what to do with clients who don't pay?

[SilverNodashi]

Marq, I can think of 14 other people, right now, that have had bad experiences with South Africans not paying. And they're not all related to me, like family, nor the same indursty as me.

And I can find you many more that has this same problem. I'm almost certain that if I had todo a survey with just our clients I will find many more with the same experience. Quite a few clients have asked me before what todo. And luckily for us, in the hosting industry, we simply suspend their accounts Most of the times we do get our money though, but there's still a lot of clients who couldn't be bothered to pay the invoice and just move on.

Your statement,

My experiences are not the same, probably as I have screened my clients properly.

makes me believe that you're the only one doing this, and the rest of us are suckers for not doing it, right? In your industry / community you may have the luxury to choose a client that you like, and don't do business with client you don't like.

We don't have that luxury though, a client with a network or website is a potential client, and potential income. Do I need to ask them 50 security questions before I do business with them? I don't have the time for it, and I'm sure they won't have the patience either. The fact remains, South Africans tend to pay their debt bad, probably cause our law system is so badly managed, and no one has the balls to sue someone for debt either.

[desA]

Des came up with a sweeping statement that may be true but maybe just his experience. You agreed with it. Bolstered, He comes back and makes some more generalised statements.
I ask for the evidence cause I am interested in whether this is true so we can look at it. If its just a feeling, hearsay and a personal experience then say so rather than make sweeping assumptions that the rest of South African, which includes most of us here on the forum, are included in these 'facts'.

Sorry Des, you dont even know how to spell my name and now you assume to know my friends. If you want to make statements and continue having a go at South Africans in general like that, then back it up or cut it out.
Try this psycho babble somewhere else - its not going to work here where you have been unable to produce evidence and assume to be all knowing on this subject.

But at least you make me think as to why I participate on the forum. mmmm......makes note to self.

This is intensely weird. I will not bother to comment - it does not warrant further discussion. You choose to believe whatever you so desire. Marq.

[Dave A]

...and no one has the balls to sue someone for debt either.

It's not an issue of balls - it's the costs!

And it's entirely possible to win your case and still not see a cent! We've slipped into 3rd world morals being controlled by 1st world ideals and regulatory regime. Frankly desA's Asian scenario might just be where we're headed.

I was fascinated to see the comment branding the Aussies as being in the same league as us. No-one seems to have picked up on that aspect. Perhaps the real problem is we're too soft on defaulting debtors. Too pragmatic!

[desA]

It's not an issue of balls - it's the costs!

Yes, agree 100%. It's not only the direct loss, but also the loss of additonal revenue in chasing down the original payment, plus shock. This aspect is often overlooked. It can be rather severe, especially when large amounts are involved.

And it's entirely possible to win your case and still not see a cent! We've slipped into 3rd world morals being controlled by 1st world ideals and regulatory regime. Frankly desA's Asian scenario might just be where we're headed.

This happens so easily. The larger operators often know how to play the system in an expert way, until the creditor cannot afford to continue his collection mission. "So, sue me - take me to court".

Perhaps the real problem is we're too soft on defaulting debtors. Too pragmatic!

I think that this is the real underlying reason. We forgive easily & move onto the next project. If many of us were to take a long hard look in our rear-view mirrors, we would probably be shocked to find out how much money, stress & shock, that poor payers have cost us.

[AndyD]

I have taken two very different routes to get paid in Cape Town. Both of these customers had no claims or issues with the work, the projects were handed over and signed off, the first by the customers consultant and the second one by the customer themselves but they both refused to settle their accounts.

With the lawyer route I was very lucky to get a summary judgment. It was a national firm owned by an international company. The amount of the debt was just over R100,000.00 and I managed to get about 85% of the amount after legal fees. If their legal wasn't as slack as their accounts department and I hadn't got a summary judgment it would have been a different story, I would have been lucky to see half of the amount after legal fees and probably a lot less if it had ended in protracted court proceedings.

The second principal amount was around R22,000.00 and it was owed by a medium sized local business who just gave me the runaround for seven or eight months in between pleas of poverty, call screening, non returned calls and eventually refusing me entry to the offices. It was too large an amount for small claims and not enough to throw legal action their way after they ignored the first three lawyers letters. I sold the debt to a collection agency in Woodstock who had a reputation for being persistent shall we say, although I hasted to say their dealings with me were very professional. They were a registered agency and above board. I know they did some homework and pestered the company owner and his wife, who was supposedly his book keeper, at their place of work, and residence as well as the gym and golf club. I got 50% of the amount which they paid on signing over of the debt and before they effected collection They made R11,000.00 plus their costs for four days work.

