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#19663 - 12/31/02 10:40 AM WARNING!! to self employed!
ayrton Offline

Registered: 12/21/01
Posts: 205
Loc: Pa
I am the owner of an electrical service co. who's primary work is commercial and industrial. We did a small job for a very large business last year, which entailed dissassembly of a very large switchgear and xfmr. This co. was a subsidary of an even larger co. based in another state.
Terms of our billing are 30 days with exceptions to some business' which will only pay 90 or even 120 days. That is decided in the contract agreement! We bill promptly with the Due Date listed plainly on the invoice. This particular co. paid us two mos. late. We generally do not contact our attorney unless it looks like payment is definatly not going to be made or we need to have scare tactic. At any rate, the co. filed for Chptr 7 bankruptcy 89 days after they paid us. According to the judicial laws for bankruptcy and payment made with in 90 days the the file date is considered "Preferential Payment" and we/you the business is required by law to pay it back!!!
You business owner need to take this very seriously, you may not beleive me. If you have an attorney consult w/them, if not get one. Any business owner needs one anyway.
What we should have done, according to our attorney, is sent out a "Mechanics Lean" after the thirty day period which would have protected us from this suit. (we are being sued for the money). Now we all know you cannot send "liens" to clients when they do not pay on time, or we wouldn't have any clients. Construction contractors are the heart of this country. Our small business' make help make our strong economy. Yet we are screwd, I think more than any other kind of business. Co's and people alike feel if they do not want, they do not have to pay! We have to stop this. Voting is one of the ways. A collegue of mine, owns a sprinkler co in Vorhees, NJ. He is getting a group of people together and working on a plan to help contractors set a "standard" for payment amongst other things. For more info contact Dean Scarpa, at Alpha Sprinkler. I will give his email on the next post.

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#19664 - 12/31/02 12:25 PM Re: WARNING!! to self employed!
sparky Offline

Registered: 10/18/00
Posts: 5545
'judgements' as to payments are rarely enforced by those who pass judgement, so ownership being 90% of the law i would thumb my nose at said customer.

should you care to research the political aspects of small biz, and possibly gain some contacts, there is none better than the NFIB

good luck.

#19665 - 12/31/02 01:36 PM Re: WARNING!! to self employed!
HotLine1 Offline


Registered: 04/03/02
Posts: 6804
Loc: Brick, NJ USA
I feel for you, and thanks for the info.
I'll bring it up when I speak to the Association Lawyer, and a lawyer who is a family friend. I've been very fortunate over the years, and only got burned a few times.

As to Sparky's comment, I have to say that a "judgement" is only a piece of paper. I have one for <4K, and I seriously doubt that I will ever see a penny.

Happy New Year to all.

#19666 - 01/01/03 08:04 AM Re: WARNING!! to self employed!
pauluk Offline

Registered: 08/11/01
Posts: 7693
Loc: Norfolk, England
There are some legal aspects of being in business that just don't seem right.

Several years ago I had two publishers go bankrupt on me, owing a couple of thousand.

The law here deems that any debts owed to any govt. body take absolute preference over other debts. As in this case the companies both owed an amount to Customs & Excise (which administers the U.K. equivalent of sales tax) which exceeded their assets, the rest of us never saw a penny.

#19667 - 01/01/03 01:33 PM Re: WARNING!! to self employed!
sparky Offline

Registered: 10/18/00
Posts: 5545
seems there's a bankrupcy trend lately

#19668 - 01/02/03 09:43 PM Re: WARNING!! to self employed!
nesparky Offline

Registered: 06/21/01
Posts: 650
Loc: omaha,ne
Due to a company going bankrupt before paying thier bills, my lawyer recomended that if the payment is 45 days or more late to file a lein on the property. Do not release the lein untill paid. The origional customer may be bankrupt but the new owner still has to satisfy the lein.
In my case after two years my lawyer got all of the $0.15 on the dollar from the origional bills and I still owed more him lawyers fees.

#19669 - 01/03/03 08:14 AM Re: WARNING!! to self employed!
George Offline

Registered: 02/23/02
Posts: 380
ayrton ---

You say this was a "small job".

Part of being in business is taking the risk of being paid or not.

You should always be ready to accept some nonpayment on small jobs. On large jobs always get a bond.

The difference between a small job and a large job: your ability to accept nonpayment and continue in business.

#19670 - 01/03/03 11:43 AM Re: WARNING!! to self employed!
ayrton Offline

Registered: 12/21/01
Posts: 205
Loc: Pa
To George, "small Job" is all relative.
As far as the bond goes, it is the fact that it was a bankruptcy. Not a customer not paying. I was paid, but now that the business has filed it is the federal government suing for the money. The issue is when terms are not met, to file a lien or not! What we need is, is for every "small business" in the counrty to petition congress to change the F$#^$6 law!


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