Client refusing to pay options

[nlinecomputers]

I would not lift the lein until they pay all legal fees!

 

[Nathan Igo]

Filing fees, attorney fees and the depreciated resale value difference of the equipment are all included in the lien. They will also have to pay their own fee to the clerks office to get it officially lifted once I sign off.

 

[timeshifter]

I should have dropped them months ago when things started going downhill but at this point it is more about principle.

I don't envy the position you're in. Feel free to ignore this if you'd rather not deal with it, I know you came here looking for help on how to collect. But, I can't help but wonder what's going on with them to make them turn on you so suddenly. Ideally you or someone who is a smooth negotiator could meet with them and figure out where your differences are and work things out.

 

[nlinecomputers]

I don't envy the position you're in. Feel free to ignore this if you'd rather not deal with it, I know you came here looking for help on how to collect. But, I can't help but wonder what's going on with them to make them turn on you so suddenly. Ideally you or someone who is a smooth negotiator could meet with them and figure out where your differences are and work things out.

Sounds like they are going bankrupt. If they had a bunch of people quit, it's likely because they didn't get paid. Never rule out passive-aggressive behavior on the old river of denial.

 

[Porthos]

What I also saw is the equipment was involved as well. Would never be the finance company for hardware.
Labor is easily blown off but with the hardware involved, I see why you want to go that far with it.

 

[nlinecomputers]

What I also saw is the equipment was involved as well. Would never be the finance company for hardware.
Labor is easily blown off but with the hardware involved, I see why you want to go that far with it.

This. You pay me in full or via Credit Card. Even Dell gets paid in full. The credit they offer you is some big lender with Dell's name plastered on it. The fine print tells you who really provided it.

 

[Nathan Igo]

I don't envy the position you're in. Feel free to ignore this if you'd rather not deal with it, I know you came here looking for help on how to collect. But, I can't help but wonder what's going on with them to make them turn on you so suddenly. Ideally you or someone who is a smooth negotiator could meet with them and figure out where your differences are and work things out.

No problem. I think the company is slowly imploding on itself for whatever reasons I do not know. I tried reaching out to them multiple times over the weekend with no response but once I saw access was revoked from my keycard it just solidified something was going to happen and glad I took steps to be proactive on it before it was too late. There are plenty of other minor details that I just can't say as this is not a private forum so don't want to put too much identifying information out there. I am just documenting my experience in case anyone else gets into some kind of similar situation and maybe this can help steer them in a way or give them options.

As for the financing stuff, I never do that for all but a few clients even on any part over $100. I have most my clients order directly, pickup themselves from Microcenter or pay a 100% deposit. I lose out on an upcharge but keeps cashflow in my hands and eliminates hassles if they change their mind for whatever reason.

 

[sapphirescales]

Dear God this is why I always collect payment upfront. Your job is to fix computers, not chase invoices. Even if everything goes well, you're still giving them a free loan. And net 7 terms? Why even bother? Businesses that insist on net terms are best left to someone else. Apparently they want to be in the loans business instead of the computer business. If the business can't give you a CC# upfront then there's something wrong there. I know that most businesses EXPECT to be offered net terms, but you don't have to accept that. It's your business. Don't be a doormat.

 

[Nathan Igo]

It is impossible to not bill on some kind of net term at end of month because the hours change month to month. I don't offer clients AYCE plans for that reason. I can bill 5 hours one month and 30 hours the next. They get billed end of month for those hours and then the NET 7 comes into play. I also don't want to be responsible for storing CC#'s just for compliance reasons. Also, most clients cut and mail a check so a CC# would be worthless.

 

[Rigo]

Key phrase. This is often never

Totally agree with you.
That's been my experience including all your cost/benefits analysis.
Even cases that may look like worth pursuing, those who know they can game the system will never pay and do not bother coming to mediation.
I made a principle of buying parts with the client's prepayment only, if the bill is contentious afterwards I'd only lose wasted time.
Those who refuse to prepay, the project does not progress until they do or I don't want their business.

