Late Payment

[Stephen_Pepe]

One of the wineries responded to my email that their distributors in NY, NJ and Conn, have not paid them because of Sandy and they anticipate paying us by February. This is perfectly understandable to me. Mother Nature can disrupt things and there is not much we mere mortals can do about it. Ah the joys of being a farmer or in agriculture.
As an aside, when I first started practicing law in 1968 our firm had several clients who paid us yearly and the rest we billed quarterly.

[Brad_Bogdan]

@Martin Keen

What really gets my goat (not Walter Taylor’s wine) is the winery …

That reference totally brought back memories of the East Coast for me. Well done.

[Glenn_L_e_v_i_n_e]

@Martin Keen

For the doctor and attorney that said you should in a sense expect late payments. I have never met a doctor or attorney that is willing to work for an entire year and then finally get paid at the end of the year for an entire year’s worth of work. They should try operating under that cash flow scenario. You would have to operate your business with absolutely no income for most of the year.

Clearly we’d be unable to remain open for business sans cash flow. Alternatively how would you like to be compelled to sell grapes to 20% of the wineries who buy your grape for nothing, not a cent! Sell to say another 15-20% for around 15 cents on the expected dollar? Then try to survive on the remaining 60-65% of customers, 10% of those who will be months late in closing accounts.

Point is biz sucks for everyone who is small these days and a client being 30-60 days late is not the end of the world in 2013 California.

[Casey_Hartlip]

New word is that my buddy left a firm but positve voicemail and got a text back 48 hours later. $60% of the Decmber 1st payment is on the way this the balance due Feb 1st. Problem is that the 2nd half of the payment is due Feb 1st. He’s happy to see anything at this point.

[Martin_Keen]

@Glenn L e v i n e

Clearly we’d be unable to remain open for business sans cash flow. Alternatively how would you like to be compelled to sell grapes to 20% of the wineries who buy your grape for nothing, not a cent! Sell to say another 15-20% for around 15 cents on the expected dollar? Then try to survive on the remaining 60-65% of customers, 10% of those who will be months late in closing accounts.

Point is biz sucks for everyone who is small these days and a client being 30-60 days late is not the end of the world in 2013 California.

[/quote]

Actually I know grape growers who received much worse and this is not just recently, but over a span of forty years. How about never being paid for an entire crop! I know many grape growers who were compelled to get into the wine business because they were always getting screwed and the only way to be sure you might get some return was to get into the wine business. Years ago one winery that was going down the tubes issued stock for the grapes. Needless to say even then they were out of business in a year. Other grape growers have switched entirely to home winemakers and pick-your-own because it was a cash business. I was always amazed how many tons some of them could sell. One of the problems is no one seems to talk about the wineries that do not pay. I’ve never had Dun & Bradstreet ask us about some winery’s credit worthiness. Point is if you contract to buy the grapes you had better be able to pay and not hope the money will magically appear to pay your grape bill. Timely payments = better grapes.

[Glenn_L_e_v_i_n_e]

Martin - I am watching scores of docs leave private practice to become employees of some corporate entity b/c they simply can’t stay in a functional business. In this CA economy the models have broken down across many fields of endeavor and it really doesn’t seem to me a client 30-60 days late requires Moose & Rocco to make a visit and help find their checkbook. This is the only point I’m trying to make.

[Martin_Keen]

@Glenn L e v i n e

Martin - I am watching scores of docs leave private practice to become employees of some corporate entity b/c they simply can’t stay in a functional business. In this CA economy the models have broken down across many fields of endeavor and it really doesn’t seem to me a client 30-60 days late requires Moose & Rocco to make a visit and help find their checkbook. This is the only point I’m trying to make.

Glenn: I’m not trying to trivialize any other business, just trying to show that grape growing is not all wine and roses. Cash flow in any farming and other businesses can be difficult. When I was a kid I was around too many old timers. I first worked for a man that was born in 1872. The saying of one of those old timers was “Pay as you go and if you can’t pay don’t go.” Sound advice in any era.

I wonder if Andy Beckstoffer ever receives late payments?

[Casey_Hartlip]

I wonder if Andy Beckstoffer ever receives late payments?[/quote]
As long as Andy’s been in the game, you can bet your bottom dollar that he’s had late pays. He probably has some good tales to tell.

[Peter_Simpson]

@Casey Hartlip

New word is that my buddy left a firm but positve voicemail and got a text back 48 hours later. $60% of the Decmber 1st payment is on the way this the balance due Feb 1st. Problem is that the 2nd half of the payment is due Feb 1st. He’s happy to see anything at this point.

Casey, your buddy needs to keep calling this customer, if he doesn’t they just successfully renegotiated the deal.

He needs to do everything he can to get hold of a live person (even if it’s a warehouse worker) and ask for the cell phone number of the CEO. Then just keep bugging him till he gets paid, the squeaky wheel will get the grease!

[Casey_Hartlip]

I think you’re right Peter, time to be like a terrier on a pantleg and not let go until some greenbacks are seen.

[Paul_Romero]

I love the CEO, CFO, Warehouse worker talk. At 95% of the wineries in California that’s the same person.

Casey has your friend tried ‘love’? Everyone is different but sometimes being the nicest most flexible guy to some one with 50 creditors pounding on the door is best. Lots of little payments and even setting up auto payments is something we’ve done.

