debt collection

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emahler hooked me up with this guy named "Guido" from Jersey.

Actually, there's a couple routes, depending on how much money is involved. Lein the property, write it off and forget about it, or hire a debt collection agency.
 
adamants said:
what do you guys do as far as debt collection/recovery?
how soon etc?
having a couple of "client issues"
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Not sure how New Zealand does it.

I have had to put mechanical leans on new homes in order to get paid. The builder can't close the home until all the leins are satisfied.

I've been there. Most of mine worked themselves out.
 
I always sent my wife and she always went to talk to the persons wife and I to this day never got stiffed. Some of the guys who were trying to stiff me thier wives never knew they were doing this and were mortified when they found out. They couldnt wait to get the money in my hand as they were crying about my unfair debt collection practices. She is pure genius, mywife that is. 9 months pregnant banging on the door dont mess with hormones. It was too funny you cant write humor like real life. So I bought a nice plasma tv with the found money.
 
quogueelectric said:
I always sent my wife and she always went to talk to the persons wife and I to this day never got stiffed.

So I bought a nice plasma tv with the found money.
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So, what did she get? ;)
 
I don't know what size your business is but with respect to that you'll have to determine whether you're owed big money or small money. It doesn't pay to file a lien for small money and usually (when it gets down to actually getting paid and if lawyers get involved) there are negotiations for final payment and you'll probably not get what you're entitled to anyway. If it's small money and you can take the hit, then be ticked off for a few days, take the hit and walk away.

The other thing you'll have to consider is how long the debt is outstanding and how long you're willing to let it go without some sort of action. If it's 60 or 90 days - no big deal. However, each time you send a reminder statement or overdue invoice I would add an interest charge (say 2-5% per month) on any unpaid balance. That way if you end up putting a lien on the property at least you'll be in a better negotiating position. I would not stop dunning your customer for the unpaid balance but make a determination as to when to end your aggravation.

The real trick is not to let it get to the point of big money. If it starts getting out of hand then shut the job down until you get paid. If you end up taking a hit for non-payment you can list it as an expense on your P & L statement
 
No matter what method you choose, you should first consult with your attorney.

Lein laws vary by state. I know I have to provide a clause in my contracts that provide warning that if I am not paid, I have the option of filing a lein. Without that clause, the deadbeat could legally fight it.

As for charging interest, also there are laws that limit how much you can charge.


Don't let emotions ride roughshod over you... keep a cool noggin and tread lightly.
 
LarryFine said:
So, what did she get? ;)
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She got every bit of the money and the guy called me furious about my unfair debt collecting practices. His wife had no idea he was trying to stiff everyone and was mortified. He came running with a check and his tail between his legs. Dont mess with hormones. Oh she watches tv too.
 
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mdshunk said:
emahler hooked me up with this guy named "Guido" from Jersey.

Actually, there's a couple routes, depending on how much money is involved. Lein the property, write it off and forget about it, or hire a debt collection agency.
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yeah, about that...."Guido" is gonna be a little preoccupied for about 5-10 years...so we're using "Rocco" now...i'll send you his contact info:D
 
We usually have no problems collecting on the larger jobs because all that is worked out early on. It's the smaller residential remodel and service jobs that occasionally get dicey. They fall into three catagories:

1 The customer that is thrilled with the job and cheerfully writes a check ASAP.

2 The customer that is happy with the job and price but just doesn't pay for various reasons. This is usually resolved by constant nagging. We can wear them down eventually.

3 The customer is happy with the job but not the price. This is usually a technique used to negotiate a lower price. Sometimes the HO has a legit beef ie, the crew was slow or took too long on breaks etc. It's important to look as criticaaly at my own company as I do the HO and make adjustments accordingly if it is justified. And also to stand my ground if the HO is just working me.

Another technique I use on small jobs where the HO is sticker-shocked is to ask the HO to write the largest check they can and still refer us to their neighbor. More often than not I get the full amount. They feel impowered and respected and don't want to treat us unfairly.

