Have you ever sent a client to collections?

[ManWell KMA]

This is a spin-off from another thread about friends taking advaneforum.xxxe...and I ended up with a friend owing me $350 for services her accident claim didn't pay. After several months of trying to connect with her, and trying to get *some* payment I gave up. Never heard from her again.

I didn't send her to collections, it didn't occur to me at the time. But I'm wondering what the experiences of other MTs are regarding small biz collections and the success rate of actually getting some of the owed funds?

 

[sean]

I haven't, and I'd probably never bother. I doubt it would be worth the time or expense. I guess if you do a lot of insurance billing and have a lot of unpaid services, it would be worth it in the long run, though. I don't do insurance billing, partly for this reason. I get paid at the time of service and will provide any documentation the clients ask for to bill insurance themselves.

If someone were to stiff me, they would be on my "turkey list" - I won't work with them again. I only have two people on my turkey list in four years, but not for failure to pay for services received.

 

[Johnny Rico]

You are better off going to small claims court.

Costs you very little, easy to do. Collection agencies take a huge % of the bill, especially in a one-off situation.

 

[Andie]

You are better off going to small claims court.

Costs you very little, easy to do. Collection agencies take a huge % of the bill, especially in a one-off situation.

How easy is it to actually collect? How is a judgment enforced?

 

[Smoochy "Tin Machine"]

Most people don't like the idea of court -- it tends to drag up all kinds of other messy stuff like unpaid parking tickets, back taxes etc.

Chances are, if they have stiffed you, they have slipped up elsewhere.

It is the threat of court that usually ends up in receiving payment.

But having a court judgement is something you have every right to send to the credit bureaus, which you can point out in a letter. I had a mortgage appllication for $500K held up over $98 I did not pay a cell phone company because I thought they were idiotic in how they handled my termination for being assigned overseas. Guess what...they got their money or the bank would not lend to me, and that was BEFORE the sub-prime fiasco.

If the person does not show, you get a judgement by default, including court costs and attorney's fees (not that you need an atty, but you can pay yourself as your own representative and make that part of a claim)

 

[zoe]

I'm sorry your friend stiffed you. And from a post on another thread, sounds like she doesn't have much to pay anyways. By going through the court system, you might get a judgement for you, but is she going to be able to pay even then? I'm sure the friendship is in tatters to begin with.

As a possible alternative, are you able to claim it as bad debt on your taxes? I don't know what your tax laws are like, but it might be worth looking into. I haven't had to do this yet, so I don't know the ins and outs of it, but I know several people who do this on a regular basis when they don't get paid for their work. Something to think about if it is an option, if not, ignore me

Myrrha

 

[Rich]

You can write it off - that is permissable regardless of SP, LLC or S-Corp.

Allowance for Bad Debt. Counts as a business expense, so you get (1-your tax rate) as the value as it decreases your taxable income by the amount written off.

Better than nothing.

 

[b r]

This happened several years ago, but I thought of it while reading the other thread and wondered what others have done. It's too late to take her to court (which I'm not sure I would do anyway) and I've already written it off.

I don't do much insurance billing because it is a royal PITA to begin with. : Unfortunately, I was doing her a favor that I was not aware of at the time, nor afford to finance myself.

Oh well, fair weather friends and all...

 

[Nirvana Veggie balls]

Have you ever sent a client to collections?

. But I'm wondering what the experiences of other MTs are regarding small biz collections and the success rate of actually getting some of the owed funds?

I've never sent someone to collections.

I think I have about $68-ish dollars floating around out there from around 1996 that I never recieved.

My clients are usually pretty good at paying.

 

[kid_of_the_k-hole]

I know this won't help the current situation, but what I do in terms of insurance, is the person pays me at the time of service, and then I give them what ever they need to claim for their insurance. And if they don't get reimbursed, it is their problem to track down the money not mine. It is part of my policies. If their insurance doesn't pay up, not my problem.

Only time I alter this policy is when I can get preapproval for payment of services from the insurance company before treatment starts. That way I know how much my client has to spend, and I WILL get paid for X number of treatments at X amount of time.

Money is often the straw that breaks the camel's back in friendships. It is a shame this had to happen to you. And at least you were able to write it off, not much, but it is something.