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Old February 4th, 2009, 05:12 PM   #1
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Collections or Small Claims Court

Just wondering if anyone has advice on where to proceed with a client that isn't paying up. I'm not sure what the advantages/disadvantages of collections versus small claims court are.
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Old February 4th, 2009, 05:31 PM   #2
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either way it will cost you something but small claims would seem to be the best. Since it's a legal way of collecting as opposited to a collector calling in which case the person might just not pick up the phone or respond to letters.
In small claims court the jude enters a judgement against the person and then if they don't pay you have further legal avenues.

But then what do I know...I'm just a vide-O-grapher ;-)

BTW, sometimes just a letter from your lawyer will promt payment. That letterhead 'Dewey, Screwem and How' can work wonders.
Don

Last edited by Don Bloom; February 4th, 2009 at 05:32 PM. Reason: forgot to add
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Old February 4th, 2009, 05:37 PM   #3
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Most small claim orders have the same force and effect as a regular court judgment. If the issues are simple, it is a way to go. I our state, if the Defendant doesn't like the ruling, he can ask for trial in superior court, but if the plaintiff doesn't like it, he can't. There are, of course, limits to the amounts.

The bigger problem,of course, comes with actually collecting- whether it be by judgment or by dunning the customer. You really have to make a judgment as to whether the debt is actually collectable. Getting a judgment against a destitute person is not necessarily worth the paper its is printed on.

Finally, a client that is otherwise happy with your work might not be so happy if you are suing them, and that might actually create bad press with other potential clients. As an attorney, I have never sued my own client, understanding that I should take care to assure payment before I perform the work, or be sure the ability and character is there to assure payment.
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Old February 4th, 2009, 06:43 PM   #4
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Thanks for the information, guys. I certainly don't want to sue a client .. haven't had to yet .. but I've got a client who is more than 3 months late on a payment, and it's killing my cashflow. Gotta make ends meet sometimes, you know? Anyways, thanks for the info.
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Old February 4th, 2009, 06:48 PM   #5
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Hi Travis. Is your service not 'pay as you go'? I don't do any work until they pay first. Even if the client doesn't have the money come wedding day, I will still film their wedding. But I won't edit it until the balance has been paid. The way I see it, I got at least a $300 deposit from them to record that day (and that's not bad. Most of the work is in the editing anyway). I don't care if their tapes sit on my shelf till Kingdom Come, I won't touch them until the client pays. No need for me to harass the client. I just move on to the next project without giving it a second thought. In other words, take care care of the people who ARE paying.

I knew a photog that wanted to charge all kinds of fees for late payments and threaten legal action and all that. I think it looks really bad, works you up for no reason what so ever, and puts a family that's potentially having a hard time financially though yet another burden to bare.

btw, I ditched that photographer. He was great to work with on the field, but treated people like garbage when he wanted money on the back end of the deal. He was responsible for half of my business (yes, really), but I didn't want to be apart of that any longer.
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Old February 4th, 2009, 07:09 PM   #6
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Quote:
Originally Posted by Tim Harjo View Post
Hi Travis. Is your service not 'pay as you go'? I don't do any work until they pay first. Even if the client doesn't have the money come wedding day, I will still film their wedding. But I won't edit it until the balance has been paid. The way I see it, I got at least a $300 deposit from them to record that day (and that's not bad. Most of the work is in the editing anyway). I don't care if their tapes sit on my shelf till Kingdom Come, I won't touch them until the client pays. No need for me to harass the client. I just move on to the next project without giving it a second thought. In other words, take care care of the people who ARE paying.
I completely agree with this. If you shoot the whole day and don't have full payment don't edit till you do. Make sure your deposit is enough to cover your shooting fee for an entire day in case you don't see another dime. One less wedding to edit is ok with me.
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Old February 4th, 2009, 07:39 PM   #7
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Last year we tried out something new .. allowing clients to make a final payment after their wedding date. Brides in my market aren't typically shopping for video, and certainly not for higher-end video, so we thought spreading the payment out would be a nice alternative for them. I charge a 15% late fee each month on late payments, so that's nothing to sneeze at. So I was really surprised that anyone went late (truth be told, I have more than 1 client doing this to me).

So basically it was a novel idea that maybe didn't work well. I did receive 2 payments up front for each client, but I film a limited number of weddings, so having a few clients late on the final payment (which is the highest percentage of the balance) is really hurting my cashflow.
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Old February 4th, 2009, 07:46 PM   #8
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Collection Agencies usually charge 40% of the amount collected (your collection agency may vary!).

I would say the letter from 'Mann-Dewey-Cheatham & Howe' would be the first step, followed by small claims.

