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Thread: Advice on a company holding clients money

  1. #1
    Craftsman leo1790's Avatar
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    Advice on a company holding clients money

    Bit of a random one but I know there's some business savvy people on here and I wondered if anyone could offer some advice.

    The situation is: Company was commissioned for a bespoke order in 2021, deal was finalised and 50% deposit paid.
    Just before production started, the client requested to change the order. A new order was submitted, client was due to send the extra 50% deposit to finalise, but this never came.
    Since then there has been zero communication, the company has tried on numerous occasions to contact the client via email, phone calls etc. They finally got in touch with someone at head office and stated that they just wanted to return the money and could they please send over bank details, contact at head office said they will look into it. This was nearly 12 months ago.
    The company is in the UK. The client is based in UAE and is still operational, however, the only point of contact the UK company had seems to have disappeared off the face of the earth (he seems to be a contractor for the client, who is also representing another client.)

    Simple solution, just return the money to the same account they recieved it from but because it's been so long this isn't something they want to risk and also getting relevant paperwork from the client to account for this will probably never materialise.

    Any ideas on responsibility and next steps? I've told them it's probably a lot easier (although at a cost) to get legal advice, they've spoken with their accountant but they have admitted to not really having a clue.

    Thanks

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  2. #2
    Master
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    I wouldn't spend money on the issue now. Just park it somewhere and leave it a few years. Assume the deposit hadn't been recognised as income (and tax paid).

    Was the contract drafted under english law?

  3. #3
    Craftsman leo1790's Avatar
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    Thanks, yes the money's been put in a seperate account and won't be touched, and the contract is a UK one.
    The accountant is aware of the issue and (as far as the company is aware) has accounted for it in the correct manner. It was put through as sales initially but this was amended later on in the same tax year.

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  4. #4
    Master Halitosis's Avatar
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    Maintain a record of your attempts to contact the customer in case it is ever required/investigated/audited. As previously suggested, ensure the fund aren't spent/used, and not recognised as revenue for tax calculations. You appear to be doing your best, and can only be expected to expend 'reasonable' time/resource on such a task.

  5. #5
    Craftsman DONGinsler's Avatar
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    I had that same problem a couple of decades ago with a pair of Hirsch Carbon Sport straps at $125 ea.

    Emailed the customer to let him know his order was in and never heard back. Parked them on a shelf and waited. Emailed every month and after a year. Got an email thanking me for letting him know and to ship them.

    No clue where he was and he didnít say.

    Some customers are just odd

  6. #6
    Am I understanding it correctly, you have one up front payment and have now requested another?

  7. #7
    Craftsman leo1790's Avatar
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    No, it's not me but that's irrelevant anyway.
    They recieved 50% deposit back in 2021, order was amended a few months later before production began, extra 50% deposit (due to increased cost) was requested at this time and then it's just been stone wall silence apart from one conversation with a clients head office.
    Basically they've had the money for nearly three years and just want to give it back.

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  8. #8
    Quote Originally Posted by leo1790 View Post
    No, it's not me but that's irrelevant anyway.
    They recieved 50% deposit back in 2021, order was amended a few months later before production began, extra 50% deposit (due to increased cost) was requested at this time and then it's just been stone wall silence apart from one conversation with a clients head office.
    Basically they've had the money for nearly three years and just want to give it back.

    Sent from my Pixel 4a using Tapatalk
    Did they raise a pro-forma or a VAT invoice? Why has someone not just called it a cancellation charge to cover everything, and told the customer?
    Last edited by adrianw; 11th February 2024 at 20:01.

  9. #9
    Craftsman leo1790's Avatar
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    Quote Originally Posted by adrianw View Post
    Did they raise a pro-forma or a VAT invoice? Why has someone not just called it a cancellation charge to cover everything, and told the customer?
    It was a pro forma. I think you've just hit the nail on the head with the cancellation charge. Never occurred to either of us that the deposits been paid and then they've reneged on the contract. Makes for an interesting Sunday evening conversation

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  10. #10
    Quote Originally Posted by leo1790 View Post
    It was a pro forma. I think you've just hit the nail on the head with the cancellation charge. Never occurred to either of us that the deposits been paid and then they've reneged on the contract. Makes for an interesting Sunday evening conversation

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    I think it's fairly straight forward, what does your Ts&Cs or the contract say regarding cancellation charges?

  11. #11
    Craftsman leo1790's Avatar
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    Quote Originally Posted by adrianw View Post
    I think it's fairly straight forward, what does your Ts&Cs or the contract say regarding cancellation charges?
    She's going to send me a copy in the morning. Just had a read up on keeping deposits and companies only legally allowed to retain a 'reasonable' amount. When materials haven't been bought and work not even begun, could that really be deemed as reasonable?

    Its an interesting avenue to explore so she can at least have peace of mind that this won't cause a bit of a headache in years to come, but ultimately she'd like to just give the money back.

    Sent from my Pixel 4a using Tapatalk

  12. #12
    Quote Originally Posted by leo1790 View Post
    She's going to send me a copy in the morning. Just had a read up on keeping deposits and companies only legally allowed to retain a 'reasonable' amount. When materials haven't been bought and work not even begun, could that really be deemed as reasonable?

    Its an interesting avenue to explore so she can at least have peace of mind that this won't cause a bit of a headache in years to come, but ultimately she'd like to just give the money back.

    Sent from my Pixel 4a using Tapatalk
    I have seen 20% on day one upto 100% once production commences in loads of companies terms,

  13. #13
    Grand Master
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    What sort of money are we talking and what type of commission was it for?
    Cheers,

    Ben



    ..... for I have become the Jedi of flippers


    " an extravagance is anything you buy that is of no earthly use to your wife "

  14. #14
    Craftsman leo1790's Avatar
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    Quote Originally Posted by ben4watches View Post
    What sort of money are we talking and what type of commission was it for?
    It was £20k in total, £10k paid and received as deposit.
    She owns a lighting company, designs and makes shades.

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  15. #15
    If the client is based in the UAE then the £10k is probably a tiny amount of money that they have just forgotten about. Just stick in a high interest savings account and if they ever say they want it back (doubtful) just send back the £10k then.

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