It is more common than shippers would want to experience, but there are times where your buyer will remit less than the original invoice amount by taking an unauthorized deduction from your invoice. At the same time, the remittance may have restrictive language disclosing that deposit constitutes full and final payment.
Below are some helpful steps to consider taking:
- Immediately phone/email and document, your disagreement with the payment amount to the buyer, and that you are seeking the full balance due.
- If your internal investigation confirms no dispute on the sales contract with your buyer, communicate verbally and in writing that the check is being processed as payment on account, and that there is a balance due you expect to be paid in full on. Document your action in an email and highlighting partial payment and the balance due amount.
- If you have a lockbox, follow the above process immediately upon notification from your bank.
- If you are aware that there is a bona fide dispute, you should not deposit the check until the issue can be resolved, or the check can be released as the undisputed amount through an informal administrative action with PACA.
- Each and every dispute is unique, so please consult Western Growers, or your legal counsel before you take action.
Again, every situation will have a different set of facts, but always consider the practical (common sense) approach as to whether or not you should deposit the check. If it is a customer who you routinely do business with, it may be appropriate to deposit and simultaneously communicate your position on the balance due. Alternatively, if it is a customer which you may have some trepidation with, about their financial condition, it would make sense to process the check, if the balance due is negligible, and simultaneously document the position that the remittance is payment on account and that the balance due is payable.
Separately, if you have been informed of a claim, or an arrival notification with an inspection, and the check is tendered with not only restrictive language, but it has written communication that makes it unequivocally clear payment is full and final, you should not deposit that check. This action will create an accord and satisfaction in the eyes of the PACA and will jeopardize your right of recovery. In these situations, timeliness is imperative and you need to immediately dispute the tendered amount and then consider filing a PACA informal administrative action. At that time of filing, you can request the PACA obtain the release of the funds as the undisputed amount due and owing without prejudice to the rights of either party.
While these matters of restricted endorsements are not common place, how you address them when they arise should be planned in advance between your accounting and sales department.
Western Growers Trade practices is a call away for a quick phone or email consultation to make sure you take the correct steps. Please contact Bryan Nickerson at 949.885.2392, Matt McInerney at 949.885.2263 Or Ken Gilliland at 949.885.2267.
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