PAYMENT - Deadbeats is causing Us to Change How we do Business

Last month was the final straw. In past years, we would allow clients to pay withing 30 days. Over the years, because of bad checks we stopped taking checks and are close to stop taking checks for our youth sports business.

Four major clients of ours defaulted on payments owing us over $45,000. We sent all demand letters to their accounting departments and they have not responded to our letters. Officially, their credit with us is ZERO meaning they must pay by cash ONLY! No checks. They must send a cashiers check or a bank check drawn from a recognized bank.

We stopped taking credit cards because a lot of clients would call their banks and stop payment on invoices. Then it occurred with consumers too. Now, thanks to bad checks we are tempted to stop taking checks all together. We will still take debit cards because users cannot stop payment and payment is immediate.

Over the last few years bad checks have increased in our youth sports photography. In 2005, we had only four bad checks. In 2006, we had 12 bad checks. In 2007, we had 20 bad checks. This past season, we had 51 bad checks. Most parents pay by cash.

We have been asked many times if clients pay by cash if we could give them a discount. Sorry, we do not do that. The fees we charge have sales tax include in them so it is easier to calculate how much we owe the local and state governments.

A few bad apples spoils the whole bunch.

I don't know where to find the service, but I've heard of a type of collector or service (maybe just an individual company) that ends up getting the right to "take" money owed to a company from the bank account from the company that owes the debt, until the debt is paid off. Plus also the right to take extra money to cover the cost of this "collector's" fee as well.

I didn't read it in your post, but you should not do additional work for those that owe you money until they pay what's owed, plus penalty interest (assuming you have late payment penalty written into your agreement/contract). Then make them pay in advance, but put them low on your priority list, very low.
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http://roberthoy.zenfolio.com/
http://www.photographybyhoy.com

Cheques are not so common in the city but I do not take them unless my eft machine is broken or out of range and there is no other way for them to pay. If they want to use a cheque I ask them if they have a card attached to the account, usually they do, but I have had people say "yes, but there is no money in the account" Ok, so how is the cheque any good to me then?

Direct bank transfer is a very popular and no fuss payment method especially for commercial clients. My cheque policy is they have to wait until it clears before collection of their goods. Ok for paying up front but not on pickup.

I have one client that is a major national company (I won't say the name, but everyone knows them) and they have been in default for more than six months. They've done a lot of work with me, but after delays and default for two years running now, we're saying goodbye to any future work.

Bad checks don't bother me too much. In fact, I had a colleague who actually liked getting them, because he always prosecuted, always collected additional fees, and always collected. People tend to get very cooperative when that call arrives from the local sheriff's office saying they've got a warrant to serve unless immediate payment isn't made.

Vegasluvr said:

Last month was the final straw. In past years, we would allow clients to pay withing 30 days. Over the years, because of bad checks we stopped taking checks and are close to stop taking checks for our youth sports business.

Four major clients of ours defaulted on payments owing us over $45,000. We sent all demand letters to their accounting departments and they have not responded to our letters. Officially, their credit with us is ZERO meaning they must pay by cash ONLY! No checks. They must send a cashiers check or a bank check drawn from a recognized bank.

We stopped taking credit cards because a lot of clients would call their banks and stop payment on invoices. Then it occurred with consumers too. Now, thanks to bad checks we are tempted to stop taking checks all together. We will still take debit cards because users cannot stop payment and payment is immediate.

Over the last few years bad checks have increased in our youth sports photography. In 2005, we had only four bad checks. In 2006, we had 12 bad checks. In 2007, we had 20 bad checks. This past season, we had 51 bad checks. Most parents pay by cash.

We have been asked many times if clients pay by cash if we could give them a discount. Sorry, we do not do that. The fees we charge have sales tax include in them so it is easier to calculate how much we owe the local and state governments.

A few bad apples spoils the whole bunch.

Click to expand...

--
Michael Thomas Mitchell

Is there a reson why clients are calling credit cards banks to stop payments? Seems unusual.

Vegasluvr said:

Last month was the final straw. In past years, we would allow clients to pay withing 30 days. Over the years, because of bad checks we stopped taking checks and are close to stop taking checks for our youth sports business.

Four major clients of ours defaulted on payments owing us over $45,000. We sent all demand letters to their accounting departments and they have not responded to our letters. Officially, their credit with us is ZERO meaning they must pay by cash ONLY! No checks. They must send a cashiers check or a bank check drawn from a recognized bank.

We stopped taking credit cards because a lot of clients would call their banks and stop payment on invoices. Then it occurred with consumers too. Now, thanks to bad checks we are tempted to stop taking checks all together. We will still take debit cards because users cannot stop payment and payment is immediate.

