Just curious as to what some of you do when you get a customer who dosent want to pay the 2nd half of an invoice for work completed. Do you tack on a monthly interest % & wait it out, or go to small claims / court. Customer wanted work done asap, wanted a hard start/completion date (which was given and adhered to), & signed off on a job completion form that all was ok.
It just seems that they do not want to pay, as no attempt has been made by them. I have called numerous times(no answer/no machine). As this is only the 2nd time this has happened in 9 yrs. I’m a little unsure of how best to proceed.
Replies
No phone calls. Go to their house. First thing on Saturday morning, maybe 7:30 AM. Knock until they answer, ask for payment on the spot. Phone calls are too easy to ignore.
Re: ..."do when you get a customer who dosent want to pay"
This is, IMHO, the biggest question in construction. Particularly with service work.
More than one guy running an electrical business has related something along the lines of: 'Getting work isn't the problem. It's getting paid for work done'.
Legally once the workmen leave the site the equipment installed cannot be removed. The customer hasn't paid for it and your still on the hook to the supplier but legally it's the customers property. Even entry onto a former customers property can cause legal issues and collection activities, harassment from the customers view, has some very strict legal limits.
I know people with entire file cabinets full of unpaid bills, court settlements and late fee laden unpaid bills. None of which count for squat. Of course if you are willing to settle for ten cents on the dollar most can be given to a collection agency. More an insult than a solution.
Ironically it is most often people with money who balk most. Not a few enter into the job under one person's name while making sure that same person has no assets. Father signs while mother, daughter and son hold the property. Sue the father and you get nada. And your in deeper because the court and lawyer making your case are going to get paid.
What ever happened to the good old days where if a customer wouldn't pay the agreed amount you called up cousin Vinny and Guido and they had a talk about the going rates for kneecaps and elbows. Payment, with interest and a healthy 'tip' covering the 10% off the top collection fee, was usually forthcoming. Customers who failed to pay suffering a series of 'unfortunate events'.
"Ironically it is most often people with money who balk most."How do you think they got there money? :)
It's experiences like this that make me choke when I hear how the consumer needs to be protected from unscrupulous contractors. In my life, the opposite has been more often true.Andy Engel
Never try to teach a pig to sing. It wastes your time and annoys the pig.
Other people can talk about how to expand the destiny of mankind. I just want to talk about how to fix a motorcycle. I think that what I have to say has more lasting value. --Robert M. Pirsig
None of this matters in geological time.
Bevel,
We need more information. How much money is in question and how much time has elapsed since completion of work, first invoice, and last contact?
Was there a contract? Do you have any language on your contract or invoice that deals with payment terms?
If we had completed a job 45 days ago, invoiced 30 days ago, and still had not received payment I would
1. Call a few times, possibly from a number unknown to them. There's always the possibility that they are away, changed numbers, etc. You never know.
2. Send a registered letter describing that they are in default and you need prompt payment.
3. Visit them, just not like 4lorn speaks of at the end of his post. I have found face to face discussion in a non-threating manner (i.e. don't do anything {other than the fact you are there} that could be construed as aggressive, pushy, or threatening) to be effective. Sometimes your physical presence will make all the difference.
Turn the tables on them. When you do catch up with them, ask them how they would respond to the situation they've placed you in. Often this forces them to be reasonable.
Finally, after all possible courses of action are exhausted, use legal action. Keep in mind that your time is valuable and the courts usually cost money. It may be in your best interest ($ wise) to write off the debt as uncollectable.
Liens are an option but you need to know your states laws. There's a good chance that your window to lien has already passed.
Good luck.
Jon Blakemore
RappahannockINC.com Fredericksburg, VA
We do a lot of small jobs. A big job for us is 20k and I did a job last week the bill was $109. I think one of the keys is when you are done make sure you are done. And collect NOW! If one of my guys doesn't get check that day from an unknown customer I am in the truck that night and drive over to see why and collect it then. I agree, phone calls are a waste. DanT
Jon, The amount due is $500.00. We do have a signed contract that states 1/2 down to start remainder due within 10 days of completion. 2% service charge on accounts over 30 days.
