In the past many contractors have had customers that simply refuse to pay. These contractors have had limited resources for retaliation, and employing collection agencies or mechanical liens, however effective, can be costly. Even when the contractor is in the right it can still be difficult to recover what’s due. In the past the businessman had no centralized location for any client information regarding past delinquencies. Our goal is to inform the contractors of the delinquent customers before they start work; and by doing so the contractor has the customers’ payment history and can therefore avoid entering into business situations that might result in payment complications down the road.
Resources for Contractors
Most building contractors eventually find themselves in a situation where they are unable to collect a debt from a customer. Besides customers who don’t pay on time, they also encounter customers who try to get them to do more work without additional compensation or try to renegotiate the price after the job is completed. There are various methods contractors can employ to receive payment for services rendered, as well as other means by which contractors deal with their customer payment and billing issues.
Collection Agencies
When a customer refuses to pay, implementing a debt recovery solution can be a drain on time and finances, particularly for small businesses, and many businesses turn to collection agencies. A collection agency’s tactics and behavior will reflect on your company, so it’s important to choose one that has a good chance of collecting your debt, is knowledgeable in debt collection law and will present a respectable image. It’s also helpful to employ an agency that is experienced in your industry, since your business may require specific collection tactics. To some, these companies have a reputation for using intimidation to recover debts. However, this reputation is outdated. Collection agencies must comply with the Federal Fair Debt Collection Practices Act (FDCPA) which requires that debt collectors treat debtors fairly and prohibits certain methods of debt collection, including threats and harassment. In addition, most collection agencies find that by working with debtors and providing payment plans or other settlement options, they are able to recover a larger percentage of money for their clients. Remember to do research when deciding on an agency; some can be costly and take a large percentage of the delinquent account – sometimes up to 50% - so do your homework before you go this route.
Due Diligence
Performing due diligence on prospective customers, including credit and reference checks and reviewing past payment history, provides a safety net of sorts for contractors who want to avoid having to deal with non-paying or delinquent customers. It’s also a good idea to have a structured contract and billing system in place, with clearly defined terms and mechanisms for sending invoices and reminder letters and, if needed, making phone calls at set intervals. If those fail to produce payment, it’s a good idea to find out why, because there may have been a problem with the product or service that was never resolved. If the customer is having cash problems, try to work out a payment plan. If all else fails, hire a lawyer or a collection agency, which can be costly and difficult, after doing due diligence on them.
Dispute Resolution Services – Arbitration & Mediation. Arbitration & Mediation are time-tested, cost effective alternatives to litigation involving debt collection. Arbitration is the submission of a dispute to one or more impartial persons for a final and binding decision, known as an “award.” Awards are made in writing and are generally final and binding on the parties involved. On the other hand, mediation is a process in which an impartial third party facilitates negotiation and encourages voluntary decision making by the parties to the dispute. This can be effective for resolving collection disputes prior to arbitration or litigation.
|
