A settlement discount comes with a promise of future work

The customer offers a relationship as well as money

Imagine a contractor owed $48,000 is offered $24,000 now and a promise of preferred status on future projects. The customer says the new work will more than make up the difference. Before responding, separate the actual cash proposal from the commercial hope. Work that has not been contracted cannot be assessed like money already available for settlement.

Define the outcome you need

business.gov.au recommends checking the facts and identifying priorities when managing a dispute. Decide what matters in this account: available cash, ending uncertainty, preserving the relationship or another realistic objective. These priorities can differ. Do not let a general wish to keep the customer replace a clear assessment of what the proposed discount would cost the business.

Source: business.gov.au: Prevent, manage and resolve disputes

Ask what the future promise means

Find out whether there is a defined project, scope, price, commencement date or commitment to order. Preserve the customer's wording. A chance to tender is different from an awarded contract, and neither guarantees profitable work or prompt payment. In the hypothetical example, preferred status may simply mean an invitation to quote against other contractors on ordinary commercial terms.

Cost the new work on its own merits

If a genuine proposal exists, examine its expected margin, upfront cash requirements and payment terms separately. Ask the accountant to help assess the numbers. Do not count future revenue as recovery of the old invoice without the associated costs and uncertainty. Further work with the same customer could add exposure while the existing account is still unresolved.

Have the settlement boundaries checked

Ask a lawyer what the settlement would release and how any future-work term would operate. Avoid signing a broad agreement on the assumption that details can be supplied later. If the future promise is not part of the documented arrangement, understand what that means for the decision. Keep the old debt, settlement payment and proposed new contract identifiable.

Record a decision based on the real offer

Compare the supported cash proposal and other available options with advice. Note separately what value, if any, you assigned to the future opportunity and why. CRP can help organise the commercial comparison. A relationship may matter, but a settlement decision should not depend on treating an uncertain invitation to work as guaranteed replacement for money already owed.