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ATP
10-12-2006, 05:37 PM
[I did a search on the Freelance forum archives, and the closest I found was the] complementary thread, 'Credit management for writers'
http://www.absolutewrite.com/forums/showthread.php?t=33979&highlight=debt (http://www.absolutewrite.com/forums/showthread.php?t=33979&highlight=debt)

I am currently experiencing some difficulties obtaining the remainder of monies owing me from a small publisher, for the second of my two contracted articles for the firm's editor.

I would like to know if any of the vets or others here have had any experience with the use of debt collection firms/agents for collection of monies owing from difficult or recalcitrant clients, be they small publishers or others?

Was the collection firm successful? Was the amount sought from the debtor small, for example, under USD 300? Was it a painless exercise? Did it end positively eg. continuing to maintain a working relationship with the client, or otherwise? How much effort had you expended before you decided on utilisation of a collection agency services? Would you do it again? If not, what would you have done differently?

Thanks.

pconsidine
10-12-2006, 06:45 PM
This is my experience only, but...

Debt collection agencies are the last resort. Their manner and method pretty much ensures that there will be no working relationship from that point on. And that's generally why creditors go to them. They don't care if they ever hear from you again - they just want their money.

One question - have you contacted a lawyer first? One of the most effective debt collection tools I've found is a letter to the publisher on a lawyer's letterhead.

In the end, the biggest question is whether the amount of money you are owed is worth taking that next step. Between the expenses and the effort, it often turns out that any money you might get just about pays for what you had to do to get it.

That's your call, though.

Cathy C
10-12-2006, 07:19 PM
Is it a small enough company that your editor is ALSO the person who writes the checks? If not, have you contacted anyone at the company besides your editor? That might be a start point.

But if they're one in the same, then he probably doesn't have the money to pay you, so he's stalling. Then I agree that an attorney letter is called for. You might contact local colleges in your area that have law schools. They usually have a "Student Bar" office that does pro bono (free) work for the public, as training exercise. The work is overseen by law professors--lawyers themselves, and is usually enough to shake loose the money from the publisher. But pconsidine is right. You'll lose that market forevermore. If that's okay, then go for it. :)

scottVee
10-17-2006, 12:48 PM
It depends on the size of the claim. I can't see most collection agencies being interested in little tiny disputes, say under $1000. And lawyers cost $100+ an hour.

If a little publisher fails to pay, I usually just have to write it off as a loss -- they're risky operations from day one. Some writers groups like the SFWA or the WGA (if you're a member) have legal and complaints divisions, but they can't fly across the country and shake someone until their pocket change drops out. Assuming there's even pocket change to be had.

When my website clients fail to pay, usually a few friendly reminders or regular invoices get things rolling again. If they can't pay the full amount, settle for half now, half in a month or so. But if the entire relationship is based on emails, it's easy for someone to just trash your messages and pretend you don't exist.

Of course, I'm also owed $13K that's tangled up in a bankruptcy case that will likely never end. 5 years now. I'm sure the lawyers are all getting paid and there will be nothing left for the folks who got screwed.

Stay on top of your billing and do the best you can.

K1P1
10-17-2006, 03:44 PM
I've used my experience in other areas of business when I've had to pressure clients to collect my writing fees. It helps to have a clear escalation path.

1) On your invoice, indicate that there will be finance charges and late fees if it is past due and have a clearly stated due date. Check with the editor to find out who the invoice should be sent to.

2) As soon as the due date passes, send out another invoice showing that it's past due, and add the late charges and finance charges. Marking this "PAST DUE" in big red letters helps get their attention. Indicate that if payment isn't made in 30 days, more late fees and finance charges will be added. Call or contact the editor to find out if there is a problem with payment.

3) If another 30 days goes by, send another invoice with the additional fees. Send it by certified mail and require a signature - ask for a return receipt and the PO will send you back a post card showing who received your letter. Call again and talk to the editor and to whoever does accounts payable to find out if there's a problem. Let them know you sent another invoice and ask them to look out for it because it's past due.

4) Wait a week or two and follow up with another call. Be polite. Say that you know they received your invoice and ask when you should expect a check. If there is a problem, ask them if it would help to set up a payment schedule. If you ask specifically, "Can you afford to pay $20 now?" they will usually be embarassed enough to pay more than that. Get them to agree to a payment schedule, and send reminders.

5) If you can't reach anybody or can't get a satisfactory answer, write a formal letter to the highest level person you can find at the company explaining the problem. Attach copies of all your invoices and correspondence. Send this by certified mail and be sure to get a return receipt. Send copies of this to the editor and the accounts payable department. In your letter, let them know that if you don't receive payment by a certain date, you will have your lawyer contact them. You don't have a lawyer, but they don't need to know that at this point. Frequently, just the threat of legal action is enough to get a debtor moving.

