You’ve sold something now how do you collect the money?

You’ve sold something now how do you collect the money?
It is an awesome moment when you finally sell something and you have a new customer, but the real dance a jig moment is when you see cash in the door. It seems like a logical chain of events but it’s not always that simple.  I’ve heard sad stories and even experienced my own tragic moments when I performed all the work and in the end I didn’t get paid.  So a few words of wisdom for collecting from your customers;  a) with all the excitement during the sales process, remember they may not pay you so include some sort of deposit or milestone payment for the start of the work whenever you can. b) If it’s a service make sure the terms say you can stop providing the service or collect equipment quickly for non-payment c) make sure it’s clear up front what you will be invoicing them for – there’s nothing worse than a disputed invoice because they misunderstood the terms or the deliverable.

 

Customers always remember you agreeing to more stuff than you remember promising.  Make sure it is all written down in plain English and signed whenever possible, especially if it’s a quote or for a large amount of money. If you’re delivering something try to get a signature upon delivery or some sort of acknowledgment that the work was finished.

 

I only suggest these things because if for some reason they don’t pay, the more support you have the better your chances at getting them to finally cut you a check or getting a third party to collect the monies for you.  I’m sure you know how to collect money, you call, you wait, you beg, you sit outside their office and so on and so on. So assuming you are an unsecured creditor (if you don’t know what that means then you probably are) then if you can’t get them to pay you for your work or product, you have limited options.  In the end you can agree to settle for a lesser amount in exchange for calling it settled.

 

You can always sue them; small claims court can be used to sue someone generally up to $10,000.  If you file a lawsuit you generally must file it in the county of the person or company you are suing.  You should search for the Justice of the Peace in the Justice Courts for the appropriate county and call them or go down there and file the appropriate paperwork.  If that is overwhelming you can reach out to www.texasbar.com and look for a lawyer to represent you (if you’re in Texas. If you’re in a different state they all have a bar association you can go to). You can sometimes find a lawyer who is willing to take your case on a contingent basis, which means they receive a % of whatever you receive in the case when you win and you would pay them minimal amounts out of pocket otherwise.

 

If that sounds like a complete headache, I have found the most effective method is to hire a collection agency to collect the money for you and just like a lawyer they will take the debt in exchange for a % of the amount they collect. For example they may keep 30%-40% of the amount they are able to collect on your behalf, which is a whole lot better than zero and a lot easier than a lawyer. To find one of these firms simply go online and look for a “contingent collection agency” – there are a million of them and they all have different deals.  But these are the guys who send mean letters and call the person constantly and so on and so on; we’ve probably all dealt with these guys before.

 

And one other quick note, if you think your customer is about to file bankruptcy you should try to get whatever you can from them, once they have filed for protection the courts will take over and if you are unsecured (which is likely unless it is a traditional loan or payroll) you are probably at the end of the line for being paid.

 

So good luck and may you have perfect credit customers. But in the event they aren’t perfect, do not give up, collect what you can and be a little smarter next time.