How do I handle a contract consultant who submitted bills VERY late?

April 8, 2015 12:47 PM

A contract consultant who has been working for my business just submitted invoices and expenses that are very, very overdue. He submitted hours incurred 4-6 months ago and expenses that stretch back to 2013. With this latest bill, my business partner expressed his frustration and asked me what we should do. Has anyone else had to deal with such a situation?

My partner is suspicious about the validity of the hours and expenses, but I think they are probably accurate and might even underrepresent time spent working for us. I think we need to pay the bills and be done.

Note that our relationship with this contractor came to a natural end in December and we will likely not be working with him again, partly because his business cannot accommodate us any more. But, we're in a small industry, and we'll undoubtedly cross paths again. Also note that we have specifically addressed the issue of timely billing with this contractor multiple times in the past. I think it has more to do with poor bookkeeping than malice.

posted by scottso17 to Work & Money (18 answers total)

I think they are probably accurate and might even underrepresent time spent working for us

Then pay the guy.

Separate whether the contractor was acting professionally from whether the contractor deserves to be paid. A contractor can simultaneously be slow on invoicing and still be owed money. There is no state where the statue of limitations on debt collection expires in less than 3 years, so you don't really have any excuse. You can reasonably never hire the guy again (which I would suggest since his poor bookkeeping messes with your company's cash flow), but he's still owed his dues.

Your company can dispute the charges or pay the bills. If you dispute the charges, prepare to go to court. If you aren't willing to go to court, pay the bills. There's really no other option here.
posted by saeculorum at 1:01 PM on April 8, 2015 [14 favorites]

I have been in this situation on both sides. I think you have answered your question at least with the point about crossing paths again and being in the same industry, if not by just asking about it here. As saeculorum pointed out, you still owe him the money, and unless your partner wants to dive into the details, you need to pay this person. You probably will run into him again. It is to your benefit to make this a win-win situation, and I don't really see where you lose anything as things stand.
posted by circular at 1:05 PM on April 8, 2015 [1 favorite]

This is annoying, but you gotta pay up. You owe him the money for the work he did ( you probably technically owe him that money whether you're invoiced or not, depending on what the contract said.) Please do check your own records to see if the invoices are accurate, maybe spot-check and then fine-tooth it if something seems off (but you better have backup to prove it if you're going to be paying less than you were invoiced.)

I'm sure you're not the only one he's been slow to invoice, so his reputation will reflect that. Don't sour your own business' reputation by screwing him over on payment, though.
posted by kapers at 1:08 PM on April 8, 2015

I agree that you should pay him under the circumstances that you've described, but before you do so I think you should demand a full audit of all of the jobs he's completed for you, so that he guarantees in writing that this is the last bill you will receive from him, through the completion of his contract with you in December. You don't want to get hit with this again a year from now.
posted by vignettist at 1:09 PM on April 8, 2015 [3 favorites]

Definitely pay. Sure, he's been irresponsible about invoicing, but it's not as if the bill should have been a surprise to you. You should have already budgeted at least an estimated amount for this payment when you were incurring the expenses.
posted by ktkt at 1:11 PM on April 8, 2015

He may have been slow in invoicing, but your company also has its own bookkeeping flaws. Why didn't you set aside the money (at least estimated) to pay his fees?

If paying all the invoices at once would be difficult for your cash flow, I think it's reasonable in light of his invoice dump to suggest paying off this debt a little at a time over a period of months.
posted by Leontine at 1:13 PM on April 8, 2015

Response by poster: From my perspective, I sent the invoice to our bookkeeper and asked that the bill be paid. My partner is annoyed and frustrated and held the payment so he could talk with me. I think the clear consensus agrees with mine -- just pay and figure out how to handle my partner's emotions/opinions about this.
posted by scottso17 at 1:18 PM on April 8, 2015

Unless you really do suspect he's lying about some of these hours/expenses (which it sounds like is not the case), you should definitely pay. And I would also suggest revamping your internal procedures so that when you contract out work, you're setting aside money then for the estimated bills so that a) you can follow up better from your end and b) you don't get caught in another situation where a bill comes as a total surprise.

I do agree with the above poster that mentioned you should do your best to get a signed statement from him that this is a final bill for services rendered and expenses. And then never hire him again -- it sounds like even if his work quality is good, he is a big pain to work with and not very professional.
posted by rainbowbrite at 1:19 PM on April 8, 2015

Response by poster: @ktkt, @leontine and @rainbowbrite: We have no cash flow issue. We're well budgeted for the expense.

I do like @vignettist's and @rainbowbrite's suggestion to get a statement that this constitutes a final bill. Thank you for that.
posted by scottso17 at 1:22 PM on April 8, 2015

I can understand your partner's annoyance but unfortunately it's not going to shake out any differently. I'd let the partner vent about this, then confirm a) you're never hiring this contractor again b) you'll ask for a confirmation of final invoice and c) invoices will be checked for accuracy against your records. And then together you and your partner can come up with a way to ensure this doesn't happen again, (e.g., insisting on adding riders to all future contracts that specify invoices must be rendered within x days of service so you'll have some legal protection if the agreement is breached.)
posted by kapers at 1:31 PM on April 8, 2015 [1 favorite]

Pay him, but pay with something like a money order: don't let his slowness to bill you be compounded by an equal slowness in cashing your payments.
posted by easily confused at 1:51 PM on April 8, 2015 [3 favorites]

I agree that there's not much you can do this time, but you could institute a policy that requires people to submit expenses or invoices within 60 days or 90 days or whatever is appropriate. I know my former employer had this policy for employees, anyway.
posted by cabingirl at 1:54 PM on April 8, 2015

Did you ever ask him for an invoice? Yes he should have invoiced you sooner but you knew an invoice should be coming, when it didn't, you should have asked.

IMO the expenses from over a year ago is a little off but payment for a contract that ended 3 months ago really doesn't seem like much of an issue.
posted by missmagenta at 2:36 PM on April 8, 2015

Tell your partner that, through being a flake, this contractor basically gave you an interest-free loan of that amount of money, for over a year. Annoying, but you've been collecting interest on his money all that time. Maybe that will assuage the annoyance.
posted by LobsterMitten at 2:40 PM on April 8, 2015 [7 favorites]

Yes, pay it, mark 'final payment' on the check and buy a bunch of WWJD stuff to hang around your partner's office, just to mess with him.
posted by myselfasme at 4:02 PM on April 8, 2015

issue of timely billing with this contractor multiple times in the past. I think it has more to do with poor bookkeeping than malice.

i think I'd be estimating the amount I owed him in my own accounting if that was the case, and then correcting when I got the actual invoice. That way you'd see a really old payable and call him up sooner, no? In any case, if it's not that crazy from what you expected, you still owe him the money. What else are you going to do, say no, too slow, you worked for free?
posted by ctmf at 8:48 PM on April 8, 2015

You could ask for a more detailed accounting of time spent, but that might backfire if he just approximated a low end estimate for this bill. If you get him going through logs, he might follow up with a second invoice for the "second half" of the hours.
posted by salvia at 9:01 PM on April 8, 2015

I agree that if you owe him the money, you should pay him.

But he's billing you for stuff from 2013? I don't know your business and I'm definitely not any kind of authority on how to run a business, but - will you suffer any kind of tax consequences for this? For that matter, will this consultant person face any tax consequences?

Maybe it's nothing, maybe it's trivial. I just know I hate dealing with taxes, and I *really* hate dealing with "amended" tax paperwork.
posted by doctor tough love at 9:48 PM on April 8, 2015