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Collecting money

How do you do it?

6:37 pm on Jan 7, 2003 (gmt 0)

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Someone owes you money.

How do you collect from them? I know this person will not pay up unless his credit report is impacted, so I want my claim on his credit report.

How do I do that?

6:43 pm on Jan 7, 2003 (gmt 0)

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I'd say you have two options.

1. Hire a lawyer. I've done that in the past. Usually they will just need to send the person a letter, or speak to them briefly to get the issue resolved. Be prepared, however. You will probably have to negotiate a settlement. Unless the person is very stubborn, or has a legitimite beef with you, they won't agree to a full payment. So, in addition to the legal fees, you will be getting less than 100% of the money owed.

2. Hire a collection agency. They'll take a HUGE chunk of the total amount owed (40 - 60%), but they're very good at getting the money.

It sucks that you have to go through this. It's unfortunately a part of business that we all must deal with, however.

6:50 pm on Jan 7, 2003 (gmt 0)


WebmasterWorld Administrator rogerd is a WebmasterWorld Top Contributor of All Time 10+ Year Member

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I agree with chameleon. One final step you might take is sending another invoice marked "Final Notice - If not paid in full in 7 days, account will be referred to our collection agency". The process of turning a client over for collection often DOES appear on their credit report, so if you get lucky your own invoice might be sufficient to scare them into paying. Then again, it may not. Good luck!
6:59 pm on Jan 7, 2003 (gmt 0)

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Small claims court? Was this for a service or a product? Or both?
7:42 pm on Jan 7, 2003 (gmt 0)

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WebmasterWorld Administrator martinibuster is a WebmasterWorld Top Contributor of All Time 10+ Year Member Top Contributors Of The Month

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I bet they'd pay if all of a sudden their web site experienced "technical difficulties."
7:49 pm on Jan 7, 2003 (gmt 0)

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I agree with rogerd. But Sun818, IMHO small claims court is waaay too much trouble. The sums are limited, and basically I think the time spent filing the right papers, researching it, showing up in court, and the like to collect the limited sum available is better spent finding all-new business. Because think about it: $5,000 made with a new client with growth for the future means, what, $50,000 over 10 years? Versus collecting $5,000 from a client you'll never work with again. In essence, you're potentially shorting yourself $45,000 to get that missing $5k from the deadbeat.

So I'd either just write it off and move on (feel free to complain to the Better Business Bureau at least), or just send it to a collection agency if there was a good chance they could get anything of it at all, and it didn't cost me a lot of hassle.

8:06 pm on Jan 7, 2003 (gmt 0)

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We have a case in which the client hasn't paid his dues. We cut his site off on the last day and he called our manager during the holidays in a panic from across the ocean to demand his site be put back up. Our guy said, "Sure, pay me first".

I guess it depends how important the site is to the client. Sometimes a simple threat like this will put them in place and spare you legal action and related expenses.

undead - it depends what kind of situation you're in. Unfortunately one can't always write of 5k just like that.

9:06 pm on Jan 7, 2003 (gmt 0)

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Fortunatly, legal expenses are fully tax deductible here in Canada. Better than collection agencies where you will get only a part of due.

But I rarely have to go for either ones. I always split jobs in small chunks over time and ask for 50 % up front for each steps. Less of a (temporary) loss this way.

It costed us about 15 k of legal expenses to use ironclad contract boilerplates. We never lost any collection with them.

The 'repo' suggestions made above are not very serious. They could lead to more troubles than anything else and justify him not paying you.

2:04 am on Jan 8, 2003 (gmt 0)

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You know he won't pay unless his credit report is impacted and you did work for him on credit anyway? There is an old saying about it being useless to close the barn door after the horse has gotten out.

Well, you are pretty limited at this point, but since his credit report is his hot button, go to Dun & Bradstreet and pull up his credit number (I think you can still do that). Inform him you have his D&B number and will be reporting him in five days if a check isn't on your desk. To actually report him to D&B I think you have to open an account with them, (they used to have a small business plan that was about $100.00/year but that was 2-3 years ago) an account gets you a few free credit reports and you can turn in deadbeats.



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