Over the last few years bad checks have increased in our youth sports photography. In 2005, we had only four bad checks. In 2006, we had 12 bad checks. In 2007, we had 20 bad checks. This past season, we had 51 bad checks. Most parents pay by cash.

We have been asked many times if clients pay by cash if we could give them a discount. Sorry, we do not do that. The fees we charge have sales tax include in them so it is easier to calculate how much we owe the local and state governments.

A few bad apples spoils the whole bunch.

Click to expand...

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http://www.jeffseltzerphotography.com (fine art)
http://www.jseltzphotography.com (wedding/portrait)

There are four types of approach to recouping outstanding invoices :

(1) Factoring agencies.

http://www.teneric.co.uk/businessfinance/factoring.html

(2) Lawyers

(3) Direct negotiation

(4) Small claims courts

Given the nature of your problems you should look into factoring agents.

Lawyers are an option if you have a few large targets to aim at. I don't regard them as a practical option for small clients.

Direct negotiation means accepting that economic realities may have pushed clients to financial limits and you try to agree a (formal legally binding) schedule for payment, ideally with secured debt.

Small claims courts, depending on your locale, may deal with some of your problems. But this does mean court time and unless you're already covered for legal fees it means doing the preparation and presentation yourself.

Finally note that formal legal methods almost always result in a settlement for a reduced sum. Be prepared for that and avoid court ( and costs ! ) as much as possible.

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StephenG

Pentax K100D
Fuji S3 Pro
Fuji S9600

A couple strategies I've heard of to get paid.

1) Continue service but client must get on a payment plan or else service stops.

2) Notify that there is no choice but to send account to collections. At this point most will want to cut a deal. Stop service and arrange a payment plan. Possibly, forgive some debt.

3) Take trade. When there is little hope of getting any money. Hey give me that car and we'll call it even.
4) Write it off as a loss. Accept defeat.
5) If the amount is significant, legal action.

It's a tough call, especially if you're not the only show in town. If they cannot live without you, they'll pay. If you have competition, then they might just go and rack up a bill with them. $45,000 is a lot of money no matter how small or big your business is.

Not sure how you charge clients or what you do that they owe you $40 grand...

This year my sports average was the same and only 1 bad check (vs 3 or 4) and that one should never have been taken by my table people (starter check w/ no number, name, nothing...ahh, the hidden costs of cheap labor).

I take CC but dont' get many, take cash but don't get many more of them - 90% is checks. Most leagues will pay the checks -they feel the parent's that write them are financially challenged so they do it 'for the kids' and perhaps to save embarrassement.

My fear is with my new lab giving me less than a week turnaround I'm deliving the product before the checks clear...I'm losing any leverage to collect the money.

I've considered charging the league - they want me for my turnaround and they want some commissions so I can hold back bad checks from their commissions if I can't get it collected, or at least my costs/losses on the bad sales.

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If I knew how to take a good picture I'd do it every time.

Sorry to hear that they owe you so much.

Usually I have 2-5 bad checks per league I shoot, 3 times a year, but then I send them officially looking letter demanding payment in cash or they will be sent to collection agency with all unpleasantness and such.

So, the parents arrange with me payment, in cash only after that, plus bad check fee.

For so much money, I would contact a lawyer and sue them for lost wages, work, etc...

Anyway, good luck.

I don't take checks from individuals. The ONLY exception is from people that I've personally known for years. (Read: I know where you live.) That said, it's pretty rare anyway. Some individuals will pay with cash, but most just whip out a card.

Businesses will generally pay by check but I've never had one skip on me. Most are net 30 and usually pay on time... Magazines are also net 30 but rarely pay on time...the reality is that they often take longer...that just seems to be the nature of the beast.

For indiviuals, studio customers, we take debit cards (preferred) or credit cards. If I had to guess I would say that 80%+ are debit cards. Onine sales are by card as well...though the fulfillment company deals with any bad cards. (I've never had to deal with one of those.)

I think a letter from your attorney would not be a bad place to begin... It just lets them know you're serious and you ARE going to collect.

For the future, unless they're a big corp with a good rating I would suggest getting as much as you can up front. If they balk at that, you might check into setting up an escrow account. That way, you're protected because the money will already be there...and they're protected in case you happen to flake... Which is why some people will balk at spending thousands for a product that has yet to be produced...

No, the reason they do this is because they are over extended on their credit card. People learn that they can dispute charges under $50 on their credit cards very easily as their credit card company always sides with them.

There is a lot of credit card fraud in some of the areas we accept credit cards. That is one reason we probably will not accept credit cards in the future.

Because of possible robberies, I try to make sure all cash is safely secured when we do Photo Days. Usually we take in about $7,000 in cash at each event. At our lab, we take in much more credit and debit card transactions than cash.