It really takes it's toll on a small business to operate in this environment. Energies and resources spent on collecting from slow and bad payers are energy and resources that should be going into existing customers. It's bad for moral and motivation, it's stressful to you as a person and bad for business. Even in both case above where I collected as best as I possibly could, I lost two customers and still didn't break even on the work I had done even without the expense of carrying the debt.

[desA]

Excellent post, AndyD.

It really takes it's toll on a small business to operate in this environment. Energies and resources spent on collecting from slow and bad payers are energy and resources that should be going into existing customers. It's bad for moral and motivation, it's stressful to you as a person and bad for business. Even in both case above where I collected as best as I possibly could, I lost two customers and still didn't break even on the work I had done even without the expense of carrying the debt.

This is the essence of what I have been saying about South Africans being poor payers, this is the character they continue when living overseas. It is not good.

Now, with this kind of thuggery, the small business owner is left no option but to raise intial price, where posible, to insure/guard/cover against this kind of bad practice. It is inflationary.

[AndyD]

Now, with this kind of thuggery, the small business owner is left no option but to raise intial price, where posible, to insure/guard/cover against this kind of bad practice. It is inflationary.

You're right about the customers paying financially to compensate for unpaid invoices but I think it goesa lot deeper as well.

With regular non-payers or slow payers many small business owners develop an 'us and them' mentality where they see every customer as a potential non-payer and treat them accordingly. This underlying mistrust and hostility will be perceived by the customer as bad service. If the customer perceives bad service they're more likely not to pay or to pay slowly. Catch 22, chicken and egg, call it what you will everybody suffers eventually.

[tec0]

Well I will not tell you how to get stuff done because I don’t have a clue how to make people pay-up. However, I do recommend an out-front payment and deposit. I used to do this whenever I sold people “expensive equipment” Then I also would structure a lease rather than ownership program. Meaning the “equipment is rented and not sold to the person” And once the person in question paid in full. I hand over ownership.

If they did not pay I will reclaim the equipment “and I did” and if they damage it I will go-back to my agreement and sue them for damages. If they don’t want to give the product back I go back on my agreement and sue.

Once your reputation is established then people will not take chances. If you get the customer that wants to take chances and or abuse your equipment then just act like a bloody lunatic and go forward with proper legal procedure and then you take them on for legal cost as-well. Always check with your lawyer first!

I know it is easy if you have physical product but I hope it might help a little bit. I belief that most companies can ask for a deposit and or that one month be paid in advance. Then you have a month to play with and start proceedings.

Sorry I can’t be more helpful.

[SilverNodashi]

AndyD, what your saying is very true.

Since these 2 incidents that I had last year, I have shown away a lot of potential clients purely cause I over judged, or "screened" the clients and didn't think they will pay for the work that I need todo. This spiraled a bit badly in our favor though, cause the one client was a referral from existing client with whom we had a good relationship for about 5 years now.
Another was a referral from a friend. In both instances I felt that the "clients" wouldn't pay the invoice, and I lost the deals.

[AndyD]

AndyD, what your saying is very true.

Since these 2 incidents that I had last year, I have shown away a lot of potential clients purely cause I over judged, or "screened" the clients and didn't think they will pay for the work that I need todo. This spiraled a bit badly in our favor though, cause the one client was a referral from existing client with whom we had a good relationship for about 5 years now.
Another was a referral from a friend. In both instances I felt that the "clients" wouldn't pay the invoice, and I lost the deals.

These are judgment calls that a small business owner shouldn't have to be making. I'm not in business to gambol on who will and who won't pay, I want to give customers the best solutions to their requirements, provide them with the best service possible and do so at a fair price without worries of non-payment. If I wanted to gamble for a living I would play the lotto or the horses.

and then you take them on for legal cost as-well. Always check with your lawyer first!

Unfortunately you will never find a lawyer who will work for anything like the legal fees that you are entitled to claim back if you win the case.

[tec0]

Well I never had a problem really. I talked to my lawyer and he said yes you had a case “he helped me with the contracts so he knew what was going on. When I contacted him and hand him the file of the person that was not willing to pay. He just did his thing and the people paid up within 2 months. In almost six years I only had one case that actually made it into the courtroom.

See the fact is the people that you are taking on also need a lawyer and they would all normally settle on something reasonable before things get expensive. It never failed me to be honest. Maybe I had a really good lawyer... The point is he never cost me more than R7000 to do his thing and I always saved money and my equipment was always returned to me. I don’t know maybe I was just lucky??