How to deal with clients who aren't paying bill?

[greengal]

I have a wealthy client (multi-million dollar home) who is trying to stiff me $2,100 for landscaping work i did. She was referred to me by a good friend who would be horrified that her friend was not paying me. I have been sending invoices since June and she continues to tell me "it's in the mail", "watched my husband write it", "supposed to be coming from the bank" etc. Also she is "so busy" running her own business on Martha's Vineyard for the summer.... I have taken the kind approach, giving her the benefit of the doubt. (My friend told me from the get-go that she was a bit scatter-brained at times.) I did not ask for a deposit because she was a friend of a friend. Have not said anything to my friend. Not sure that is appropriate. This is the first time anyone has not paid me. I'm a start-up and that $ is important to me. Especially frustrating to be stiffed by the wealthy. Suggests? Thanks.

[billbenson]

Personally, I'd figure out a way to go to her house when she's there (finish something in the landscaping, confirming the irrigation works etc.) for free. Just something that will put you face to face. Then ask for the check. Be pleasant. I wanted to be sure "this" was working for you, oh by the way can I get my payment now?

Also, don't assume that because she has an expensive home she has the money to pay you. There are a lot of house poor people out there.

[Spider]

I would let your mutual friend know and ask for her help --- "I don't like to mention this, Clare, but Stephanie hasn't paid her bill after many invoices and many promises that 'the check is in the mail,' etc. Could you help me and talk to her and see if you can get her to pay me. I really need that money, y'know?"

Whatever you decide, track down Kendall SummerHawk - she is a business/finance guru for ladies. She has lots of good advice. Here is an ad for a seminar but it contains a short video that will serve you well - it's about women entrepreneurs and their relationship with money. -- The Secret Energy of Money With Kendall SummerHawk (http://www.kendallsummerhawk.com/sem-workshop.html)

Good luck

[nealrm]

Do not tell the mutual friend, disclosing financial details to a third party can get you in a lot of trouble. Bill's idea sounds good. You are still in the 90 day period. After 90 days, start with the "I really don't want to send this to collections, but unless you pay ..." At some point you may need to think about small claims court.

[seolman]

I strongly suggest face time with the client. A polite visit explaining your needs will at least bring the issue to a close one way or another.

[Steve B]

Telling the mutual friend is wrong on many levels.

I do the following. Two or three attempts in writing. One or two attempts by phone. Go to small claims court (Which was clearly stated in one of the written notices).

[Spider]

I would let your mutual friend know and ask for her help --- Asking for the referrer's assistance is not the same as telling uninvolved friends. I am not suggesting broadcasting this information to all and sundry.

Some of the other suggestions will not only annoy the client but almost certainly annoy the referrer, too, when she finds out the actions being taken. There's a great potential for losing two clients AND two friends, if this is not handled properly. As for small claims court, that will only spread the destruction even wider.

You and your business will be much better off in the long run to write it off and get on with your life. Go earn another $2,000 somewhere else. You could earn $10,000 with the time and and wasted effort you will face chasing this lost money.

[greenoak]

we do about exactly what steve b does....then we send a letter saying exactly when we are going to small claims..
..then small claims and learn for next time...
maybe you need a better policy up front no matter if friend or not...

[nealrm]

Sorry Spider, but you are not correct. Telling the friend can and does land people in legal trouble. However, in the same though line you could mention that you would not be doing business with them again do to undisclosed reasons. If the friends ask, just state it is not your policy to disclose such information.

A agree with you line of though of not waste money chasing after this one payment. But, progressively worded letters are cheep and take very little time. If worse does come to worse, spending $50 and an hour of time in court is worth it to get $2100.

[Spider]

I repeat: Asking for the referrer's assistance is not the same as telling uninvolved friends. Especially if a referral fee has been paid or promised. But you may have direct experience of someone getting into legal trouble because they solicited the help of an already involved third party. If so, I'd be interested to hear the details.

