Gamers finish last, this company went out of business shortly thereafter and the sister in law was indicted for theft and embezzlement.

NIGHTMARES: A Member sought help after his customer disappeared. The customer boasted he was a  founding partner in a well known company and that he had made millions upon its' sale. He looked the part wearing expensive suits, and driving nice cars. The customer claimed his new company was well funded. He explained to our client that he did not want a credit line, but a good price, and would pay cash if his price was met! The printer fell for the con and lost more than $500k by shipping the job without getting payment or checking the facts. By the time PICB was consulted it was too late. The address provided was a UPS store, the car was gone, the house was sold in foreclosure, and the client was only the LATEST victim. 

PS: The member never recovered from the loss and the recession and is now out of business.    

ROBBIE BURCH

DIRECTOR OF SALES AND SERVICE

[email protected]