The job was completed approx. 4 months ago. For the last contact I will have to dig out the file.
I have stopped at the home twice previously & either nobody is home. or they are not answering.
To the best of my knowledge this has nothing to do with a quality issue. When we left the job, the job was complete & the customer was happy.
The other time this happened was with a builder/remodeler (I didnt find out about his rep. untill it was too late) the amount was less & I filed in small claims on him, as soon as he recieved the papers in the mail, I got a check. I believe that is where I am headed with this one.
The amount isnt as bad as it could be, luckily it was a small job, however money is money and if you let 1 go, why not another, and another.
Shouldnt any and all court/lawyer costs be paid for by the delinquent party?
Why do you finance your work to start with? Are you in the finance business, as well as being a contractor? I get paid for everything I do before I leave the house the last time. I think you're inviting this sort of thing by allowing them 10 days to pay you, and telling them you'll charge them 2% interest after 30 days. Maybe they just decided to wait a year, and pay you the 2% interest. I think yuou need to make all accounts payable the day the work is complete, and get out of the finance business.
Allen in Boulder Creek
Agree with moondancer, 100%. Also, I write the contract up with the homeowners in their home. I prompt them to ask questions, add specifics, etc. I also explain that changes will mean T&M at $/hr and that they will have to sign a separate agreement for every change. Cuts down on that BS. I'm very specific about the final payment, that it will be due on completion. This is all very friendly, nothing heavy at all. But I find that once I've made my presence felt in their home, it's almost never a problem getting paid.
Another legal thing...many states have laws to protect small contractors who work for homeowners. The general heading is "theft of services". In PA for example, it's a misdemeanor to default on a contract.
When the work is completed you should be paid at that time. I had a friend of mine, that at the time of completion, a woman said, 'My husband will pay you when he gets home from work tonight'. He said 'OK' and sat down in a chair and said 'I'll wait'. Needless to say, she wrote him a check straight away....View Image
a woman said, 'My husband will pay you when he gets home from work tonight'. He said 'OK' and sat down in a chair and said 'I'll wait'.
I tried that same tactic once. About an hour later, the husband showed up with a buddy, drunk as hell, waving a pistol around. My helper who was much smaller than I am, but was a rugby player in his spare time, said "I'll take the one with the gun, you get the other one."
They settled down, gave us a beer and wrote us a check with a tip.Birth, school, work, death.....................
http://grantlogan.net/
If the amount is significant, record a mechanics lien if available in your jurisdiction. If you have a lawyer, have him/her set up some forms for you to use so the next time you can do it yourself. Once the lien is recorded, the deadbeat can't sell or refinance without either satisfying the lien or posting a bond. In Massachusetts, where I practice, it will cost about $3-400 in filing and recording fees and an hour or two of lawyer time. I have taught several clients how to do it and ususally they just call me and I walk them through it.
This assumes that it is only a payment question and not a real dispute about quality, compliance with plans and specs, etc. Obviously, your state's procedures will be different.
It's $35 and no lawyer required to file here in my county, but the lien only lasts 8 months (I think) unless further action is taken.
In order to perfect the lien in Massachusetts, you need to file a lawsuit. The filing fee in Superior Court is almost $300 and there are fees for service of the complaint and recording. If the contractor is a corpporation, it needs to use a lawyer to sign and file the complaint.
Try stopping by early on a sunday morning, and don't leave until the deadbeat answers, I'm not suggesting you get violent or anything, almost everyone is home on a sunday morning around 7 am....
Edited 11/22/2005 8:42 pm ET by CAGIV
All good suggestions. In my business, if I have to collect I visit the place and very nicely point out that I am owed X amount per the agreement. Have copies of the originals with you. When they give you the "so and so is gone, he'll send you a check when he returns" I say ok I'll wait, in the entry way doorway etc. I pull out my newspaper and sit down and read it. After a couple of hours they git tired of seeing me there and I get paid.
The lien and lawsuit stuff doesn't work and your just paying a lawyer. Then you still have to try and collect. Be a persistent pain in the ask.