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When they don’t pay...

    • 270 posts
    June 8, 2007 5:55 AM EDT

    I think I would exhaust all things outlined in this thread before I would turn to the courts.   But that is my worthless opinion.  The courts are mess up and should be your last recourse.  But if you threaten to go to a lawyer or to court you must do so if all else fails.  There is nothing wrong with getting the advice of a lawyer this time and you will know what to do in the future.  Getting good legal advice is more than likely better than taking our advice on an issue like this one.  I will bet if you go to a lawyer he will start by you trying certified letters from you first.  But at least he will give you all the right words to use...

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    Bert at Harvey Software, Inc.
    Multi-Carrier Shipping Software and Supply Chain Solutions for Internet Retailers

    Also a provider of free shipping information and resources at Harvey Software`s Parcel Shipping Blog along with free tracking solutions at TrackingPage.com...

    • 731 posts
    June 8, 2007 5:57 PM EDT

    I have recently found myself in a situation in my business where a client I did some work for in May has decided not to pay me.  I am wondering, does anyone know an effective method of collections in a situation like this?  This guy is a tough player and is withholding payment out of spite.  I feel he will not pay unless I force him to.

     


    jenidlg,
    I know what you are talking about... I think what you need to do is toughen up your policies.. I think it`s time for you to start amending all your contracts if you have any, if you don`t... This is the time where you goto legalforms.com and find yourself a contract that fits your type of work modify it or have a lawyer modify it for you.
    What I did was, joined pre-paid legal services, had lawyers modify all my contracts and when someone doesn`t pay, you have an actual lawyer calling the person.
    See the problem with sending him to court is that, even if you summons him, he can re-schedule, and reschedule, and reschedule. By the time it goes to trial you would probably not even care about the money anymore. "A waste of time"..
    It takes 30 days for the summons to be handed to him (it doesn`t happen tomorrow) then another 30 to 90 days for your hearing.. if he reschedules, they usually do it 90 day intervals. So if he reschedules 3 times thats 9 months form now that you would be going to court.
    Although, that would shake his cage a little, I don`t think that, that`s your solution. Another thing you might want to do is send him to collections. DUNN & BRADSTREET has a good program where they write the letter for you and they do the calling.. if he doesn`t pay... Well then there goes his business credit..
    Was this for a service or product?
    Nuevolution2007-6-8 22:58:47

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    Edgar Monroy
    Web Developer / Owner / Consultant
    When starting your own business the need to "know-how" is greater than money!
    http://www.nuevolution.net

    • 731 posts
    June 8, 2007 9:48 PM EDT

    hi jenidlg,

    I don`t know how the laws would work since he`s in another state, and it could even be harder if you didn`t have an agreement drawn up, especially since he`s not local.

    Try some of the other advice mentioned by others. I don`t know what industry you`re in, but here is a site that offers legal document forms in a template type format where you (or your attorney) could modify specific to your needs:

    http://www.weblawresources.com/

    Also...if he were local...this particular charge wouldn`t be dragged out for 90 day..., let alone 9 months. If he dragged this thing out that long on his own, then he`s probably very familiar with the `system`. But the average guy (and thats most of us), don`t know much about the legal system to drag stuff out this long without the assistance of an attorney (and that costs money).

    if he were able to get all these types of extensions, he`d most likely need a lawyer, where he`d then be out of pocket (probably a lot more than what he owes you). But...since he`s out of state, I couldn`t tell you.

    Consult with a lawyer in that case...but for scumbags who try and pull this stuff on you locally...this would be perfect


    Cartess,
    I am pretty sure, that the minute he gets served, he would consult a lawyer, most lawyers advise would be to drag it to the full extend of limitations (which is about one year)...
    See she is facing a tough situatuion since he`s in NJ and she is in TX.
    She would have to Fly out to NJ and do the filing out there... Not in her state...
    Now they owe her 1,000.00 a ticket to NJ is about 300.00, on SouthWest.. I know because I`m originally from Linden New Jersey.. then she would have to go to the township that he is doing business in and file the summons...
    To travel back and forth? It`s not worth the money and the time.

    I think what she heeds to do is, Trash his business Credit.

    ---
    Edgar Monroy
    Web Developer / Owner / Consultant
    When starting your own business the need to "know-how" is greater than money!
    http://www.nuevolution.net

    • 59 posts
    June 7, 2007 5:23 PM EDT
    It`s a horrible fact of doing business that some people will just not pay you.  The reason why they have choosen to not pay you will help you out more than trying to get them paid.

    The sad reality is that many people now a days feel that they deserve to get something for nothing.  How people can live with themself after they do this is beyond me.  I mean how many people go to the grocery store and fill up their cart and then when they get to the cashier they just say they don`t want to pay and they walk away?  Obviously, if they did that they would be arrested for shoplifting.

    The short of it is this person stole from you.  Obviously that`s not the type of person you want as a client, so no matter what you do, I hope you no longer do work for this person.

    Like I said before, try to find out why they did this...  Are they just having a temporary cash flow problem?  Did they ever intend to pay you?  Were they unhappy with your service?