6) If you get no response, let Jenna know. I've seen her offer to contact publishers. She has the leverage of mentioning the problem in her newsletter with a circulation of 75,000 (I think). Most publishers don't want word to get out that they don't pay, because it means no one will write for them.

7) If none of this works, now's the time to decide whether to approach a lawyer. Some lawyers will write a siimple collection letter for a very small fee. Ask ahead of time what it's likely to cost.

As you go through the process, be sure to keep a file of all your correspondence and a log of your phone calls. When they do agree to pay, they may ask you to waive the finance charges and late fees. You can do this if you want to, but keep in mind that there have been real collection costs (certified letter postage, long distance telephone calls, paper and envelopes, your time). You may want to waive some of the fees and point out to them that their failure to pay cost you money in terms of time, materials, postage and phone charges, and that they should be paying for this additional cost.

It really is worth it to continue to send invoices and to call, at least once a month. Try not to get personally involved--it works much better if you stay calm. Debt collection is part of doing business. As long as they are still answering the phones and haven't gone out of business, it's worth continuing to try to collect. Sort of like water torture - drip, drip, drip.

ATP
10-17-2006, 08:41 PM
Thank you. Based on this, and coupled with my research, and the reading of the experiences of other creditors, it is in many such cases, these debtors (apparently) don't have money problems - they're just trying to wheedle out of paying.

Is there anything preventing one from affecting or influencing these proprietors' credit rating? How about taking one's 'campaign' to the paying/advertising clients? How far would you go to recover USD200 or less?

K1P1
10-17-2006, 09:05 PM
I think that initiating a smear campaign is a bad idea.

1) it shows you're angry and looking for revenge, not money.
2) It lays you open to law suits that you probabaly don't want to have to defend yourself against.
3) Making them angry doesn't mean they'll pay you.
4) It's unprofessional.

I think it's very important in cases like these to take the moral high ground. Don't lower yourself to their level by behaving in an unbusinesslike manner.

ATP
10-17-2006, 09:44 PM
I think that initiating a smear campaign is a bad idea.

1) it shows you're angry and looking for revenge, not money.
2) It lays you open to law suits that you probabaly don't want to have to defend yourself against.
3) Making them angry doesn't mean they'll pay you.
4) It's unprofessional.

I think it's very important in cases like these to take the moral high ground. Don't lower yourself to their level by behaving in an unbusinesslike manner.

I made no mention of a 'smear' campaign, nor wish to imply this. 'Campaign' was too strong a word. Rather, my meaning was that if one chose to, one would be within one's legal right to raise the matter with said proprietor's advertisers, and let these advertisers know the problems that you are having with the publisher. I sense that this is not part of your method of operation. Would you conclude that many - though not all - debtors are such because of their general attitude of 'unwilling to pay, irrespective'?

I discussed the matter earlier today with an Australian lawyer/solicitor. The best that she could offer was a letter of demand, followed by another if the first was ignored. Yes, she said, letters of demand are quite often ignored. On the second, it would be announced that proceedings against the debtor would be undertaken. Smalls claims court would eventually follow, and more than likely, get no where. I couldn't appear at the court proceedings as I live outside Australia, making it an unviable proposition to attend.

ETA: In line with what PConsidine stated earlier, the lawyer/solicitor indicated that the cost of initial reading of necessary documentation, and writing of letter of demand would be the same as the amount of monies owed by the debtor, if not more...

K1P1
10-19-2006, 12:58 AM
I made no mention of a 'smear' campaign, nor wish to imply this. 'Campaign' was too strong a word. Rather, my meaning was that if one chose to, one would be within one's legal right to raise the matter with said proprietor's advertisers, and let these advertisers know the problems that you are having with the publisher.

I don't see what purpose it would serve to go to the advertisers. The only leverage an advertiser has is to refuse to advertise, which would reduce the income to the publication and make it less likely that you would be paid. Almost certainly, the publication would see it as an attempt to discredit it with its customer base which would not make them more willing to cooperate with you. I fail to see how either of these results would be of benefit to you in collecting.



Would you conclude that many - though not all - debtors are such because of their general attitude of 'unwilling to pay, irrespective'?

I have no idea why businesses don't pay their bills and no data on which to base any generalization. Based on my own experience collecting from a variety of businesses, I have seen cash flow problems, dishonesty, and incompetence.

pconsidine
10-19-2006, 04:16 AM
I think there's a minor point that we need to be mindful of - there's a great difference between debtors who won't pay and those that can't. Often, the people we deal with would love to pay. It makes life as an editor fantastically more difficult to be known as a person who doesn't take care of his writers. However, there's often little that they can do that you couldn't do yourself, i.e. nagging the hell out of Accounts Payable.