We’ve actually not sent out our invoices for grape sales yet, and I’ve only gotten 2 of the 5 invoices we’ll get for grapes I bought. I know every region is a little different but I’d personally not be to pissed off until April.

[Casey_Hartlip]

Paul, my buddy started out up front and friendly. Heck, when folks owe me money (and I’ve had a few in 34 harvests) I start out nice too. Not getting any answer at all for a couple of weeks started the problem. I know you’re honest enough to return a call and say what’s up. And no April is too long to wait for a December payment.

[Paul_Romero]

Casey - wasn’t saying he should wait to April. I haven’t sent my invoices out yet so I’m not expecting people will pay me until February-March. April - 90 days or so - would be when I would be upset. 60-90 days is ‘normal’ for almost all the invoices we send out, but I’ve had people basically never pay as I’m sure we all have in the last few years. I haven’t gotten invoices from my three biggest grape suppliers yet. Last year the last one showed up in June. I’m not sure why there’s this big cultural difference in my area from the North Coast, but no one around here would really be upset that they hadn’t been paid by the end of December.

If he’s tried nice, the next step I’d take is to tell the customer that he’s going to report them as non pay to the CA ag department. They will pull the customers grape haulers permit until they pay which would prevent them from buying any grapes and if I remember how this is supposed to work puts a lien on anything they tax pay. Basically it’s a death penalty until they pay the grower. It’s possible they don’t have a haulers permit which would also have the Ag department shut them down until they get one.

As growers we have a lot more powerful tools to use than outing someone on a wine board.

[Karen_Troisi]

@Paul Romero

If he’s tried nice, the next step I’d take is to tell the customer that he’s going to report them as non pay to the CA ag department. They will pull the customers grape haulers permit until they pay which would prevent them from buying any grapes and if I remember how this is supposed to work puts a lien on anything they tax pay. Basically it’s a death penalty until they pay the grower. It’s possible they don’t have a haulers permit which would also have the Ag department shut them down until they get one.

Paul - that’s what I was trying to describe earlier - thanks for clarifying.

[S_Reynolds]

@Paul Romero

If he’s tried nice, the next step I’d take is to tell the customer that he’s going to report them as non pay to the CA ag department. They will pull the customers grape haulers permit until they pay which would prevent them from buying any grapes and if I remember how this is supposed to work puts a lien on anything they tax pay. Basically it’s a death penalty until they pay the grower. It’s possible they don’t have a haulers permit which would also have the Ag department shut them down until they get one.

Does this not run the risk of putting them out of business such that they can never pay back their debts to growers? Have you ever seen that happen?

[Andy_Steinman]

Not seeking to be grossly commercial, but offering a resource:

My wife is a Creditor’s Rights Attorney who specializes on the Wine Industry.

http://www.steinmanlegalnw.com/

[Paul_Romero]

@S. Reynolds

@Paul Romero

If he’s tried nice, the next step I’d take is to tell the customer that he’s going to report them as non pay to the CA ag department. They will pull the customers grape haulers permit until they pay which would prevent them from buying any grapes and if I remember how this is supposed to work puts a lien on anything they tax pay. Basically it’s a death penalty until they pay the grower. It’s possible they don’t have a haulers permit which would also have the Ag department shut them down until they get one.

Does this not run the risk of putting them out of business such that they can never pay back their debts to growers? Have you ever seen that happen?

Yes that’s happened and it usually shows up in Purdue’s daily updates when it does. I’ve also seen it have wineries get their payment priorities realligned. SCV Bank’s recommendation in cash situations from their annual webcast a few years ago was 1. taxes 2. permits 3. payroll 4. growers, as I remember it. There was a bit that payroll should be met in the terms that employees or the government could not take action to shut down the company. Basically it was a list of who could kill you and growers were right behind the government.

When I’ve seen this used against a winery it sticks for years, even decades with the Ag department monitoring wineries who have been out of payment compliance like a hawk. A winery threatened with this should be very afraid, it can put you out of business.

[Dave_Smig]

I was late paying Andy B this year. My daughter got sick and I just plain forgot about the payment. DOH! Got a call and it jarred my memory…

[Casey_Hartlip]

FWIW I talked to by buddy today. He got a pretty decent lump sum payment and a payment plan has been set up to end in August. Sounds like all parties are working in the right direction. Also nice to report all of my payments are streaming in. Gonna have enough dough to operate for another year! Woohoo!

[Joe_Webb]

I hate it when this happens to growers who have bills to pay too! So many wineries act like there the only ones who need cast to flow, many restaurants have this attitude as well.

In Anderson Valley there are several very well regarded brands that get a lot of chatter on this board that don’t pay on time. Which is ok once in a while with explanation prior to the due date. However when bills are not being paid and the winery head is in France (or any other exotic location) on a 2 week vacation and posting things to Facebook and Twitter about all the great food and wine there enjoying it just rubs me the wrong way.

If a grower sells grapes the next year to a winery that has not paid for last years yet, i.e. 365+ days late, then I have no sympathy for the grower. I can’t believe this still even happens.

We have stopped selling to wineries who are late to us or any other small grower in this valley. It is hard to find new interested wineries but much better than getting the cold shoulder from a slow pay. The few times we have had grapes on the spot market payments were always COD even if the prices were lower it was still better than getting stiffed for months.