That's the route I would go.
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Old February 4th, 2009, 08:17 PM   #9
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Did you try contact them? What do they say (or not say)? Did you try visiting then at home? Emails? anything? Im just curious how do they avoid talking to you.

What I hate most that ppl might be in financial trouble and wont admit that. I do understand that someone might not have money at given moment because one lost the job. I would suggest payment plan or request paying with CC over the Paypal.
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Old February 4th, 2009, 08:43 PM   #10
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Well, this particular couple was okay with taking late fees. I had alerted them by email and phone well before they were going to be late .. and then again many times since. They just weren't paying, and were apparently okay with the late fees that were adding up.

It really became an issue once January hit, since it's a tight time of the year for cashflow, and we had just put a lot more money into a local wedding show than we usually do. I finally realized that assessing late fees was not motivating a payment for this particular couple, and I was at the point where I need the payment to keep things running smoothly. I've since been promised a payment for monday this week, but it never happened, and I got some personal excuses. I understand that, but at some point you have to draw the line and get paid, right? d;-)
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Old February 5th, 2009, 12:26 AM   #11
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Travis,

I regularly attend Chamber of Commerce meetings and at my last one I met this sweet lady who turned out to run a collection agency. I would have never guessed it by looking at her. When I say sweet, I don't mean hot, I mean 50ish, petite, very pleasant... Well, she apparently is very good at collecting so she started her own business. If she doesn't collect, you don't pay. I just assumed that collection agencies were kind of like thugs. I almost sent her after 225.00 someone owed me. I would have but I wasn't entirely sure that they hadn't paid me.

Anyways, talk to a local collection agency. You might be surprised... I sure was. Your late fees will probably cover the recovery fee. A real lawyers letter will cost you. And they could probably sniff out a fake one.

Hope it works out.
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Old February 5th, 2009, 12:34 AM   #12
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In the past I've worked for my dad at his collection agency.
I would recommend talking to a local agency. Find one that works off of commision and won't charge you unless they receive payment. Ask about sending a 10 day free demand letter. The agency sends a letter to the debtor stating they have 10 days to pay or it will be assigned for collection and put on their credit, many times that is enough to prompt payment. Our rates are anywhere from 25-35%. The nice thing is if the amount is large enough and we sue we go after bank accounts, place leins on property etc... We have methods of collecting on a judgement that the average person might not have the resources or time to use.
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Old February 5th, 2009, 12:49 AM   #13
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"I charge a 15% late fee each month on late payments, so that's nothing to sneeze at. So I was really surprised that anyone went late (truth be told, I have more than 1 client doing this to me)."

Make sure you are legal on that kind of a late fee...
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Old February 5th, 2009, 02:21 AM   #14
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I have never, ever had a late or no payer. Its very simple to avoid. When they book me, I tell them that the balance needs to be paid 30 days before the wedding day. If they say they don't want to pay until they have seen the film, I tell them to go elsewhere, as they have seen my sample work and were happy enough based on that to want to book me in the first place.

If they haven't paid three weeks before the wedding i tell them to pay asap. Two weeks and a warning that I need payment urgently because I won't be there on their big day unless payment is made and cleared.

Never bee passed that one. If the couple don't cough up the balance in the last week, I will tell them they have forfeited their deposit and I will not be turning up to film their wedding, as they are in breach of their contract, and good luck finding someone else to film their day. I have heard other videographers going this far and the money suddenly appears.

Worst case scenario is to do what my rival (and friend) did, and filmed the wedding even though they hadn't paid. He did all the work even though I warned him he was being taken for a sucker. The couple were friendly and said they would pay as soon as they came back from honeymoon. he finished the film and asked for payment. Yet again he made a foolish error of allowing them to see the film before they had paid. He took it around there and the wife said to him that her husband hadn't got home yet, but to leave the film and they would call the next day.

Guess what? yes you have guessed it already. The husband phoned and said the film was a load of rubbish and if he thought they were going to pay for trash like that he was living on another planet. And they would post the film back to him.

Well of course they just copied the film and got it for free. My mate is now chasing them through the courts but its already cost him 100. He is confident he will win it but what have any of this aggro in the first place?

Since then he has fallen in line with me and gets full payment a month before the wedding day. And so should everyone else.
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Old February 5th, 2009, 02:12 PM   #15
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Chris, I'm checking into that now that you've mentioned it.

Steve, I get what you're saying. This was an experiment I wanted to try, because it's so hard to get brides here to book videography. I thought this might help. Regardless, I would NEVER give away any materials to the couple if I wasn't fully paid.
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