Regarding the expenses of small claims - In some states, a commercial entity must be represented by counsel whereas an individual is not so required. (That differs from state to state, though.) Which would increase the cost way beyond $50 (which also varies from state to state.)

Also, winning a small claim doesn't guarantee you your money. Unless the defendant pays immediately (in the courtroom) and is given "time to pay", further action (and cost) may be required to get paid.

Unfortunately, dealing with the justice system is not always as simple as might be expected. Best to let it go and move on. That's usually better for your nervous system, too.

[Steve B]

You can repeat it all you want - but you're still wrong. Most people I know would find it unethical to share financial information like that. This "already involved" person is merely a friend to both parties - they should have nothing to do with the financial arrangements and collections effort. They tried to do a nice thing by getting the two parties connected - why in the world should they be put in a position to feel bad about doing that? There are also very specific rules about how to collect money - sharing the information with friends is hopefully not allowed.

I've had good luck using small claims court in two different states. It has been a piece of cake - other than spending a few hours of time. I've collected in 5 out of 6 cases. I understand if others would rather walk away from $2,000 than spend $50 and a few hours - but I wouldn't mind doing that at all.

[greenoak]

small claims is easy here.... and i wouldnt mention the other person at all....
we are in a regular, not small claims , court with someone now....thats a w hole different thing as far as effort and money...

[huggytree]

i would not discuss anything with your friend Yet!....wait until its all over and then definitely tell her....she should not be referring people to this person!!! if this person is a non-payer...

learn about the lien laws in your state....this could have helped you earlier...now its probably too late to use that as a threat

here in WI there is time periods for each of the (3) steps to put a lien on a house...30 days to give them a 'prelien' (letter announcing that you are working on the property) (this letter could be something included in your contract that they sign)...then you have 90+ days to do the 'intent to lien' and next comes the 'lien'

i hire a lien company to handle all my preliens and i do preliens on all projects over $5,000...the day i start the work is the day i file it...
after the bill is 30 days over due i do the 'intent to lien'.....these letters look scary, especially when in a official envelope from a lien company..you have to sign for these letters with the mail man...they are a big deal....why do i do this???? to make sure customers dont F with me....i want to be the first guy they pay....its an attitude.....when bills are 7 days late everyone gets a phone call....if they lie to me ONCE then i call and ask to pick up the check in person....'ill be right over to get my check'

another thing i do is get paid before i leave the jobsite...i make sure they understand this when i hand them the contract....no money up front, but paid in full immediately when the job is done....i dont mail invoices to homeowners..ever....

5 years in business and ive collected 100 percent of my $$...ive come close 2-3x and ive had homeowners refuse to sign for 'intent to lien' letters when the builder didnt want to pay me...

i would spend $2,000 to recoup $2,000.....i would probably pay $4,000 to recoup $2,000.....thats how i am....

since this customer has lied to you about sending the check id mail one last invoice saying in 7 days your going to file in small claims court....then do it

Next time use the Lien system...in reality it doesnt have much teeth unless your willing to forclose on their house, but it has scared almost every customer it needed to scare...they hear the word 'lien' and they pay

[greengal]

Thanks to all for the feedback. I have spoken with her on the phone twice as well as sent invoices. Same thing, "I take care of it right away" I was considering writing a more personal note to try to shame her into paying. i.e. "As you are Barb's friend, I extended to you the courtesy of waiving the deposit and I assumed that there would be no problem with payment, etc." Also, she has her own business. So thought i could include. "As a fellow female business owner, you understand that employees have to be paid and one must cover the up-front expenses, etc." then perhaps end with, "if there is something that you are dissatisfied with, i hope that you will give me the opportunity to correct it..." Perhaps this could be the final attempt at being nice and then go from there. I'd almost rather mention it to my friend before going to small claims.

