small business and its bill statements ignored by customers

[kuka]

What is the name of your state? California

Hello,
I am the owner of a small business (housekeeping service) in California. I am angry and almost desperate because of some of my customers. About 50% of my customers pays for the ordered services on time (after each service or by mail), unfortunately another 50% in time starts to ignore our bill statements, phone calls and reminders, and at the end they cancel all services. We tried to use collectors agencies but even those companies were not effective. We have no opportunity to use a small claim court because it will take forever to run the single cases for services worth from $70.00 to $1500.00 and there are no legal chances to combine those cases and sue all my customers at the same time. In my opinion there is a loophole or I am a really dump small person running a really small business. Please help me and guide me hao to solve my problem!

Thank youWhat is the name of your state?

[Chien]

I’m sorry for your situation and I sincerely hope that visitors to this forum read your post. Many are looking for ways to avoid paying just debts. You represent exactly the type of business that motivated me to do commercial collections. You work hard, have everything tied up in keeping your livelihood going, and you don’t get paid. You’re not dumb; you’re being victimized.

With the size of some of your accounts, there are only a few things that I can suggest. You won’t be able to do them all, and most won’t feel comfortable but try some and see what works:
1.) Screen your customers for acceptable credit histories before you start.
2.) Use a contract. For your business, you probably don’t. You rely on your customers to pay for the services they request. That isn’t working, if 50% go bad. If you don’t use a contract, it may be hard to adjust, but you’re losing enough that you have to make some hard choices or you’ll be out of business. The contract can be simple. It’s the psychological impact of signing it that will do the most good. Include a provision that bills are due and payable within 30 days of the invoice date and will earn a finance charge if not paid. Include a right to terminate on 30 days notice for you and the customer. You can choose to enforce this as you want, but let your customers know its there. If you’re afraid it will scare potential customers, give them 60 days of service and then ask for it. Tell them you’re expanding and your accountant said you should have it. By that time, they know your skills and that you’re dependable. Those that that don’t want to sign are those you don’t want anyway.
3.) I realize that you’re in a competitive business. If the use of a contract is too much at this time, add a line to your billing that bills are due and payable in 30 days and will incur a late fee of 1½% a month thereafter. Enforce it on late payments.
4.) If you’re more comfortable going the other direction, reward those who pay on time with 5% off. If it gets everyone paying, you’ve cut your price by 5% instead of losing 50%. (Raise it later.)
5.) Get tougher with the non-pays. Cut the service off earlier or let them know you’re not going to be able to continue until the bill is current. That may be he most difficult. You’re afraid of losing customers but, one way or the other, they’re going to put you out of business.
6.) Find a way to start using Small Claims Court on unpaid bills $200+ or pick your own number but do it. Record Abstracts on those judgments. That’s a lien on the property, and the cost to you will be about another $30, but copies of those get sent to the homeowners, and you can add the costs the judgment. That’s a public record and a mark on their property. They can’t buy, sell or re-finance without paying you. It’s as powerful as an active collection effort that you don’t have the time to do.
7.) If collection agencies didn’t work, find a young, hungry collection attorney who will send a letter and make a call. Trade your services (clean his/her office) for theirs, if you have enough to justify it. Otherwise, pay them for what they recover. They can help you with enforcement, if that time comes.

These things will be scary. You’ll worry about not getting customers or frightening some away, but it’s a choice you have to make. Operate your business like a business. If you have a good service to provide, you’ll get new and better customers, just by word-of-mouth. But right now, you’re getting paid for 50% of the work you do. Keep on like that and you either have to double your prices or go out of business.

You can PM me as well.