Basically, the major clients are talent agencies who orders 100+ 8x10 for their clients (we emboss the clients resume on the back of their images). These agencies all give the same rhetoric "we will pay on the first of each month". These are the clients that owe us the bulk of that $45,000.

Professional sports teams are the best in paying invoices - usually in two weeks.

Our turnaround time is 7-10 days after we receive the order. For a 1200 kid league, their prints are finished within 7 days.

For companies we have a short relationship with (less than 5 years), they must pay 50% up front to cover the cost of paper and processing.

Someone mentioned the economy. Well, if their finances are that bad they should not be spending money on images.

Vegasluvr said:

Because of possible robberies, I try to make sure all cash is safely secured when we do Photo Days. Usually we take in about $7,000 in cash at each event. At our lab, we take in much more credit and debit card transactions than cash.

Our turnaround time is 7-10 days after we receive the order. For a 1200 kid league, their prints are finished within 7 days.

Click to expand...

In another thread I recall you saying your average sale on T&I as $55 or something like that with package up to $100. So a 1200 kid league would be a picture day of $66,000, not $7000...what am I missing here?

A photo day here can be 40 to 400 kids, usually in the 200-300 range for baseball/football/soccer. Everyone pays on picture day and as mentioned, 90% pay by check. But then we dont' have an economy with a lot of tipped workers that have cash laying around. Averages range from $19/kid up to about $33, depending on many factors (shooting outdoors the weather is the biggest one).

The other stuff you do is probably unique to vegas, la, miami and NYC areas. It's hard to decide what to do about badly delinquent accounts - some businesses make money this way, by shafting their suppliers. But cutting them off or perusing legal action will certainly cost you their business and perhaps hurt your reputation. You never know when the guy in charge of paying you changes jobs and holds a grudge or who he talks to in bars after work.
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If I knew how to take a good picture I'd do it every time.

Robert Hoy said:

I don't know where to find the service, but I've heard of a type of collector or service (maybe just an individual company) that ends up getting the right to "take" money owed to a company from the bank account from the company that owes the debt, until the debt is paid off. Plus also the right to take extra money to cover the cost of this "collector's" fee as well.

Click to expand...

As far as I know, in the U.S., IRS is all there is for getting into bank accounts, without going to court first. Garnishing wages is possible, but can cost a lot, or so I'm told. I'd guess there are all sorts of possible liens available, but every one that is safe to carry out--that keeps you from getting sued--is bound to have a lawyer attached.

Last I heard, there are collection firms who will buy bad debts and then try to collect, but what I also heard was that they never pay more than 50% of the amount owed, often less.

Getting half your money up front is the only way that makes sense, especially in today's economy.

--
Charlie Self



http://www.charlieselfonline.com

I fully understand your pain. I have a cousin who owns a company in Phoenix (been in business 30 years) he is a roofer. Has a strong reputation for honesty in a business full of crooks. He does big projects all over AZ & NM. One of his biggest problems always is getting paid by big clients. They almost universally will hold the money past every due deadline and will only pay just short of lawyers getting involved. Why - the have the money but the longer they have it in their bank they earn interest.

I have an Uncle who worked for a very large engineering firm. One aspect he hated about his company is they would never pay the smaller subs until their demand for payment letters started the legal process for collection. They would pay their big subs that had in-house legal teams, but small subs would have to wait and wait for their money.

Some company's have no ethics. Our company has a clear set of values that are short and sweet and they start with total honesty, ethics and high moral conduct. The values apply not just for our dealings with customers, but our employees, partners and suppliers. Everyone working for us knows the values and they are the foundation of our company. I just wish everyone had strong values that exist more than just on paper.

I was really surprised to hear that CC companies let their customers get out of their debts. I had a couple of friends who had clear cases of fraud and it took a lot of effort to prove to the CC company that it was a true case of fraud. Very sad to hear about the change.

I hope you are able to get your money from these customers.

Ed

Vegasluvr said:

For companies we have a short relationship with (less than 5 years), they must pay 50% up front to cover the cost of paper and processing.

Someone mentioned the economy. Well, if their finances are that bad they should not be spending money on images.

Click to expand...

I've heard that visa etc will give consumers up to 18 months to reverse charges!

Some people think the cc companies 'eat' these types of things - they do not. They take the money back off the business and then it's up to the business to try and resolve this with the consumer.

There's a lot of fraud out there. Most of it is mailorder though, local folks dealing with local businesses are pretty honest.
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If I knew how to take a good picture I'd do it every time.

I am talking about cash only.

We took debit and credit cards in prior years. This past year we went solely with debit cards and cash only at these events. This year many parents used debit cards which was easier because it meant our cash handling was at a minimum.

We also experimented with pre-paid offers too. We gave parents who prepaid a voucher they could hand us at the time of the Photo Shoot which also meant less time handling transactions. This worked very good in high volume leagues.