[huggytree]

you have the wrong attitude and idea about your letter....shaming her? huh?.....does anyone feel shame anymore?....by discussing the issue with your friend your putting her in the middle....i see nothing good in this idea...after your all paid up id tell her...but right id keep my mouth shut...its not her problem and what is she going to do about it...

why are you getting into being Barbs friend or being dissatisfied..neither issue should be discussed....if she's dissatisfied she will let you know-by mentioning it your giving her a excuse to not pay

a personal letter between women is not professional in my opinion....thats begging for your money you earned

here's what my late notices say!

Job name
Address
Work performed date
Payment due date:

Payment is xx days overdue
this is your 3rd notice
if no payment is received in 7 days I will be filing for small claims court to collect money owed
Please send payment immediately to avoid court & collections agencies

you could add:
If payment is a problem please contact us to start a payment plan

there! Done!....either they pay or they dont...if they are honest they will pay, if not go all out! they are stealing from you and your family

this customer isnt paying..what are the reasons

1. they dont have the money
2. they dont want to pay and have justified it in their heads somehow
3. procrastinator or forgetful

your final letter notice needs to be professional and spell out exactly what you want from them and what you are going to do if they dont pay...i wouldnt even call them again after you send out the letter....ive done the calling thing over and over....it typically doesnt work....you just become a pest and they will like you less and it could become easier to justify not paying..send the letter and follow through

getting into your friend Barb or satisfaction just makes you look weak in their eyes....like your begging for your money.....dont beg..demand it!...you worked very hard im sure....now its time to get paid

if you typically get a downpayment dont skip it anymore...that downpayment shows your customer 'can' pay

[nealrm]

Spider - Here is the section of the fair debt collect act. It is very clear, you can't disclose this type of information.


Section 805(b) -- Communication with third parties. Unless the consumer consents, or a court order or section 804 permits, "or as reasonably necessary to effectuate a postjudgment judicial remedy," a debt collector "may not communicate, in connection with the collection of any debt, with any person other than the consumer, his attorney, a consumer reporting agency if otherwise permitted by law, the creditor, the attorney of the creditor, or the attorney of the debt collector."

In short - you can tell other people about the debt unless the debtor says you can.

For those interested - here is a link to the full bill. FTC Staff Commentary on the Fair Debt Collection Practices Act (http://www.ftc.gov/os/statutes/fdcpa/commentary.htm#805)

[Spider]

Thanks for posting that, Neal. Please note that this does not cover the point of the discussion - Section 805(b) are directions for an independent debt collector, a person distinctly separate from the creditor. I am talking about the creditor discussing the matter with a third party who is part of the transaction.

You may be right, but this quote does not prove it. Again, have you had direct experience of someone getting into legal trouble because they solicited the help of an already involved third party. If so, I'd be interested to hear the details.

[Steve B]

That's is quite a stretch to say that a friend that refers another friend is an "involved" third party. They are not legally involved at all - and should be kept out of it.

[Spider]

You may be right, Steve. I'm just trying to determine what the law says, in addition to what we each think ought to happen. I'm sure we all have heard of instances when the law said something different to what we expected.

[greenoak]

spider, you are like my dh...who always wants the exactly correct answer on anything important....it can be irritating but i must say it has kept us on the straight and narrow a couple of times!!! he tries hard to never guess...he gets nervous if i want to brainstorm and generalize.... he does our books and lots of the very exact stuff we have to deal with financially and with the government and all the boring stuff....hes so important to the store...he always gives very picky answers..lol


we are in court with someone now over a bad consignment deal, about 5000$$$....and i have told a few other people...one who was considering consigning with her....

huggys letter sounds a lot like what dh sends out.... he doesnt hint at this point.......thank heavens we rarely get in this situation.. but sometimes with bad checks...

[Matt Ohne hamen]

Hey Green Gal,

I am a contractor myself. I have been using a website called NASTYCLIENT! I have been able to get money that customers have owed me in three different cases. Check it out.