Larroudé (C)

Having built their own factory in Sapiranga, which was now producing nearly one third of their output, Marina and Ricardo Larroudé were pleased with the growth that had continued on both sides of their business. Suddenly, however, they were confronted with a cash crisis caused by their largest customer attempting to violate the terms to which they had contractually agreed. In October 2023, Nordstrom placed a massive $3 million order for delivery in February 2024. Based on experience, Ricardo expected that the $1.5 million prepayment on that order would provide sufficient cash to fund Larroudé well into the first half of 2024. In January 2024, Nordstrom was ready to place an additional order for another $1.1 million worth of shoes, but they wanted to return $600,000 worth of merchandise that they had bought earlier. Worse, they wanted to deduct that sum from the prepayment that would otherwise be due. Marina and Ricardo had to decide how to respond to Nordstrom, their largest and most influential customer. And quickly!