So Charlie. My husband?
He has a little business that he started a few years ago and his little business has grown. It hasn't grown tremendously, but it's been a nice supplement to our revenue.
Charlie recently completed a job for his client and on that job, he had a subcontractor working for him. The subcontractor does "niche" work which means that it is highly specialized and there aren't very many companies that provide this exact service. Because there is relatively no competition in the region, Charlie is limited with who he can work with and so this niche subcontractor has worked with my husband for the past two years. For the most part, the subcontractor does fairly good work. Although, they tend to be a bit sloppy in their reporting.
For example, with almost every analytical report that Charlie receives from this subcontractor, there are errors. Some of the errors are significant enough that the results would indicate his client has failed critical testing and would need to pay substantial governmental fines for non-compliance. However, because my husband is very thorough with numbers and is quite handy with a calculator, during his reviews of the draft reports, he'll usually identify that the subcontractor forgot to carry a one, or is off by a decimal. And nine out of ten times, that simple error will make the difference between a passing test and a failing test. Or, the difference between compliance and non-compliance - the latter of which is accompanied by fines with lots of zeros.
A few months ago, Charlie received a cost proposal from his subcontractor to do work for him. And Charlie scanned the proposal briefly and thought it looked in line, so approved the work. He did not go back and look at previous proposals to evaluate if the cost was consistent. Last month, Charlie executed the work and today, he received the invoice from his subcontractor for services rendered.
It was only tonight when my husband sat down to pay the invoice that he realized the invoice was off by several thousand dollars relative to what the invoice had been during the last sampling event. But when he compared the invoice to the cost proposal, he saw that they were identical. It would therefore appear that the subcontractor had made an error in the cost proposal, by potentially underbidding the work, and either didn't notice the error, or noticed it but decided that it was too late because the proposal had already been approved.
Needless to say, Charlie is conflicted with what to do.
Does he call the subcontractor and let him know that it looks as though he underbid the project in the proposal and then, didn't invoice him the amount that Charlie was expecting from previous events? Or does he not say anything because the invoice is consistent with the proposal?
We were discussing what all of our former consultant employers would do, and without question, we know that they would pay the invoice as is, even if they recognized the possible error, and pocket the extra money with a smile on their face. That's life in the business world ... your mistake is my gain.
My recommendation is that he call the subcontractor and tell him that from one business man to another, he'd like to point out that over the past few years, he's observed a lot of errors that could have significant negative ramifications for his clients. And now, he's noticing that there are errors in his bookkeeping practices that could have significant negative ramifications for him (the subcontractor). Then, I'd tell the subcontractor that it appears he has underbid the project based upon past invoices and ask if he'd like to submit a revised invoice? Heck, that might be a good segue to suggest that the subcontractor hire Charlie as a quality controller to review all of his future reports and proposals.
As my husband "sleeps" on his options, please tell us ... what would you do?