It takes time and effort, but small business owners must document their business dealings in writing. We recommend a contract and ( if customer is a business) a personal guarantee, but even any documentation, even a quick email, is better than nothing.

Here are  two examples of how poor documentation hurt our clients with bad debt recovery.

Our Client #1 is a sewer and drain contractor – we will call him George – who was called out to a small business in his town. he customer described the problem and George told him he was could not be sure of the extent of the problem until he saw it. George verbally confirmed hourly rate, advised that he required a two hour minimum and told the customer he required payment at time of service. Customer verbally agreed and George went out to the job. When he got to the job, the problem was much worse than the customer had described. George told him the issue could be fixed, but that it would take approximately 5 hours to do so. The customer became irate, and asked George to leave the job.

The customer refused to pay anything to George, stating that he was only on the job for 15 minutes and did not fix the problem. He also complained that George’s rate was too high, and that he had not agreed to an hourly rate or minimum.

What could George have done? George could have confirmed all details in a quick email, and asked the customer to email back his approval of the terms. Everyone has email these days. George did finally get paid for the job, but had to hire a collection agency to recover the money for him.

Client #2 is an HVAC contractor – we will call him Joe – who went to a customer’s home on two occasions. Total bill for parts and service was $ 900.00. The two visits were for different but related issues. The customer did not want to pay for both visits, stating that if the Joe had fixed the problem the first time, the second visit would not have been necessary. The customer’s premise was technically not correct, but Joe simply wanted to be paid, and agreed to reduce his bill by half if the customer paid him immediately. Customer asked for a bill reflecting the new balance, and Joe sent it to him. 

Three months later, the customer still had not paid, and Joe hired a collection agency. The customer promptly produced the bill for 450.00, and refused to pay more. Joe’s mistake? He had not indicated on the bill that the offer was a limited time offer. 

If you offer a settlement, put your offer in writing. Offer it for a limited time only, and state that if payment is not received exactly as outlined that the settlement is offered, and full balance will apply.

Take the time. Put it in writing! Your debt collection results will improve drastically as a result.

Want a collection letter that gets results? We can help!