 

[britechguy]

That's been my experience including all your cost/benefits analysis.

And that's actually not been my personal experience, but what I've observed almost every time someone I know has pursued this route. The time (which could, at least in theory, be spent earning more money) and aggravation (which often becomes huge) just isn't worth it.

I can't, and wouldn't try, to deny that @VISA MC's experience is as stated. What I will say is that based on every incident that I've been made aware of over a very long period of time: it's an outlier.

But it generally comes down to it being a "matter of principle" rather than a matter of money. And once you've put the wheels in motion, it becomes somewhat more difficult to justify stopping them than just finishing it off. And by finishing it off I don't mean actually collecting, I mean reaching the end point in the legal proceedings.

 

[VISA MC]

And that's actually not been my personal experience, but what I've observed almost every time someone I know has pursued this route. The time (which could, at least in theory, be spent earning more money) and aggravation (which often becomes huge) just isn't worth it.

I can't, and wouldn't try, to deny that @VISA MC's experience is as stated. What I will say is that based on every incident that I've been made aware of over a very long period of time: it's an outlier.

But it generally comes down to it being a "matter of principle" rather than a matter of money. And once you've put the wheels in motion, it becomes somewhat more difficult to justify stopping them than just finishing it off. And by finishing it off I don't mean actually collecting, I mean reaching the end point in the legal proceedings.

I would honestly be interested to know the process you followed or those around you followed when in this situation. Everyone I know that has been extremely frustrated with collections has tried to do everything themself including sending their own letters, making their own phone calls, sending their own emails, waiting a few weeks between each one etc.

My process has been go to court and file a claim and pay to have them served. That’s it. They get the letter and a date is assigned. This part takes about 15 minutes at the courthouse.

At this point one of two things happens: 1] they show up or 2) they don’t. I would spend about an hour waiting for our turn and we tell our aides I’d the story and a judgement is issued. The judge would tell them they have 21 days to pay or we can proceed with garnishments, attachments etc. So far we are at roughly an hour and a half and I now have a judgement in hand.

21 days goes by and again 1 of 2 things happens. Either they pay or they don’t. If they don’t, I go back to the courthouse and again spend 15 minutes and a few bucks to file a discovery sub poena and have them served again. Total time investment is now less than 2 hours and maybe $60 total.

If they show up, they are required to provide bank account info, social security numbers, employment info, etc under oath. This information is taken straight to the clerks desk and more paperwork is filed. Bank accounts can be drained, wages garnished, property recovered, tools or cars seized, etc. This visit takes around. 45 minutes and every single time has resulted in payment. If you attach a bank account, the bank will hand you the money from their account. If you attach a tax return, you’ll get paid out of their tax return. If you attach tools or property, the sheriff goes with you to their place to get it. At this point we are less than 3 hours into it and have our payment.

If they don’t show up, a bench warrant is issued for them and bond is set at the amount of the judgement. If they get stopped for anything they’ll be arrested and not let out until they provide the information above or they make bond which comes to you.

The other option we have used is sent it straight to a collection agency and wash your hands of it. They do everything and take a cut when payment comes but now you have no time or money or effort invested.

As I said, everyone I know that thinks it’s too much of a hassle tries to do everything themself which I agree would be frustrating. We do collections twice a year and haven’t had one escape us yet.

 

[Nathan Igo]

So in this situation I learned a lot about all the different routes speaking with my attorney even after he took the route he did. Because there were parts/equipment over the cost of the labor he took the mechanics lien route. Because of that the client never even had to be notified anything was going on until we showed up yesterday to basically repo the parts with the presence of an officer of the courts. It is a quick process as long as you have the documentation in order and contracts spelled out. It also didn't help that the company said in writing "I am not paying this". With this route, it cost me $600 in filing fees, $300 for a 2 hour window for the officer of the courts and my attorney fees. This is all added to the lien also when the judge approves it. The lien stays with the business and will show in any credit reports. If they decide to sell the building or go bankrupt I am paid first before any other lenders.