Hope these tips help. They were developed over 30 years of service work and lots of scars.
 
bkludecke said:
3 The customer is happy with the job but not the price. This is usually a technique used to negotiate a lower price. Sometimes the HO has a legit beef ie, the crew was slow or took too long on breaks etc.
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How can the customer negotiate a lower price, on a contract, he has signed and agreed to? are in the contracting business?

What concern is it to the Homeowner, on how slow, the job went, or how long the breakes were, when your contracting.
 
satcom said:
How can the customer negotiate a lower price, on a contract, he has signed and agreed to? are in the contracting business?

What concern is it to the Homeowner, on how slow, the job went, or how long the breakes were, when your contracting.
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99% positive he's still doing them T&M
 
Intresting post,... In court with a new commercial building that was contracted with-out extras. When a signature was asked for on extras, Sticker shock occurred and the owner wont pay for them, of course not all 28 extas got finished either. We left the Job for non payment and a $56,000 lien was put on the building . Now (6 months later and plenty of Court time) the court wants us to go to FACILITATION which is only the start of Lawyers getting rich. The GC and owner want to aviod this and settle the matter out of Court. Our lawyer is out of Town and I will consult with him A.S.A.P. but in the mean time what does settle mean to us as tradesmen? , .50 on a dollar or what?

I know some of us have been there and can put my mind at ease, I'm not looking for legal information, This is a first with court involvement and just want to know what settlement really is.


THANKS GUYS !
 
mjc said:
the court wants us to go to FACILITATION which is only the start of Lawyers getting rich.
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That's the long and short of it in a nutshell.

The GC and owner want to aviod this and settle the matter out of Court................what does settle mean to us as tradesmen? , .50 on a dollar or what?.....................This is a first with court involvement and just want to know what settlement really is.
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I would hope it would not be $0.50 on a dollar but anything is possible. Try to negotiate with the GC and owner on your own (no lawyers on either side) knowing that you may have to make some concessions and walk away with the majority of your money. If it ends up being $0.50 on a dollar and that is not what you believe would be fair then get your lawyer involved. Keep in mind that he has fees associated with his efforts and you may not be able to get those fees back with the agreed settlement
 
One thing to try is to figure out what it will cost you, total, to collect. Consider how long it will take, how many hours, any fees you will pay, etc.

Take that dollar amount and deduct it from what is owed. See if the person is willing to settle for that much.
 
Debt collectors have a huge advantage nowadays and they use lower level courts such as county level district courts to attatch all of the bank acounts owned by the debtors. Ask me how I know. If you have a legitimate debt I dont know the fee they charge however I do know they are very efective moreso than in later years.
 
I have sent a bill collection company after a couple of offenders. They take 50% and get their half first. It took very little effort on my end to get them going. I have not received any money yet but it gives me a warm feeling knowing the bill collectors are hounding them (and hopefully making life miserable) on my behalf. These collections were for less than $500.00. If it were more than that I would have to rethink my strategy.
 
satcom said:
How can the customer negotiate a lower price, on a contract, he has signed and agreed to? are in the contracting business?

What concern is it to the Homeowner, on how slow, the job went, or how long the breakes were, when your contracting.
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I know alot of you guys hate T&M work but in my world it is more common than bid work. This is a resort area where most of the customers are rarely even here. They call up, tell us what they want and where to pick up the key. We do the work and send the bill. More than half of my customers I have never even met face to face.

In 30 years of contracting I have probably done over 25,000 invoiced jobs and written less than 100 contracts. I almost never get burned and the few times it has happened are of so little consequece it's hardly worth mentioning.

Before all you fixed price guys pile on and tell me I'll be out of business in six months by doing T&M work; it's worked fine and profitably for 30 years.

Another thing I do that will drive you fixed price contract guys nuts is this. Frequently I will bid a job and then when we get going we'll find a much quicker and easier way to get it done. When that happens I will actually do the unthinkable and reduce the price accordingly. When the opposite happens I let the customer know about it and renegotiate a higher price. I realize that this kind of reckless folley is going to totally ruin the industry but that's why I started contrcting in the 1st place.

Sorry for the sarcasm but many of you out there are of the opinion that there is only one way to operate a successful EC business. In fact there are many types of winning business models.
 
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