any suggestions? Collecting on overdue invoices...

[SRI Cleaning]

Any suggestions would be greatly appreciated! We have a commercial janitorial account. It is a full day of work for 2 of our people, every week. It is a very good account but they have been very slow in paying. Up until this point, we have been too "understanding." We didnt want to ruffle any feathers because it was such a good account.

Well last week we found out that our head cleaning girl was going to work for them. They had been telling us not to send her to their jobs because she always screws up, in the meantime they were telling her what a great job she does and she should come work for them (little did we know).

Our other guys get there today and they say that all the units for today were cancelled. so, now i'm done being "understanding"

They owe us over 7 grand and the person we need to speak with is always "unavailable". Any suggestions? have any of you ever used a collection service? if so, how does that work?

 

[Scott]

Do you have a collection policy in your contract?

Oops, guess I better ask - Do you have a contract?

Scott

 

[breathe72]

Man that really sucks. How big of a company is this? Im not asking for their name, just curious. Are they a local company or do they have a corporate office that has a higher up in an accounts receivable/payable department?

How were you invoicing them? By Email? By Fax? In person? US Mail?

Did you obtain a signature or some form of confirmation after each cleaning? Something that would leave you a carbon copy of the signed invoices?

Good luck with that. If you're sure they're dodging you, Id be chasing them like they stole something from you.

 

[SRI Cleaning]

No we dont have a contract. it was never agreed that we clean every week, for any contracted period of time. it just so happened that they had us do it every week for a few months. So we dont have a contract with them. But we do have signed work orders for every week we were there.

I will have to check with my partner, but i do beleive we have a signed proposal stating our prices per unit, and terms of 30 days.

 

[Bob Foster]

It seems that the girl hired is the one that screws up might just screw up again. Putting an account to collection is a one-way trip to negative customer relations.

I suggest you escalate your attempt to see in person Mr. Unavailable and in a non-confrontational professional manner ask him why they chose to do what they did and at the same time ask him what he intends on doing about paying the outstanding balance.

For the next 90 days this should be your stance because it will be within the next 90 days that your girl will screw up. If she does based on your meeting with Mr. Unavailable you may well have your account back and maybe even getting paid more promptly due to your new understanding emanating from your personal meeting.

After 90 days a $100 letter from an attorney requesting payment is cheaper than giving 30-50% of the collected balance to a collection agency.

 

[breathe72]

Yes, what Bob said.

 

[bob vawter]

When i first started in business i targeted management companies.....the lesson i learned from that is:

Sooner OR later they will screw you.....it's only a matter of time!

SOOOO...i paid a secretary a $100 for Sids home phone number.....and i called at all hours of day and nite...asking his wife WHY he didn't pay me........wasn't long till i had my money...

This is a very true story......

nails in the driveway works too.......

 

[Scott]

Our policy is - no contract, no terms. We're not a bank, although we'll act like one if they'll sign a contract.

In the contract (we actually call it an "agreement" so as not to scare 'em away) we spell out such things as what each party is responsible for, what we're contracted to clean, cancellation policy, billing and terms, insurance requirements and proof, and collection policy. I know it's too late this time, but next time I would certainly get a signed agreement with everything spelled out, ESP. if you're going to extend credit.

Yep, we learned the hard way years ago, just like many small businesses.

But you want to collect now, so let's look at a few options. This assumes you'll probably never work for them again. If you think you might, I would be a little more nice than what I'm about to write.

1) Send a demand letter stating exactly what is owed, the amount, and a payment window - we use 10 days but our demand letter goes out @ 60 days after the work is completed. Also in the demand letter state what happens if you do not get paid by the arbitrary date set. Our language is pretty nice at the 30-day mark, a little more aggressive at the 45 day mark, and we're downright bulldogs @ 60+ days. Be sure to check your jurisdiction as every locale has different collection requirements. Also send it signature-required.

2) If the initial demand letter doesn't work, have an attorney draft up a demand letter. It should cost you between $100 - $150. If you don't think they'll pay you with the initial demand letter that you've written, skip step one and go to this step instead.

3) Get a contract together and after they pay approach them with it. IF they still want you to extend credit, I would demand this. If they want to pay cash and carry I would still ask for them to sign the agreement just so both of you are the same page as far as expectations go, but if they don't want to sign it, I would still work for them as long as they paid on the spot.

I have had zero luck with collection agencies over the years and the amount owed you is sizable enough to contact a lawyer instead.

Scott

 

[SRI Cleaning]

Chris,
They are a big company, and i had called their corporate office and they said i have to talk to someone at the local office. We have done work for one of their other properties and have always been paid promptly.

And yes, we do have signed work orders for every day we are there, with the exception of a few days when our people were done after their office was closed.