We could have gone the small claims route and most likely won the judgement but I solely would have to be there for that along with serving them, paying the servicing cost and waiting about 1.5 months for a hearing. If they don't show you win and even if they show and you win you are still stuck with a bill against the company so good luck collecting. My attorney informed me roughly 80% of these cases the contractor dismisses to a collection agency at half the rate just to get something and then they are done with it.

The route we took with the mechanics lien, while crazy aggravating and driving me up the wall for the last few days, actually worked in my favor. Other than providing documentation to my attorney I spent only the 2 hour window at the office for the repo. My attorney was able to represent me at court (which they cant for small claims) and add his time to the lien on the spot. I do have to keep the equipment in tact for 2 weeks incase they decide to pay and have it returned if they pay off the lien but I can deal with that. The equipment had been sitting on my shelf for almost a year.

This whole debacle will definitely make me rethink contract agreements and terms in the future though to try and avoid these situations.

 

[sapphirescales]

Also, most clients cut and mail a check

Dear lord, what is it, the 1980's? I don't accept checks and haven't for decades. It's your business. You can demand upfront payment and refuse checks. By not doing this, you open yourself up to the sort of BS you're experiencing.

 

[britechguy]

I don't accept checks and haven't for decades.

Well, m'dear, you are the exception.

Most businesses, and quite a few individuals, use nothing but. Governments absolutely use nothing but. I only accept cash and checks.

I can't even conceive of a service business, of any type, that is not prepared to accept a check. You cut your likely clients by a very significant number.

 

[VISA MC]

Dear lord, what is it, the 1980's? I don't accept checks and haven't for decades. It's your business. You can demand upfront payment and refuse checks. By not doing this, you open yourself up to the sort of BS you're experiencing.

Different BS.

A very large part of my business is from selling merchant services. I had a jewelry store once ask me what the best advice I can give him to avoid problems taking cards. I told him to not take them.

The issue with large transactions is the chargeback risk. Say you sell a customer an hour of labor for $4,000 and charge on the card. Customer files a dispute with their credit card company and the $4,000 is withdrawn from your checking account and held in escrow until the dispute is settled. Now $4,000 I would expect most could cover that kind of balance but say it was for a couple of new PCs for an office or network equipment. That could easily run north of $10,000. Many small shops can’t cover the withdrawal.

Even if you win the dispute, your still without funds for a month or so. Also disputes always favor the customer. You can have all the signed contracts you want, all the evidence you want, you still are fighting an uphill battle. Some of the chargebacks I’ve seen come through would blow your mind.

 

[britechguy]

Different BS.

Indeed. After having to go through trying to set up merchant services years ago for my partner, when he was still doing shows, I swore I would never, ever, take credit cards. The setup hassle was enormous, and at least at that time, all everyone who sold them wanted was for you to sign on the dotted line without really explaining exactly what the costs would be.

What is provided today via Square is an absolute bargain by comparison (to then, anyway).

And I've been on the end of disputes where the customer was completely wrong (in this case, absolutely confused wrong, but the reason did not matter). If a dispute is filed, it is always the merchant on the hook, even if it's only until the dispute is settled, which is not always "with all possible haste."

 

[timeshifter]

Don't forget the 3% off all your revenue that the cc company gets.

Wanna bet that if the OP's customer had paid by cc that he wouldn't have tried to chargeback for being 10 minutes late of getting that remote setup?

 

[DRPCNZ]

Dear lord, what is it, the 1980's? I don't accept checks and haven't for decades. It's your business. You can demand upfront payment and refuse checks. By not doing this, you open yourself up to the sort of BS you're experiencing.

New Zealand as a country all banks stopped taking cheques by 1st May 2021

 

[NJW]

New Zealand as a country all banks stopped taking cheques by 1st May 2021

Yes, but AIUI the norm is now electronic payments – not the same overheads and risks as card payments. Essentially, cheques without the paper and time delay.