Big client blackmails firm to get discount

TF writes: A client of my engineering company is refusing to pay in full. We have order numbers to cover the work and the support of its local depot. But the chairman refuses to pay unless we deduct 10%. To secure the most recent payment, a £78,000 bill was cut to £70,200. If we litigate we face costs, delays and counter claims. We are still owed £70,000. Should I take as much as I can or go to court? If we stop work for the client it will withhold cash and if we continue it will deduct 10%.

Answer

You should make a commercial decision on the viability of working for the client. This will help you decide how to deal with the money owed. You should work out if you can trade with it while offering a 10% discount. If you can, you should find ways of encouraging the customer to settle, perhaps with a formal discount option. You might even lift your prices to cover the discount imposed on you. If you cannot accept the discount, you should talk to a lawyer. This will involve legal costs and time spent on dealing with counterclaims. So before you take legal action you should gather the paperwork and other evidence to support the claim.