“Not criminal but its easy to add the hiring company onto the civil lawsuit. They are responsible for hiring the company which conducts business unethically and illegally. I don’t think you have to prove intent for the illegal actions.”
I’d like to see someone try and hold me responsible for 3rd party activity.
“My customers are other businesses but they still fail to pay. I’ve learned to choose my customers more wisely and do checks on them before extending significant credit.”
Here’s the problem we run into, many times, we are replacing a furnace or AC unit on an emergency basis (thats when they go out, in 110F or when its -20). We ask for 1/2 up front, to pay for the equipment. Usually folks pay that 1/2 with check or credit card. We call it in, either with Telecheck or verify the card. We don’t offer our own financing, but we do have banks that offer financing for commercial work, over say $20 grand.
Now, Telecheck or the credit card company approve the charge. We go buy the equipment, on our dime, because we won’t be paid that 1/2 for at least 30 days, even though they wrote a check, it won’t clear both banks, and depending on the credit card, it will be 45 days (American Express used to be up to 6 months and Discover is about the same, so we don’t use them anymore).
Now, we have at any given time, about $150,000 = $500,000 in accounts receivable out. We also know, that 1 in 25 homeowners are not going to make payment on time to their credit card or they will overdraft even though Telecheck has approved them.
Guess who foots the bill? Telecheck? the credit card company? Nope. Us. We eat it until they pay up. And in some cases, if they are disputing the charge, for whatever stupid reason they make up, we have to pay to open a dispute. Yeah, we eat that cost as well. Now, that doesn’t even take into part the 1/2 they still haven’t paid us. Sometimes, it can take us a year to get that money. In the mean time, we have accounts PAYABLE out there for the equipment we bought, often times, we have to go to our bank to loan us the money for that debt that we have, so we are paying interest on that debt as well.
After a year, you can bet that you will almost NOT get paid. So, we sell our debt off. We don’t actually HIRE an collection agency, we sell off our unpaid accounts receivable.
We get about 10% of the value, sometimes 20% depending on the risk factor. This covers our interest that we used to borrow to pay our suppliers and administration costs, plus the actual labor and employee costs of the job (maybe, sometimes).
At that point, the debt is no longer ours, but we have recouped some of our loss. Is our collection agency a douche bag? Probably. But its their debt at this point, not mine. I have nothing to do with it.
If it has taken you a year to pay up, I have to recoup some of my costs, and even 10% is better than nothing.
Now, I’d like to see someone come after me for selling my debt, its totally legal, and a common practice. What happens to those liabilities after they are sold off is not my concern.
As far as someone harassing you for debt that is not yours, I have not had that happen. But, I have had folks who owe us money, see the caller ID come up, and answer in a false accent, tell us so and so died, tell us they sold their home, whatever. I will try and be cool and collect ourselves in a civilized manner, but you would roll your eyes at some of the bullcrap people try and pull on you.
Like I said, we reckon about 1 of 25 homeowners is a scammer or just a plain old POS, and about 1/2 of all restaurant owners will jerk you to no tomorrow.
‘I’d like to see someone try and hold me responsible for 3rd party activity.”
Its done all the time. At the very least you will incur significant legal costs to defend your choice of collection companies.
You are the one who stated you don’t care if your vendors violate the law. And yet you complain about bottom feeders?
I don’t accept credit cards. Thats a business decision. If they want my services they pay a retainer and then as work is completed. Its either a wire transfer or check.
Uncollectable revenue is now 1-2% of total revenue. That cost is figured in my prices as a cost of doing business.
Banks are the worst customers IMO.