When a company can’t pay its bills, it puts all parties involved in a predicament. As if that’s not frustrating enough, they offered you stock or equity instead of paying you the money that is owed. So, what should you do? Do you take the stock instead of the payment? It may be tempting to just accept this and move on rather than deal with the hassle of collecting the debt, but you should think twice before you accept.
It’s difficult to liquidate stocks
The number one reason not to accept stock in place of money is that it can be very difficult to turn your stock into cash. If a company isn’t public, the stock is even more difficult to place a value on. If the company happens to be public but is having financial difficulties, chances are good their stock is not worth very much. You risk not receiving any money when accepting stock.
By accepting stock in place of payment may seem fair, though you are exposing your company to hidden costs and potential losses. It’s important you understand that once a company issues more stock, it dilutes current shareholders, as the earnings are spread among even more shareholders.
If you do accept stock
It’s important to remember that if you do accept stock in place of payment, you become an investor instead of a vendor. If you would not invest in a company based on their business model and current situation under normal circumstances, you should not invest in them when they are already in trouble.
Consult a lawyer
Make sure to have a lawyer review any agreement you sign to ensure you are not left responsible for other debts the company may have incurred or may incur down the road. If you are going to invest in a company, do so because you believe in the company and that it is a good investment.
Why Choose AWA for Your Transportation Collection Needs?
AWA operates on a contingency fee basis, meaning, if we cannot collect, you owe us nothing. If collection efforts are successful, our rates will be based on how old and how much the debt is, if there is a damage claim, and whether the debtor is in or out of business.
If you have unpaid freight invoices and aren’t sure what to do next, call 662-892-8591 to speak with one of AWA’s client specialists today!