Avacorp is an IT consultancy with headquarters in Edison, New Jersey. Their employees are located in the USA and India. According to their top management, the size of the company is more than 100 people.
In July of 2010, our company, Farata Systems, has been hired to develop an application for one of the Avacorp’s clients. I was leading a team of seven developers from our side, and Avacorp was managing the project, performed test, business analysis, and the data base administration.
Per our agreement, Avacorp had to pay for our work on the Net-30 basis, which meant not later than 30 days after receiving an invoice. After the first month of work we billed them and continued working for another month. So during the first two month our team of seven developers works, they were getting paid from Farata Systems funds. No big deal – we work with many clients under similar agreements.
After two months of work I decided to find out from Vivek Dhamodharan, Avacorp’s CEO when are we going to get paid. For some time he simply didn’t pick up my phone calls. When I got lucky, he explained that there are some difficulties, and they’d pay a portion of the amount and the rest shortly. OK. We kept working for another month and sent the second invoice. I made a follow up call asking regarding our payments. Vivek said that their client had financial issues and would resolve them shortly, and then Avacorp would pay us.
At this time the amount of unpaid invoices was way north of $100K. Each of our developers was getting paid regardless of these issues, and we decided to stop the development. This time Avacorp started bombarding us with emails explaining that this was their very important client and we should continue working.
We didn’t work on this project for a month. This was a force major situation for us – the entire team of our developers was out of project on a one day notice. After a month, Avacorp stated that their client found the money and we’d get paid, and had to put the same team back together to continue working on the project.
I responded that we are willing to continue working if Avacorp would start pre-paying a full month work based on the month-to-month signed agreements. This was a Time and Material project so we “d be multiplying the rates by the man-hours to calculate the approximate amount. Avacorp started to beg to go easier on them, and we agreed on taking 50% of the next month amount sending them an invoice with the factual amount at the end of each month.
Each month we’d sign the Scope of Work (SOW) document for the next month listing resources/hours they need. All this time the work of our developers was closely managed by a project manager from Avacorp, who was satisfied with the quality of work we provided.
By May of 2011, the application was almost ready and the size of our team shrunk to 1.5 developers. By May 15 I asked if we should keep the same developers in June, and were told that Vivek would be sending us a new SOW shortly. It didn’t happen.. Despite that, I kept the key developers working on this project till the last day of May.
On May 31, Kiran, the project manager of Avacorp contacted me stating that the project won’t continue in June, but our developers would still need to finish a couple of lose ends. I asked if Avacorp was planning to pay for it?
“No. Since some milestone was not met, you’d need to do it for free”.
I responded, “Kiran, this was a Time and Materials project, we never agreed on being paid only if certain milestones were met. Besides, you’ve been managing our developers till the last day and was happy with their work. If you believe, that our developers didn’t deliver quality code, I’ll tell them to fix what they did wrong for free “.
“No, they worked fine, but there is something else to finish”, said Kiran.
I know that something may go wrong, and nobody’s perfect. But I was not asked about a favor. I was told that we must do this job. We rejected, and apparently Avacorp’s developers fixed those small issues on their own.
It’s mid August, and we’re still waiting for Avacorp to pay us for the second half of May for the work that we completed as per their requirements. Vivek keeps promising … Nine days ago he sent us a polite email with the following content:
“Apologies for the late response. We should be able to confirm the date of payment this Monday it will be this week. Sorry for the delay. We value your relationship and it has been mutually very good. Will give you a call on Monday to confirm the wire date.” Needless to say that we didn’t get a call till today.
Anyone who ‘s running a company knows that sometimes delays in payments happen. This was happening to us too with the clients as small as two-person startups or as large as multi-billion dollar corporations. But we never had a situation when the client simply didn’t want to pay and postpones this moment by any means.
Are we the only vendors of Avacorp having issues with payments? Apparently not. We found the site http://ripoffreport.com where another vendor complains about the same.
The more the merrier. The class action law suit can be the only way for us to get paid for the work that we did.