What Happens When The Third Party Payor Refuses to Sign?
Have you ever found yourself in a situation where you've offered a parent or a family member a third-party payor addendum to facilitate payment for your services, only to have them refuse to sign? It certainly raises a red flag when someone flat out says ‘no’ to putting their signature on the document. So, what options do you have as the service provider? Is it a matter of severing ties with the clients, allowing the third party to pay without the signature on the addendum, or is there another way forward? We’re here to answer all your questions and how to handle this situation.
What is a Third-Party Payor Addendum?
Let’s start off with what a Third-Party Payor Addendum actually is... A third-party payor addendum is a one-page document signed by the clients AND the third-party (aka anyone paying you for your services who is not a client) that puts legal conditions on the third-party's payment and involvement with the clients' original agreement. A third-party payor addendum does not change the original client contract but instead acts as any other addendum would by ADDING another ‘page’ to the contract to include information about this new third-party payor, who they are and their role in working with you purely from a monetary payment standpoint, and how their payment will be treated.
For professionals in the service industry, especially those working with weddings/events and couples, presenting a third-party payor addendum is a standard practice. When you know from communications with the couple that another person is going to be paying you, by securing the signature of that third-party payer you're safeguarding yourself legally and creating an agreement that permits a parent or family member to cover the costs of their loved one's event. Yet, when faced with an unwillingness to sign the addendum, and especially when these individuals are not even your clients, navigating such a situation can be challenging. This is particularly tough when the third-party is behaving rudely or condescendingly.
What Do You Do If The Third-Party Won’t Sign The Addendum But Still Wants to Pay OR If You Are Unaware a Third-Party is Involved with Payment?
The recommended initial response is to step back from being in the middle of the conflict. Reach out to your clients promptly, preferably through a follow-up email after a phone conversation (always put it down in writing!). Clearly explain that a Third-Party Payor Agreement must be signed by the individual responsible for payment, who isn't the client themselves. This is because otherwise the third-party acquires rights and responsibilities under the contract by the act of paying! And that can get you into trouble during the event when they start bossing you around because now there are three clients instead of two.
Emphasize to your clients that booking cannot proceed unless payment is received from the client directly or the third-party signs the addendum. While being firm, maintain a respectful tone and acknowledge that this can be a tricky situation. Remember, you shouldn't find yourself in a payment dispute; it's the client's responsibility to ensure the third-party's cooperation or to make the payment themselves.
Sometimes you will have clients who will try to pull a fast one and just not inform you that a third-party is paying. Sometimes there is simply no avoiding this and some CRM systems or online payment platforms don't reveal the payer's identity due to security reasons of the credit card payment, potentially allowing a third-party to pay without your knowledge. However, if your service contract with the client is solid, this should not impact you negatively because the contract will still put all the responsibility on the clients for payment measures. Then if a third-party’s card is used for payment, and a payment fails or is canceled, only your clients are eligible for refunds or credit, and they bear responsibility contractually for any payment issues. In cases where there is no third-party involvement, have a conversation with your client to clarify that they are solely accountable for payment and have signed an agreement stating so.
But… What if The Third-Party Continues to be Difficult to Work With?
Now let's explore an alternative option: treating a refusal to sign the addendum by the third-payor as a red flag and considering bowing out as the service provider. If you find yourself in a situation where you feel harassed or unsafe, you have the choice to terminate your services. Disrespectful communication from the third-party at the get-go definitely signals potential issues throughout your working relationship and certainly on the event day. When someone offers to pay and then refuses to sign a simple document like a Third-Party Payor Addendum, it's honestly a tell-tale sign that there are massive problems with control of the event going on and is a red flag. Thus, take heart and potentially reconsider your involvement. Obviously, if you love the clients and feel good about them, you can also decide to try and salvage the relationship. But, if you decide to bow out, communicate with your clients through email, expressing your appreciation for the relationship while explaining that you believe it's best to part ways. Remember, it's perfectly acceptable to release a client or family member who makes you uncomfortable. There will always be other clients who value your expertise, professionalism, and contract as an entrepreneur.
Our Take: ALWAYS Get a Signed Third-Party Payor Addendum!
Navigating the complexities of third-party payor addendums requires a blend of professionalism, communication, and a clear understanding of your legal standing. As service providers, we strive to strike a balance between safeguarding our interests and maintaining positive client relationships. By embracing the third-party payor addendum as a standard practice, we're not only legally protecting ourselves but also ensuring a seamless experience for all parties involved. Ready to navigate these challenges?! Now’s the time to purchase the Third-Party Payor Addendum to keep yourself legally legit.
THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. EVERY SITUATION IS DIFFERENT & IS FACT-SPECIFIC. A proper legal analysis is necessary based on your location and contract. Consult an attorney in your home state for advice regarding your contract or specific legal situation.
SEE OUR FULL DISCLAIMER HERE.