Just keep your anger directed in the right place. From an editor. :)

Silver King
10-19-2006, 05:09 AM
K1P1 and pconsidine offer excellent advice for collections, not just for writers, but for any business.

In recalling earlier threads, payment collection has been an ongoing issue for ATP. He's in an unfortunate position which many people face from time to time. The only thing I can add is to not take collections to such a level in which your costs exceed what's owed.

As an example, several years ago, I spent $5800 in legal fees to collect $1100 in a non-writing related suit. I was so angry at the client for deliberately trying to rip me off, that I swore I'd sue for payment no matter what the cost. Well I did, and the final judgment was decided in my favor. I was elated to collect the funds owed to me. My attorney was overjoyed as well, obviously at my expense. In hindsight, how do you think I feel about it now?

I'll fight hard for what's owed to me, but I've learned not to give up the farm for one stray cow.

K1P1
10-19-2006, 05:24 AM
I think it's very important to view the business side of writing like any other business. A certain number of accounts will simply never pay. It's not personal. It's just the way it is. It never pays to get angry or to spend too much time on it. That's why it's good to have a plan in place beforehand, so that when it happens you just go to step one, send out the invoice or letter, make a note of it in the file, and put a note on your calendar to follow up later. The whole point is to spend as little time, effort and money on collections as possible. Never, never take it personally.

ATP
10-19-2006, 06:44 AM
In recalling earlier threads, payment collection has been an ongoing issue for ATP.

Thank you, but I wish to point out, that from an examination of my records, I have had only 2 debtors. The most recent prompted this thread. 'Ongoing issue' makes it seem as though I always encounter this problem with each and every client. This is most certainly not the case.

As an independent operator, I take seriously the running of my business as a business. This means, among other things, seeking to balance my books, while having to learn to deal with debtors, or debt collection. In both situations, the amounts in question have been small; the most recent amounting to USD165.

From my research to date, it appears that many things seem to work in the debtor's favour in non-payment of 'small amounts'. On the legal side, there is the direct cost of legal fees, and others should one continue to pursue this line. Alternatively, there is apparently less outlay for the use of debt collection services, but it appears that they too, employ a method similar to the lawyer/solicitor.

That said, non-payment of the remaining 50% of agreed expenses has been already discussed directly with the Financial Manager, both by e-mail and by telephone. Her refusal to pay is because, as the editor previously informed me, the firm has had an experience of some other contributor trying to seriously pad his expenses.

However, I have met the requirements of a detailed accounting of these, yet the &*&^%% Financial Manager has not carried out the most basic of due diligence ie. by directly looking at the relevant bill and asking me to indicate the who and the why. I have been scrupulous in my costings and billings, and have provided the required proof. I am being indirectly accused based on the unfortunate experience the firm had with some idiot. The FM is trying to avoid payment by employing patently thin excuses. I am not happy in the slightest with what I see as her deliberate effort at a vicious and unjustified 'cost-cutting'.




As an example, several years ago, I spent $5800 in legal fees to collect $1100 in a non-writing related suit. I was so angry at the client for deliberately trying to rip me off, that I swore I'd sue for payment no matter what the cost. Well I did, and the final judgment was decided in my favor. I was elated to collect the funds owed to me. My attorney was overjoyed as well, obviously at my expense. In hindsight, how do you think I feel about it now?

I'll fight hard for what's owed to me, but I've learned not to give up the farm for one stray cow.

Would you now consider this not worth the time, energy and cost? Do you have the benefit of 'writing it off' for tax purposes?

Silver King
10-19-2006, 07:41 AM
Thank you, but I wish to point out, that from an examination of my records, I have had only 2 debtors. The most recent prompted this thread. 'Ongoing issue' makes it seem as though I always encounter this problem with each and every client. This is most certainly not the case.
From my own recollection, which is spotty at best, you've claimed in the past that collections affect your work, that the energy involved in recovering funds owed to you is counter productive to the work at hand. I could be making this up, but I doubt it.

As for tax write offs, there's no way to truly compensate for bad business decisions. It's like saying, "Well, that cut on my hand sure got infected. Since I let it go untreated, I lost my arm. But it doesn't really matter. At least the blood poisoning never reached my heart."

ATP
10-19-2006, 08:54 AM
From my own recollection, which is spotty at best, you've claimed in the past that collections affect your work, that the energy involved in recovering funds owed to you is counter productive to the work at hand.

Yes, the above is true, and I don't deny it. It is the same, general experience shared by all SOHO / independent business operators.
But 'ongoing' as in 'always', and with 'all clients' ? No. I can only conclude that you are implicitly suggesting that I drop the matter, for the reasons indicated above. Correct? I certainly hope that you are not heading down the path toward implying that I am the party at fault.

