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#159417 - 01/18/07 05:57 AM How do you deal with Customers that won't pay
Happi_Man Offline
Member
Registered: 06/12/02
Posts: 206
Loc: Columbus, Ohio - USA
I have a couple of customers that are down right refusing to pay and won't return any communications. I have one customer that has no problem calling me up and asking for stuff but has open invoices more than a year old.

I don't take on customers anymore without a signed contract but in general how do you get these people to pay?

Do you use a collection agency? Is it worth highering an attorney? I'm just tired of calling, leaving voice messages and faxing invoices and getting no response...
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Business, Office, Estimating, Legal:
#159418 - 01/18/07 06:51 AM Re: How do you deal with Customers that won't pay
ITO Offline
Member
Registered: 11/26/06
Posts: 348
Loc: Texas
1) File a lien, unless you have waited too long to do so, check your local laws.
2) Turn it over for collection, and yes a good agency will get results, and their cut too.
3) If it’s a lot of money, as a last resort I sue.
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#159419 - 01/18/07 08:48 AM Re: How do you deal with Customers that won't pay
Happi_Man Offline
Member
Registered: 06/12/02
Posts: 206
Loc: Columbus, Ohio - USA
Can anyone suggest a collection company?
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#159420 - 01/18/07 05:57 PM Re: How do you deal with Customers that won't pay
macmikeman Offline
Member
Registered: 07/16/02
Posts: 717
Loc: Honolulu, Hawaii
Soprano Brothers Collection Agency?
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#159421 - 01/18/07 06:28 PM Re: How do you deal with Customers that won't pay
Happi_Man Offline
Member
Registered: 06/12/02
Posts: 206
Loc: Columbus, Ohio - USA
Nice. That's who I feel like hiring sometimes...
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#159422 - 01/24/07 02:37 PM Re: How do you deal with Customers that won't pay
Zapped Offline
Member
Registered: 10/01/02
Posts: 482
Loc: Huntington Beach, CA, USA
I think I've gone over this before in another thread, but here's a little trick that often works:

After exhuasting all the nice-guy methods, hire a lawyer just to right a letter demanding payment, and have him send it on his letterhead. My guy does it for $75, and I'd say about 8 in 10 have at least started communicating back to me and arranged payment, if even in installments.

If that doesn't work, and you aren't eligible for a lien, it's time to consider litigation. It's rarely worth the headache if it's not less than $5000 (small claims - no lawyer needed) or over $10,000 (this will usually be widdled down for a settlement before it goes to trial, and you should always add the legal fees on top of it).

It sucks, and it's a big waste of time, but a small business can easily get killed by an unpaid bill.

I don't get the problem, I always pay MY bills...
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#159423 - 01/24/07 04:58 PM Re: How do you deal with Customers that won't pay
Tiger Offline
Member
Registered: 05/04/05
Posts: 706
Loc: Crystal Lake, IL USA
Thankfully this is a very small issue for me, but very disturbing when it happens. First you have to consider if your customer has a point. If they do, make it right to their satisfaction.

If the work was fine and they just don't pay you can do a before/after bill like utilities. If it's late they start paying interest per your contract. Next a letter stating legal fees and property lein costs are going to be added. A letter from your lawyer after that is a good idea. Get legal advice early on the timing for a lien. If you're late, you're out of luck (although a lawyer told me ages ago that if I went back and tightened a screw that would make the timing OK again).

Some people just want a lower price, not to cheat you completely. It might be easier in those cases to take what they offer and don't work for them any more.

In over 20 years I've only filed two liens. One paid and the other went bankrupt, so my lawyer was the only one that got paid. My losses are such a small fraction of 1% that I have people laugh at me for tracking it. In general I work for honest people or I'd get out of the business. I usually get a real bad feeling from the cheaters in the early phone call or bid stage and get away.

Dave
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#159424 - 01/26/07 05:37 PM Re: How do you deal with Customers that won't pay
DougW Offline
Member
Registered: 06/08/03
Posts: 1143
Loc: North Chicago, IL
Quote:
Originally Posted By Zapped:
If that doesn't work, and you aren't eligible for a lien, it's time to consider litigation. It's rarely worth the headache if it's not less than $5000 (small claims - no lawyer needed) or over $10,000 (this will usually be widdled down for a settlement before it goes to trial, and you should always add the legal fees on top of it).


Don't forget interest on the unpaid balance as well, at the maximum rate your state allows.
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#159425 - 01/26/07 10:30 PM Re: How do you deal with Customers that won't pay
Check Pilot Offline
Member
Registered: 11/25/05
Posts: 141
Loc: Edmonton Alberta Canada
Happi_Man

Here was a discussion we had on the forums here before. Hope you find some insight.
http://electrical-contractor.net/ubb/Forum20/HTML/000380.html
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#159426 - 02/24/07 06:42 AM Re: How do you deal with Customers that won't pay
Peter Salegna Offline
Member
Registered: 05/10/06
Posts: 19
Loc: norwich,conn, USA
I found that you always get 1/3 third up front for materials, 1/3 @ rough in inspection and final third when job is complete. But with final 1/3 you show up to do finish work when they have the money....this way if they refuse to pay the job is not complete and your not out alot of money. In my area a reputible contractor will think twice about completing a reputible contractors work.
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