Home > Uncategorized > Paid when Paid. Be warned

Paid when Paid. Be warned

A good client of mine has been hit by the nasty and underhand “paid when paid” clause imposed by an increasing number of clients. The client amended his contract to include “paid when paid” and now inevitably the debtor at the end of the chain has gone into administration leaving my client with a probably £60k loss

My client is generally very shrewd but this is an element of any contract which can easily be overlooked. For two prime reasons it is extremely dangerous.

Firstly you are handing over control of your cashflow to your client. The frustration and stress that can cause will be immense.

More importantly you are also taking on the credit risk without having any control over it. That is frankly complete madness

Invoice financiers refuse to fund “paid when paid” accounts and rightly so. See this article

The whole issue was also a huge problem in the construction industry in the 90s and has now been outlawed. Rightly so in my opinion but why stop at construction? I am all for contracts being based on the basis of buyer beware but i would certainly be in favour of this nasty clause being outlawed across all industry.

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