Dealing with bad customers - typical example

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Bad Customers

Luckily this doesn't often happen to us.

At CyberVector we believe that if we can help others to avoid bitter experiences, we should.

It's not always possible to complete comprehensive due diligence to Know Your Customer (KYC). Sometimes sources of financial and company data are not up to date.

As a result, there are some companies that reincarnate, or "phoenix", themselves when they are carrying more debt than their business model and order book can address.

Background

We were engaged by a small engineering company specialising in ruggedised sensors for companies in the utilities sector in the UK.

The contract we had was two-fold;

• to prepare them to broaden their business beyond the utilities sector, and
• to identify alternative sectors that they could deliver low volume, specilist engineering solutions into.

We worked with the Executives to identify an actionable plan that would achieve these goals.

It was clear to us that there may be some cash-flow issues but we were assured that there would be no impact on our engagement and fees.

What Happened

A number of deliverables had been produced and accepted. These were CyberVector foreground intellectual property.

Payment for two months of work had not been received, and their Finance Manager informed us that the company was not able to pay.

We knew that their management were still travelling internationally and buying materials and other services.

This was possible as a result of the appointment of a firm of Business Recovery and Insolvency Specialists on the 19th June 2012.

The Result

On 3rd September 2012 the company went into Administration, and on 4th September it rose from the ashes.

The first we learned of the matter was on 11th September, almost 3 months after the appointment of the Administrators.

To CyberVector the main difference is that they have our intellectual property that was never paid for.