 

[RandyHilburn]

We are a broad based cleaning company and do business with property management companies all over the city. I could really tell you some stories about trying to collect from property management companies ...

Nevertheless, in my opinion, the account may have promised high sales and a profitable return, but the way they treat you is who they are! They promise a lot, but can't, won't or don't deliver.

To be 7K behind is about twice as far as we'll ever go. Owners and PM go out of business all the time. Turnover is high. Don't get caught holding the bag. Write and call the PM company home office today. Write the property owner too. 10 days later, have your attorney send a letter to both. If they go under, you will never see the money.

Most of the PM companies around here only pay once a month. So, at 45 days without payment, we suspend general services, but we'll still help with a catastrophic situation (fire, flood, etc.). At 60 days we can no longer afford them. Finally, it's only a 'good account' if they pay on time!

 

[RandyHilburn]

Anthony, some of the property managers are bonused (quarterly and annually) based off their 'controllable expenses,' of which cleaning is a part.

We once had a case where the property manager did not submit our invoice for November and December so that she could make both her fourth quarter and year end bonus. She then quit in late January after receiving her bonus check(s).

I'd also suggest that you inquire with the district manager and hear what s/he has to say - followed by his/her actions to get you paid! If the local manager is holding up submission of the invoice, go to the district manager and find out - Why?

 

[diamond brian]

Pay me 5% and I'll have it for you within a few days.

 

[John Buxton]

What Bob said. Talk in person, not on the phone.

 

[Tony Dees]

Being in Pa and If it were me, I'd call the local District Justice.

They'll get cha paid, I go to the JP when I get a slow pay or no pay.

Works every time, just don't accept any money, til you get ALL of it.

This Works in PA

1. Send them a Certified letter (in your name) with your intentions, stating that you would like to be paid in 30 days.

2. After the 30 day period, send them another Certified letter (in your partners name) stating, Pay within 10 days or you will file a claim with the local JP, make them aware that all cost of filing will be additional expenses and will be added to the amount owed.

3. Once you file with the JP, they will send a letter to the party stating your claim and requesting payment within 30days or show up to a hearing.

4. They will pay the JP and the JP pays you, IF you win. If they pay you all just call the JP and withdraw your claim.

5. If they try to pay you even a one Dollar, in your 30 day period I stated above in #1, the process will start over. GET ALL THE MONEY OR NONE

I'm not in it for a Popularity Contest, F'em, give me what i've worked for.

Call the JP and make sure this is correct, they will gladly guide you this time, but I would follow the above advice and devise a system for the next time, Hopefully there won't be a next time.

Everyone takes their lumps sooner or later

 

[SRI Cleaning]

Hey guys i really appreciate all of the responses I got. And i guess We combined some of the advice and this is what we are going to do. My partner drafted a collection letter and sent it registered mail with 7 days to respond, if we get nothing, our lawyer is going to do the same with 5 days to respond. If we still get nothing then we file with small claims court which will cost less than 130 bucks. It just sucks. We are small and trying to get our new business rolling and they not only wont pay but they lied to us and basically stole our best employee.

 

[Sticky]

payment

If they don't respond to your letter try going in there with a baseball bat...lol

 

[Scott]

Hey guys i really appreciate all of the responses I got. And i guess We combined some of the advice and this is what we are going to do. My partner drafted a collection letter and sent it registered mail with 7 days to respond, if we get nothing, our lawyer is going to do the same with 5 days to respond. If we still get nothing then we file with small claims court which will cost less than 130 bucks. It just sucks. We are small and trying to get our new business rolling and they not only wont pay but they lied to us and basically stole our best employee.

The problem with going to small claims court is even if you win they might still not pay. I won a small claims default judgment several years ago, paid the court extra for a deputy to seize assets equal to the judgment if the defendant still didn't pay, and here it is 4 yrs later and I still haven't seen a dime.

By retaining an attorney and going through normal court proceedings instead of small claims, you can and should also add attorneys fees to the claim, whereby you won't pay out of pocket if you win. (and you should - the delivery of services is not in question, just lack of payment)

Here's exactly what I would do if I were you. Find a good business and/or contract lawyer that will discuss your dilemma with you. The initial consultation will not be chargeable until you retain the attorney. Have him write out exactly what steps he recommends you take, charges, etc. See if he'll do this work pro bono in case of a loss or non-collection. If you win and it's collectible, he'll have already added his attorney fees in to the judgment. Some lawyers need these types of cases in their portfolio to advance their career and may very well agree if you ask.

I would avoid small claims period.

Scott

 

[rhyde]

i had a similar situation several years ago with company that wanted to higher away one of my employees they always where late in paying their bill. I've always tried to keep an open dialog with my employees to the point that this employee knew they where poor at paying their bills. i knew with-in a hour about their offer of employment and my employee had no desire to work for a company that can't pay it's bills.