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What`s the best way to collect from clients who won`t pay?

 
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PRPro

posts: 441

Feb 09, 2008 9:59 AM ET    Quote  Report Abuse
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Even if you have a sound, signed legal contract in place, what are your thoughts on obtaining fees from clients who will not pay their bills?

Have any of you used the Better Business Bureau to collect funds? I`m doing research on this topic and would love to hear your suggestions.
 
Thanks!
Melanie


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Melanie Rembrandt
CEO, Rembrandt Communications®, LLC
Visit www.rembrandtwrites.com for valuable PR tips and SEO copywriting help!
Twitter: @RembrandtWrites
Feb 09, 2008 3:33 PM ET    Quote  Report Abuse
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small claims court is an option



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Anthony LeGree

President of Basset Communications
Host of the Business with Cents Show
CraigL

posts: 9051

Feb 09, 2008 9:12 PM ET    Quote  Report Abuse
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How does someone enter a name into these credit reporting organizations? With so many people thinking about credit scores, wouldn`t it be useful if a small business could submit a no-pay customer into such a database?
stonesledge

posts: 1093

Feb 09, 2008 10:16 PM ET    Quote  Report Abuse
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Hi Melanie.
My clients have paid 99% of the time, my problem is doing business with vendors that don`t give us the deliverables promised. We are then promised to be refunded and it never happens. I currently have 2 vendors who owe us several thousand dollars. I sent letters, final demands etc. I then contacted the better busines bureau for one of them, and the vendor did not respond. I contacted their local clerk of court and set in motion a fraud case. The second, after hounding her for a year....and utilizing alot of time and energy she has paid 4 payments and one bounced. It can be very frustrating. The second was a board on the local chamber of commerce and I asked that she be removed and she was voted out. I would not normally do so but she lied over and over again and cost of alot of money and time and frustration and didn`t seem to give a hoot and even opened a new business, so i know she had the money. Anyway.,the BBB can`t do much but small cliams or general district (which is usually faster) can.
 
Erin :)


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RicWillmot

posts: 154

Feb 10, 2008 8:26 AM ET    Quote  Report Abuse
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Contracts aren`t worth a cracker; as Melanie proves here in this post.
I tell all the members in my Mentor Program to charge your clients up-front.
  1. It gets them focused on doing what has to be done
  2. Never have the uncomfortable situation of asking for late payments
  3. Keeps your cash-flow very healthy
Rgds,
Ric
 
RicWillmot2/10/2008 8:29 AM


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Ric Willmot
Executive Wisdom Consulting Group
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Videography

posts: 672

Feb 10, 2008 12:27 PM ET    Quote  Report Abuse
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How does someone enter a name into these credit reporting organizations? With so many people thinking about credit scores, wouldn`t it be useful if a small business could submit a no-pay customer into such a database?


You have to be a member merchant.  The last time I checked into this it was not cheap by any means.


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Steve Mann
Internet Videographer
MannMade Digital Video
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PRPro

posts: 441

Feb 10, 2008 7:45 PM ET    Quote  Report Abuse
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Thanks for all of your input. It sounds like there really needs to be a better way to collect funds for small business owners (if you don`t collect upfront)!
 
Melanie


-------------------------

Melanie Rembrandt
CEO, Rembrandt Communications®, LLC
Visit www.rembrandtwrites.com for valuable PR tips and SEO copywriting help!
Twitter: @RembrandtWrites
KevDev

posts: 96

Feb 11, 2008 11:28 AM ET    Quote  Report Abuse
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A couple of more ideas:
  1. Pick your customers carefully. If you have a bad feeling about a potential customer, walk away. Better to spend the time finding better clients than trying to get blood out of a beet.
  2. If your customer`s payment is late, always assume the best and give them a nice call asking when you can expect payment.
  3. If the nice approach doesn`t work, then start applying pressure. Often a letter from an attorney will open the money spigot.
  4. Finally, don`t be afraid to go to small claims court. But remember, if someone is really determined not to pay you, it may not be worth your while to try to enforce the court ruling (see point #1).
Good luck!



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CraigL

posts: 9051

Feb 11, 2008 2:14 PM ET    Quote  Report Abuse
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I think we had a topic a long time back, regarding what constitutes the average for bad debt---uncollectable. I can`t remember, but it seems to me it was something around 3% of gross receipts? Maybe someone can post the right number.

This would be the amount that any business could expect to lose in nonpayment over the course of a year.
glgcpa

posts: 86

Feb 11, 2008 3:22 PM ET    Quote  Report Abuse
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Here`s a couple more ideas, how well they work will obviously vary:
  • Hire a collection agency
  • Ask them if they`d like to go on a payment plan
  • Ask if they`d like to barter the bill



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Gina L. Gwozdz, CPA
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http://TaxTreasures.com
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