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Moral Question

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Aaron CadieuxMoral Question
by on Mar 23, 2012 at 2:04:06 pm

Hey guys,

I have a client (a husband and wife in business together) that I do regular work for and have regular contact with. This winter, the husband became ill and spent a month in the hospital. The client had outstanding invoices with me, but since we have worked closely together for so long and we're friends, I didn't ask about any outstanding invoices while he was in the hospital. I also know that they are in a tight situation financially. But, Now he's home and they've been in contact with me about various business related things. So, I figured now that they're doing business again, I could ask about an invoice that's been owed since before he went into the hospital. I felt guilty for asking, but I figured it was OK since they're talking business again. How would you guys have handled this?


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Nick GriffinRe: Moral Question
by on Mar 23, 2012 at 2:16:51 pm

Be polite, apologize for even having to bring it up, but ask to be paid. If they're in a financially tight position and want the upcoming work to help pay for the past bills tread very carefully and ask for very specific terms and timelines in writing.

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Mark SuszkoRe: Moral Question
by on Mar 23, 2012 at 3:18:54 pm

"Fred, you know, while you were in the hospital, I thought I would hold off on billing for the work I already did, out of respect for your situtation. I really hate to bring this up, and I know you're dealing with a number of issues right now, but your account with me has some outstanding invoices.

Like I said, I wanted to wait until you were on the mend to trouble you about this, but I'd like to clear the backlog in your accounts before we press on with new business. Can we make some kind of arrangements to clear this old stuff out, so we can press on to do some new things together? I'm really flexible about the terms, just so we reach an understanding"

Aaron, I don't think this is a moral dilemma so much as a social one of politeness and of business ethics. You are expected in most cases to ask for payment for work performed, and he is expected to pay. Now, there may be extenuating circumstances and hardships he's facing, and you could, if you wish, choose to modify his debt or waive it, depending on your conscience. That's a business decision on your part.

If you're pretty sure he can't afford to settle the old accounts in one go, and you can't afford to just declare the loss, I would say, the gentlemanly thing might be to offer some easy, no-interest terms on a calendar of make-up payments, some schedule that he CAN meet.

Any time you defer payment until completion, you are extending credit. How much and for how long is up to you and the usury laws. If he's in too bad of shape to pay up his backlog, it seems a poor investment to extend further credit for new projects. If you're working in such a way that he's always paying you Tuesday for a hamburger today, I think that's not a very safe way to operate, even if he never misses a payment.

If you know this guy and he's a long-time friend, you may feel it worth the risk, and if he's truly a good guy, giving him the benefit of the doubt now, will often pay back multifold later in life, when he's rich, because he knew you "back when" as loyal and fair.

...Or he may deny he ever knew you. That happens too.

We really don't know your situation with this guy as well as you do. Decide how much you can afford to gamble and lose on this guy, if it doesn't ever work out. Set that number down in writing in a note to yourself on the calendar. If he hasn't made good on at least *some* of the debt by then, well, business is business. You are not a bank.

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Steve MartinRe: Moral Question
by on Mar 23, 2012 at 3:42:47 pm

nicely put Mark!

Production is fun - but lets not forget: Nobody ever died on the video table!

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Bob ColeRe: Moral Question
by on Mar 24, 2012 at 12:59:16 am

Not sure it is an issue of morality so much as compassion, friendship, and the viability of both your and your friends' businesses.

If I were you, I'd just arrange a sit-down, and ask the couple about business going forward. It doesn't have to be confrontational - you need information, if you are going to try to reconstruct your business relationship with them. Absent that frank conversation, doing business with this couple could put YOU - or your business -- in the hospital, literally or figuratively.

Forgive the whole debt if you feel it is appropriate, but BE CLEAR with one another about the situation, from both your and their point of view.

Some individual words and phrases jumped out at me.

"invoices" (plural) -- how many? How much as a percent of your annual income? Clearly if there were outstanding invoices, there were issues that predated the hospitalization.

"a month in the hospital" -- that indicates a pretty serious situation. Very unusual these days. Is he at risk of re-hospitalization? Is it a broken leg or a broken something-chronic?

Good luck. You are a pretty nice person even to frame it this way.

Bob C

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Al BergsteinRe: Moral Question
by on Mar 24, 2012 at 5:25:51 pm

You might want to start by simply re-billing them and seeing what happens. A gentle reminder billing. Maybe enclose a note explaining that they may have forgotten and that you didn't want to bother them during the hospitalization.


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