Major Contracting has always been one of your biggest accounts – until last year. A downturn in the local economy slowed both construction and renovation projects. As a result, Major Contracting reorganized its management team, including hiring a new CFO. The result? The company has been slow paying its bills for the past six months. As is customary, your company hired a collection agency to obtain late payments. The agency is now threatening to create credit-rating problems for your account if it doesn’t pay within a week. You receive a call from your contact at Major, a friend of 15 years, pleading with you to intercede on his behalf and promising to be back on track with bill payments. He tells you that Major has bid on a few big projects that should get it back on track financially within the month. You are now in an awkward position. You know that not all of the projects are firm, so Major may not be able to settle its debt in a month. You want to help your friend, but you also realize that you have a responsibility to your company and yourself – your compensation is based in part on the profitability of your territory. On the other hand, you do not want to risk losing the account and the sales that would come from these projects if they come through. Do you try to get Major the month it needs to get back on its feet? Do you claim it is out of your hands, which to some degree it is? Is there a better solution?

In this situation, I would like to firstly tell my contact at major clearly that, the final action is not completely in my hand, and all I can do is put his case convincingly in front of the decision makers, and do so. If we look beyond personal relations and benefits, losing a business partner of 15 years based on their late payment of 6 months. Also, since the company representative is promising to clear late payment within a month, it won’t be ethically wrong to extend their credit. Not to forget here that if the new projects do turn put as Major Contracting is working towards, it will boost our business also in times of slow economy. Hence, it is a risk that we should take, and extend the time period of payment for Major Contracting, making sure that they are aware of this being the last action towards their support, and the company will resort to its standard measures of they fail to pay their dues yet again.

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