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Comment by Animats | Hacker News Reader

Never keep working after the first unpaid bill.

The big tier ones (Bosch, Continental, etc) insist on payment up front specifically to avoid this. It's the smaller vendors that don't have leverage to set payment terms who get screwed.

One tactic I've seen OEMs use is to buy for multiple products and stop payments for one as a test. If the vendor complains, they lose all the unrelated business (possibly including clawbacks!) and the OEM moves to the second source. This can kill the supplier.

The winning move is not to play.

If no one plays then nothing will be made.

Absolutely brutal. Wow.

One big secret in economics is that essentially the whole world is demand constrained. There's exceptions, but they're few and far between. And in all of economics you will not find a solution to that anywhere, hell they don't even explain this. Obviously the supply/demand curve is in reality not linear: at low prices it goes entirely horizontal and constrained below physical needs it goes entirely vertical. Obviously, no linear model can do this. There's no real point in doing more of anything than we are doing now. Think of it like this: if in Paris double as much bread was made tomorrow, and sold at any price, there would not be even a minimal rise in bread consumption. We have enough. Essentially all of it would be thrown away. Now replace bread by just about anything, and you'd see the same problem. So "relationships" are what gets business, or as you might call it "selling demand". And it's very easy for buyers to abuse the system.

As a small player in the services game (data consulting) the only way to do it is to have good relationships with the people paying the bills. Even with good agreements, you still need the client to be on your side.

At the risk of never getting paid and losing the rest of the contract and any money you've invested getting to the first delivery and payment point.

https://en.m.wikipedia.org/wiki/Sunk_cost

If you keep working, you still run the risk of never getting paid — in which case your lost investment would be more time and money than it would've been if you'd stopped after the first unpaid bill.

Wrong notion.

Eff, what kind of sucker [1] are you?

"You" (not you) already took a risk which failed. Now you are talking about taking on more risk with the same person who cheated you, like a lallu (Hindi term for a sucker)?

You're promoting wrong ideas, which are harmful to everyone here who is a supplier.

You need a principle from Econ 101:

  Don't throw good money after bad.

Animats is right.

Look, I get it, I was starting out once, and out of necessity did some "high risk" work where we invested a lot of time before getting paid. Sometimes it worked out, sometimes it failed.

I learned to understand that -risk- has a value. All transactions have risk, maybe I don't deliver, maybe you don't pay.

I now explicitly factor risk into quotes. We can share risk (you pay some, but not all, up front, coupled with progress payments), or I can take the risk (I'm pricing it higher, and assuming you're skipping the last payment), or you can take the risk (pay up front, but pay less.)

Treating risk as a line-item in the budget helps both parties understand the pricing better. Having a track record (of paying or producing) helps the other party accept more if the risk.

I've had some clients prove to be unreliable payers. For them I accept no risk. All work us done on a "pay first" basis. Some choose to find another supplier. I don't consider that a loss.

State governments do this too. NY under Cuomo just dictated a 10% cut to invoiced labor. It was widely understood that saying no meant no more work in the future.

For software related things, if it stops working, you will then get paid immediately to fix it. That's when you get paid, fix it, and never work for them again.

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