True Story #2 - taken for a ride

I had another experience of a being recommended for a project referred to me through a family friend who was on board the project as a consultant. On my own merit, in being the lowest bidder, I secured the project. However, soon the project ran out of financing and all were left without payment. All were given assurance that things will be back to normal once the finances was sorted on the side of the developer. We were asked to continue nonetheless with faith and believe that things will be ok. Stupid enough, we did just that. Fortunately in 3 months everything was back to normal. A few payments were made and as we were nearing 80% completion of the work. Just when all the materials and equipment were shipped into the site, the project ran out of financing again. I wondered till this day if it was truly planned for. Hence no payment were made for all the equipment and materials supplied which makes up about 70% of our contract value.

Again, we were asked to continue while the developer worked out their internal resources. 2 years passed and no payment was made. Our Overdraft facility which helped financed the purchase of the material grew significantly over the 2 years. Soon the project was called to start with the promise of payment after being abandoned for over a year. However, there were to be no settlement of past dues until work started again and even then payment were to be made in stages over several months. It is only logical to think from the sound of that, if they even have enough to settle the past dues and what more additional work. The math just didn't quite make sense. Either we had to be a bank or a finance company or a company with just too much cash lying around, to agree to these terms.

For fear of what was already owing to date, contractors were just too afraid not to agree. Yours faithfully, ME, disagreed. For that, we were then asked to terminate ourselves at a settlement of a measly 35% of what was owed to us. Either that or a law suit which would take 7 years before we see any money.

Lesson learnt : Practicing Faith and Believe while stepping deeper into a financial pithole is a very stupid thing to do no matter what is at stake. Better to cut losses that to step deeper and lose more. A famous quote by Air Asia CEO, finish each day in your business with a positive cashflow. Not yearly, not quarterly but everyday. A healthy and positive Cashflow is the key to a successful business.