    If they happened to be unhappy with your service and that is why they didn`t pay you, that will help you tremendously.  If that`s not the case, then you can consider other options, such as taking them to small claim`s court.

    Please let me know how this turns out.

    Best wishes,
    Gina

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

    • 59 posts
    June 8, 2007 7:44 AM EDT
    We had some information awhile back on the percentage of customers who don`t pay. I think it may have been during a discussion of home staging. At that time, various people with statistical knowledge indicated that somewhere in range of 3% of accounts receivable going uncollected would be "normal."


    I don`t recall reading that discussion, so I can only comment on your post here and have to say that sure you can call "3% of accounts receivable going uncollected" as "normal", but I certainly wouldn`t stretch that to mean that "normal" is average or typical in a specific industry. 

    For example, many of my physician clients see up to 40% no-pay.  The "average" for them is 20%.  Then again for a plastic surgeon or some other "cash up front" physician the 3% is probably "normal".

    Thus my point is that even if 3% is normal among all industries and professions, you may actually see higher or lower in your specific industry or profession.

    That means you build into your costs of doing business this percentage where you won`t get paid. The trick is that if you sell things for $10, and other things for $10,000, you want to make sure your 3% is mostly at the low end. :-)


    This is, in my opinion, excellent general advice, taking into account what I stated above - don`t use 3% if 3% is not right for your industry or profession.

    (Maybe a tax advisor might know if you could write off the uncollected debt on your taxes?)


    If you are on the accrual basis of accounting for tax purposes then you can write off your uncollectable debts on your tax return.  If you are on the cash basis of accounting then you never paid on tax the income you didn`t receive so there is no write-off.
    glgcpa2007-6-8 12:45:56

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

    • 59 posts
    June 8, 2007 3:11 PM EDT

    As for the tax thing, if a product is shipped and gone, can`t you at least write off the cost to you of purchasing or manufacturing that product?


    Most certainly!

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

    • 19 posts
    June 7, 2007 4:59 PM EDT

    I have recently found myself in a situation in my business where a client I did some work for in May has decided not to pay me.  I am wondering, does anyone know an effective method of collections in a situation like this?  This guy is a tough player and is withholding payment out of spite.  I feel he will not pay unless I force him to.

     

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    Our Mission is to Serve our Clients with Professionalism and Efficiency.
    www.SupportMyOffice.com

    • 19 posts
    June 7, 2007 5:43 PM EDT

    Actually, last Friday I found out this person is quite unethical.  I decided that I no longer wished to do business with him.  He felt shafted because I did it so suddenly.  Unfortunately, payment was due the following week and I wasn`t willing to keep working with him to avoid rocking the boat.  Now I`m stuck.  He owes me just over $1,000.  I really don`t know what to do. 

    Thanks for the input.

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    Our Mission is to Serve our Clients with Professionalism and Efficiency.
    www.SupportMyOffice.com

    • 19 posts
    June 8, 2007 3:30 AM EDT
    He is not in my state.  Does this make a difference?  I am in New Mexico and he is in New Jersey.

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    Our Mission is to Serve our Clients with Professionalism and Efficiency.
    www.SupportMyOffice.com

    • 19 posts
    June 8, 2007 3:43 AM EDT
    I think I found the court form.  Thanks for all your help!

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    Our Mission is to Serve our Clients with Professionalism and Efficiency.
    www.SupportMyOffice.com

    • 19 posts
    June 8, 2007 6:23 PM EDT

    I agree!  Court is not a valid option for me at this time.  Not because I need the money but I have better things to do with my time like replacing him as a client.  What I have done is reviewed my time sheet, which he was questioning.  I found that I had made a few mistakes, unfortunately for him, they were in my favor. 

    This gave me the information I needed to pursue him myself with the proof that he cannot question my timesheet and payment is expected by XYZ date or collections will proceed.  I have already obtained the services of a Collections Agency and they are chomping at the bit should he not respong to my curteous request that he pay up. 

    I have already begun drafting proper contracts that will protect me which was the mistake I made with the previous client.  I allowed him to use his contract.  There was nothing in it to protect me.  That will not happen again. 

    This has been a tremendous learning experience for me and I value the advice and support that I have recieved from the individuals here at Start Up Nation.  I look forward to growing my business with your help!!!

    PS  I am a Virtual Assistant providing Administrative Services remotely across the US and Canada.

     

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    Our Mission is to Serve our Clients with Professionalism and Efficiency.
    www.SupportMyOffice.com

  • June 7, 2007 8:06 PM EDT

    He`s a tough player?  Show him you`re tough, too.

    Send him a demand letter giving him the 10 days to pay that he`s entitled to and send it by certified mail.

    Let him know that you intend to pursue legal action if he doesn`t.  And DO it. 

    Stick to your guns and others will respect you for it.  If you let HIM get away with it, what`s to keep someone else from pulling the same stunt?

     

    • 394 posts
    June 7, 2007 8:22 PM EDT
    Brilliant advice from Cartess and I agree with him 100%.