A bird in the hand.

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A bird in the hand.

Suing a slow paying debtor is normally very costly both in terms of legal costs (lawyer fees, court costs …) and time and effort required. Not to mention the time it takes to get to a final decision, which may not even be in your favour.

What would YOU do in THIS situation?

* Debt – $30,000
* Age of Debt – 6 months
* Creditor – An Accountancy Firm
* Debtor – who says in an email … I was served notice on the 27/3/2011 and the date starts on the 28/3/2011 where I have 28 days to pay or dispute this claim . Twenty eight days will bring us to the 24/4/2011 , if I inform the court that I want to dispute this on the 22/4/2011 then the court will have to book a court date. The courts are running on 30 to 60 days before we even get to court leaving you still with this debt …
I am asking for a $5,000 reduction in my bill on my account and if we can come to this arrangement I will pay $10,000 on return of email, hopefully this will be this week when you return an answer to this email. I will then proceed to pay the balance over the next three months.

On “principle” you may say
* He’s being smart
* We’ve done the work
* We can justify it all
* Sue the “expletive”.

This was my reply to the Partner in this firm ….
Hi John,
Just read his email to you. He’s right about the timing. You said you’d take $3,000 off if he paid today. He’s saying take $5,000 off and I’ll pay $10,000 by return, balance over 3 months.
I say take it AS LONG AS he signs a Payment Agreement which I can prepare. (He then CANNOT argue later if he doesn’t pay any more – you can sue on the broken payment arrangement and CANNOT lose) AND it’s “a bird in the hand” – $10,000 – NOW. Legal costs, as you know, if we go down that route, are ridiculously high, a lot of time will be required to prepare papers and time-sheets for court and, even if we won, we’d never recoup all legal costs outlaid.
I say “take the arrangement AS LONG AS WE HAVE IT IN WRITING, bank the $10,000 in the knowledge that he can’t argue about the rest. If you agree, I’ll get back to him this week “on behalf of the firm” and put that to him. I suggest that you don’t reply to him though, otherwise it’s not the firm he’s negotiating with, it’ll be you. Your call though. Let me know?

Points to Note:
Although the Partner may not accept my advice, it IS the cold, logical and commercially realistic way to go. If we sue this debtor, it will take time, a lot of money and the case could drag on for ages. Everyone will lose. The debtor may even go bankrupt or put his business into Receivership and escape the debt altogether.

If the Partner can overcome the “it’s the principle of the matter” emotion and focus on the facts and “best possible outcome” with all factors considered, then this IS the way to go.

Some things I think I know,
Some things I know I know.
This is one of the latter.

By | 2017-10-14T02:39:09+00:00 March 29th, 2011|techniques|0 Comments

About the Author:

Have you ever wondered why a client does business with you and then ignores your invoice like they had no intention of paying it in the first place or they treat you like their own personal line of credit, leaving YOU dangling, waiting months for their payment? Unfortunately this situation is all too common and can even be puzzling for the most experienced business owner. If you’ve ever had to handle outstanding accounts or you are just so over non-payers, then we can help. Real-world skills, solutions, tips & strategies to get more accounts paid on time, and, most importantly, how to maintain customer goodwill while keeping YOUR cash flow in the positive. You will find the blog posts helpful but to get real results, contact us by using any of the forms on this site, by email or by phone. I’ve been involved in the management of accounts for over 30 years, heard every excuse in the book, can spot a non-payer at 20 paces. Finance Companies in the 70s (systematic, tough), professional firms in the 80s (no systems, too gentle) and, since then, just about every other sort of business you can think of. I’ve written books on the topic, spoken all over the place about it and the blog in this website is my way of “giving back”. I hope you find it helpful.

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