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Getting Paid on Contingency During the Pandemic | Grit Daily News

Most companies require payment upon delivery of products or services, but some companies work on contingency. What does that mean?  A contingent payment is dependent on completion of a particular event or level of performance. For example, many personal injury lawyer take cases contingency. The clients only pay the lawyer if the lawyer wins or settles their case. The client ends up paying the attorney from funds that the lawyer recovered through settlement or trial verdict. The client is not responsible for charges unless the lawyer recovers a settlement from the defendant.

When I founded my debt mitigation company in 2013, few people would have predicted the global pandemic that erupted in 2020.  We have never seen such a wide variety of issues. Some clients are open, other businesses are closed trying to reopen and some are closed waiting for the government to allow them to reopen. Every situation is unique – so we start by simply trying to understand each situation, and then we look at what we need to do to help get the business, and business owner today, through the week, and then through the month. In addition, we have been helping a lot of our clients maximize the various Small Business Administration (SBA) programs that are available. The majority of businesses owners have not taken full advantage of the programs the government is offering.

From our research, debt mitigation businesses that operate on contingency are few and far between. Why not charge a fee for service rendered? There are a lot of people who offer help, but they all ask for money no matter the outcome. How do you know who to trust? I believe that actions, not words, tell the truth – if someone believes they can help you, they should stand behind it with their actions. Not only that, but the commitment to a contingency business model keeps everyone highly motivated to make sure that everything that is possible to be done is done. 

So, while the pandemic has made the process of contingency payments longer for those of us who are compensated in this manner, the success is sweeter. For example, a technology client was sued for $4.5 million from one of their lenders. By negotiating with that lender, that technology business was able to have no payments for over a year, and concluded a settlement for under $1M.

One company was sued for $90,000 by an important service provider. The pandemic made business slow and they had a hard time paying their bills in a timely manner. Via negotiations, it was settled for under $25,000 (with payment terms).  If that debt reduction had not been secured, the company would have had to lay off employees. 

Another business owed the IRS over $2 million in payroll taxes and, via the art of negotiation, the IRS agreed to a 20-year payment plan.

A manufacturing client had over $13 million in debt, with 24 lawsuits and 2 IRS audits. By reducing their debt by over $3.5 million, resolving all of the lawsuits on terms that worked for the business and handling both IRS audits, today this business is thriving with revenue that has tripled. 

So, while getting paid on contingency during the pandemic or during robust economic times is never a walk in the park, the end-goal of helping more businesses stay open positively impacts people, families and the community. 

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