PURCHASE ORDER NOT HONOURED: ANY LEGAL OBLIGATIONS? 6


Good day

I would like to find out from if there is any way of getting a client to honor a Purchase Order (PO) that would have been issued and seemingly having been “overdue”.

The client in question is a national government entity and issued a PO in October 2013 for us to conduct training for some of their senior management. The problem is up to now, this work still hasn’t been done the reason being the entity is not yet ready.

This has been the story for the past 3-4 months. Prior to this, there had been an issue of the project having been given to a different person and they hence wanted to finish off the hand-over/ take-over process. Well, we gave them that time up from Oct to end of 2013.

Now into 2014 and upon following this up, we are continuously being told that the SLA between the entity and us (the service provider) is still being drafted or hasnt been signed. Surely if its an issue of the SLA not having been signed does it take 8 months? I mean really.

Initially, we thought the client was waiting for the new financial year for them to be allocated funds by the central government but it seems like that’s not the case.

Now my question is there a way of  of getting the client to have the training done without denting the relationship between us and the client or we have to wait until they are ready

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6 thoughts on “PURCHASE ORDER NOT HONOURED: ANY LEGAL OBLIGATIONS?

  • John Marquis

    The approach I believe in strongly is this “Would your bank provide you with finance against the Purchase Order”. If the answer is yes, take them on. If no, you would be throwing good money after bad.  The simple reality is that very few financial institutions will provide this funding on the strength of a PO. They are simply not enforceable in most cases or the clauses make it impossible to provide value.  

  • Tom Ventouris

    If a PO was not issued, the argument would be that you do not have an order for any work from the client. If you do have a formal order, what terms were attached? My experience with Government entities and many others, don’t even put it on your schedule until you have an authorized PO. Furthermore, check out the conditions attached to the order by the client. We have completed many successful projects with such clients, none of whom, if memory serves, actually started as agreed in initial discussions. Good intentions are delayed by bureaucracy.

    You are also looking to maintain the relationship with the client. Best action is probably to back off. If you want the client, even if you have every possible right to the work, it will probably be your last with them. There is no win here.

  • Moira De Roche

    This happens quite often with government entities unfortunately. As the Purchase Order probably says you will only be paid once you have rendered the service, you don’t stand a chance of getting unpaid until you are able to. I don’t believe there is any way you can force the client to get the training done – with or without damaging the relationship. I am not a lawyer, but have had similar experiences in the past.

    Something to think about? Is this a really good client? Sometimes we hang onto clients who end up costing us money. There are instances when we should consider taking the tough position of firing the client.