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For some time I have advocated that honesty is one of the most important elements to look for in prospective clients. However,
even if your client is an honest, fine, upstanding, and even deeply religious person, don’t assume that he or she will never pull a fast one.
Recently I booked a new client who is an extremely devout person.
She and her husband publish a religious magazine to churches across many states. Her business and daily life is dedicated to making people’s lives better through faith. I have no doubt she prays regularly and does
all she can to make this a better world. You couldn’t ask for a more sincere and upstanding client.
Having served as a parish pastor for 14 years, I felt a bond with her. Confident about her character, I
agreed to factor her first set of invoices even though most of them were to churches (which I generally avoid as customers -- much to the surprise of some people).
Well, factoring began and several weeks
after her first advance, one of her first (and fortunately small) customer checks to be sent for a factored invoice was sent to her. What did she do? You guessed it...she cashed it.
Intentionally.
To
her credit, she openly told me she had done so and that she now owed me the money. However, the idea that she had no right to do this, and that she was in fact defrauding me by doing so, never really seemed to enter
her mind. The check was made out to her and even though she knew it was factored, she “needed” it. (Raise your hand if you’ve heard that one before...) So she simply helped herself -- without my knowledge or
permission.
What was she thinking? Quite simply, her need of the funds ($250) was foremost in her mind, and she rationalized that she would just pay me back, which I have no doubt she intended to do.
However good her intentions, this is precisely how factors can lose money, even with otherwise honest clients. If this converted check had been the last payment to be received from one of her customers, there would
have been no future rebates from which to deduct this new debt. If business were slow and she had no new invoices to factor, there would have been no advance from which to deduct this debt. Chances are good I would
have just never been repaid.
I sent her an email stating quite clearly that converting checks like this cannot be done and doing so amounted to theft, which, I said, I was sure she would never want to be
accused of. After all, the publisher of a religious magazine, putting on religious seminars...a thief?!? I wanted to get her attention.
In response, she simply stated she had “a serious personal emergency.”
She was not the least bit apologetic for her action. If I had experienced the same emergency, she said, I would have done the same thing.
She never stated exactly what the emergency was. No “Gee, I’m sorry.”
No “It’ll never happen again.” She just had an emergency, so I was supposed to understand and not question her action. Or what the emergency happened to be.
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