Dischromatics Gets Tough with One of its Debtors and Advises Others on How to Avoid Bad Debts.

Under the current credit crisis we are still seeing many companies, large and small going into receivership. On some occasions this is due to their inability to recover money owed to them by their clients.

It is a sad situation we find ourselves in when we see customers treating their suppliers like a credit facility passing on their own debt problems without the slightest tinge of guilt, many of whom eventually fail anyway causing untold misery and suffering to their loyal suppliers, dragging their viable businesses down with them. Worse perhaps, in terms of integrity, are the business owners who hold out paying until the very last minute or not at all, even though they may be cash rich themselves, some even hide behind the fact that they are based in a different country and simply rely on the supplier not being prepared to take the matter further due to logistics and the extra costs involved which may be difficult to recover.

Dischromatics found themselves in this situation with a well-known company based in New York called MBM Records run by an individual called Yan Saquet, who also, according to LinkedIn, claims to be President at Universal Music Brand Management Group. So if such large and well-known companies are prepared to treat a relatively small CD and DVD Duplication company like Dischromatics in this way, who knows where we are headed! It is therefore essential to follow a few simple steps to avoid this scenario but first some background on how this debt occurred and how easy it is to be lulled into a false sense of security.

In April 2012 the company received a rush order for Music CD Duplication for the Lotus F1 team for the Australian Grand Prix from MBM Records, the order was paid for in advance and the job was delivered on time and to the great satisfaction of MBM who even supplied a great testimonial. Dischromatics then received a follow up order in May 2012 for a much larger volume for the same disc. They requested credit saying they would pay once the delivery had been affected and therefore this company agreed bearing in mind the organisations involved. Terms were set and agreed at seven days from receipt of samples in New York.

On receipt of these samples by MBM Records and the rest of the discs to the requested destinations, MBM once again expressed their gratitude and satisfaction on the quality of the product and the service and said payment would be made as agreed. Since that time Dischromatics has dealt with several representatives of MBM including Yan Saquet and Loren Berrier, this has been done via email and directly by telephone and even text messages, none have resulted in settlement of the debt even though MBM Records received their payment from the Lotus F1 team several months prior to the order being placed. Over the following months Dischromatics encountered numerous stalling tactics and empty promises including some of the following comments:

 “My name is Yan Saquet; I am the CEO of MBM Records.  It is my understanding you have been in touch with Loren regarding the outstanding payment of the Manufacturing of the Lotus GP CD project we did with you.  We were very happy with the product, and it has always been our full intention to comply with the agreement we initially made, but unfortunately the situation is that the company has been going through an extended period of cash flow issues.  We would obviously like to avoid any litigation, so can you please let me know an appropriate course of action to resolve this issue”. Yan Saquet 07/08/2012. Dischromatics offered a payment plan but further prevarications prevailed and at the same time MBM were tweeting about acquiring new business deals.

 Here are just a small amount of messages received: “I have just been informed by Yan that the payment will be made on November 1st.  Can you please send the latest amount due”. Loren Berrier 17/10/2012. Statement was sent by Dischromatics immediately.

“Yes, Carl informed me he had spoken to you.  I am working with Yan to come up with a realistic payment schedule that we can adhere to, and will get back to you shortly”.  Loren Berrier 03/12/2012

“As our last conversation, email us a payment plan agreement:  $1,000.00 per month. Then we'll process the first payment Yan Saquet 19/12/2012

“First $1,000 payment will be paid immediately the day we'll sign it”. Yan Saquet 30/01/2013

As a goodwill gesture a payment plan agreement was drawn up with the first instalment due in February 2013 and sent to MBM on 31/01/2013 and received back duly signed by Yan Saquet on the same day. Unfortunately, no money has been received by Dischromatics and all correspondence has been ignored. Naturally no company finds it easy to turn to litigation but there is no choice in order to maintain credibility. Bizarrely, MBM have been tweeting and releasing press releases over the past months on new deals they have concluded bringing further revenue into their company, they are still operating freely using funds from their suppliers with no intention of paying. All correspondence and agreement documentation is available for inspection.

Any small company who has the opportunity to export must sensibly do their homework on the prospective client in the first place to ensure they are viable and able to pay for the goods or services. Furthermore if credit is requested as being the only way they will do business, a letter of credit or other financial safeguard has to be implemented, if this is also found to be unacceptable, the advice has to be to walk away! For trading within the UK always do a credit check before accepting an order and a good tactic is a Director’s Guarantee, never offer credit to a company with a poor credit rating regardless of how much you need the business.