[/quote]
As for tax write offs, there's no way to truly compensate for bad business decisions. It's like saying, "Well, that cut on my hand sure got infected. Since I let it go untreated, I lost my arm. But it doesn't really matter. At least the blood poisoning never reached my heart."[/quote]

Yes, but the option of conducting a 'write-off' just may not present itself to everyone, and certainly not to everyone who lives overseas.

As I indicated in the post above, there are certain details which make this situation more than just a simple case of 'disagreement'.

Nevertheless, I would like to add the following link to an article written two or more years ago by AW proprietor, JG, relating to this general matter. I think it is rather instructive. Others here might find it particularly interesting -

http://absolutewrite.com/forums/showthread.php?t=522

Silver King
10-19-2006, 09:17 AM
I can only conclude that you are implicitly suggesting that I drop the matter, for the reasons indicated above. Correct? I certainly hope that you are not heading down the path toward implying that I am the party at fault.
I'm not suggesting you "drop the matter," or anything of the sort. I'd encourage you to seek all avenues to remedy payment issues. If there comes a point, however, in which you exceed the cost of what's owed to you in your battle to collect remittance, then it might be a good idea to rethink your position.

In addition, how can you possibly perceive that I was suggesting you are "the party at fault?" I would never offer an opinion at your expense. Like the posters before me, I'm trying to help you.

ATP
10-19-2006, 10:36 AM
I'm not suggesting you "drop the matter," or anything of the sort. I'd encourage you to seek all avenues to remedy payment issues. If there comes a point, however, in which you exceed the cost of what's owed to you in your battle to collect remittance, then it might be a good idea to rethink your position.

Yes. This point looms large.



In addition, how can you possibly perceive that I was suggesting you are "the party at fault?" I would never offer an opinion at your expense. Like the posters before me, I'm trying to help you.

No offense is meant, I was but trying to clarify. And, assistance and guidance by both yourself and others is welcomed and given much credence.

jdkiggins
10-19-2006, 09:19 PM
ATP,
The more I think about this subject the more I think the discussion could benefit all writers. I'm going to port this into the AW Roundtable forum.

Great question and good discussion. Thanks.

ATP
01-06-2007, 09:30 AM
A postscript.

Legally and financially, I took the matter as far as I was prepared to go. A lawyer's letter of demand or debt collection services would be equally ineffective in this instance.And, such systems are, as the others here have indicated, ineffective for small amounts. According to my solicitor, I had 'fallen into' a contractual or legal 'grey area'. As well, small claims court proceedings would, she claimed, very likely incur the displeasure of the small claims court judge, while providing an outcome of dubious worth.


Based on legal advice, I have changed my contract to deal with similar, future circumstances. In turn, I have decided to deal with this matter of significant amount of time required for a lengthy article and attendant costs upfront in future, initial negotiations with editors.

No matter how scrupulous you are in your dealings, there is no way you can compel a publisher and/or the Financial Manager to undertake due diligence if they choose not to. Or even observe a contract.

Grey area or not, my signed, dated contract did not prevent me from being taken - at least in this one aspect. Given the attitude of the publisher and Financial Manager, had I not had any such contract, I am very sure I would have had the entire amount withheld. Indeed, during my discussion with the Financial Manager, concerning this issue, following her approval of release of most of the payment, she did an about face, and suggested that she withhold the entire sum 'until the matter had been further discussed with the publisher'. Had it not been for the quick actions and deposit by the Accountant the previous day, the FM would have had no compunction in making me do the "bend over".

With the nature of this one publisher, persisting as in dripping water
I estimated would have proven a waste of time. Given the small return on this particular piece, the size of the amount outstanding (USD165), plus the cost over-run to obtain a cheque of a smaller amount from another debtor (I did finally get the cheque, but it was accidentally addressed to the wrong bank), I decided to simply 'wear the cost' - in all, around USD200. Additional time expended on debt collection for these pieces would have further reduced earnings or profits.

Overall, my first experience in debt collection and making provision for bad debt has been a catalyst for examination of my methods of operation in a number of other areas, and I am now very much focused on implementing changes. Fortunately, I have established a relationship with another client that has so far proven very beneficial, and has helped more than offset the provision I have had to make for bad debt.

Tish Davidson
01-07-2007, 06:53 AM
As for tax write offs, there's no way to truly compensate for bad business decisions. It's like saying, "Well, that cut on my hand sure got infected. Since I let it go untreated, I lost my arm. But it doesn't really matter. At least the blood poisoning never reached my heart."


If you are filing taxes using a schedule C (small business) in the US, you can indeed write off bad debts -- not that that is much compensation for not getting paid, but it can reduce your taxes on the amounts you actually collected.