Payments and trying to retrieve money

[Faust190]

Ok Im going to try and make everything to the point and not let it drag for too long .

I have a small mechanical workshop and Im really having trouble getting a few people to pay their debts , Also need a bit of legal advice on some matters .

Case 1 :
I fitted some parts to a car , he was friends with another customer so I let him go without payment . Whats worse is he bought parts off another person who we both knew and didnt pay him so I did . Ive contacted him multiple times about payment and he does not reply or answer my calls . He has since sold the car and I havent mentioned it to the new owner there is still a debt on the car but it seems I may have to do so . Where do I stand here ?

Case 2 :
I did a lot of work on 1 car that ended up costing a lot more than planned and way over time . The car was not finished and the customer wanted to take it out and test it . weeks went past and I didnt hear anything . Upon contacting the customer he refused to pay because it took so long and the job was done poorly . I told him he took the car on the agreement he would bring it back and I would finish it off . He refused . He also has not paid . What makes this interesting is that I have written out and invoice already which he has probably claimed on tax . I have not submitted my tax yet . Can I call the taxation department tell them that I have a client who has not paid a bill yet is claiming it on tax ? Im sure its tax fraud ???

Case 3 :
I had a car towed here didnt run . I fixed it and presented the bill to the customer . He did not have the money and needed to drive to the bank to swap some money from his savings account to the normal account . I kept his keycard as insurance . He drove away and did not return . I called and he said he wasnt happy with the work and would not pay . WTF , your car is towed here and drives away and your unhappy with the work . I called the cops they said I need to speak to debt collectors . I thought this is BS , Do Service stations have to call debt collectors for $50 when someone doesnt pay for petrol ? Also I dont have any details on the customer .

Case 4 :
I finished a car and left it outside . I was at the workshop but it was still locked as I only just got here and I was out the back . When I opened the workshop the car was gone . The customer came with spare key and drove off without paying . Can they do that ? He was meant to come pay today , now its tommorow . I know this is going to keep dragging out . What rights do I have ???

Id appreciatte all help as the combined amount owed is around $15000 and its financially killing me having things like this happen !

[KarenC]

Hi, you really are having a tough time at the moment, but perhaps some suggestions ...

- get advice from an accountant and the ATO
- put some SYSTEMS into place
You don't appear to have systems as to how to get details from customers in order to check that they will pay. If you go to a hotel they swipe a credit card as surety, and you should do something similar. Then you have to phone authorise an estimated amount on the card so that you know you will get paid. Let's say you authorise a bill of $2500 but it came in at $1600 - the person still can't spend the remaining $900 until your bill is paid by the credit card company. Then the remainder is released by the bank to the customer, but it's nothing to do with you then.

An authorisation works in that the owner of the card can't spend that amount of money, but it isn't yours until your actually debit the card properly. It's just locked into cyberspace, or whatever.

It sounds like you are doing all the hard work but need someone to advise you on the systems you need whenever a customer comes to your mechanical workshop. If you have the systems, and follow them - even as a sole trader you will find it easier and less likely to have customers who don't pay.

Regarding recovering what's owing you - you may have to write it off (after contacting your accountant or ATO) and chalk it to past experience and start anew with your new system procedures.

Have a form to complete with all the contact details and take a credit card swipe as a surety. If you don't have merchant facilities, I would suggest you investigate them asap. Most mechanics have them and as there is so much of a need for mechanics, you should be able to get a basic facility with Visa/MasterCard and direct debit.

Good luck and hang in there.

[Faust190]

I cant just write off so much money

Its almost like driving into a petrol station , driving away without paying and refusing to pay because the petrol was bad . Fair trading should be helping me but they just tell me to see a debt collector . Im not writing these off as I still see these people and know them , they arent just regulars off the street , well one of them is anyway . Do I have a right to take the cars back and not let them go until they pay ?

[KarenC]

There's actually a debt collector or two that come to the forum sometimes. Hopefully they may be able to help you.

[Dardee]

I am a car person myself (yes, strange for an accountant) and have a mate who runs a performance workshop so know all about the trials and tribulations you are experiencing. I have indepth knowledge on how a shop works so feel free to give me a call or email me if you want some proper advice.

[Karen Wardle]

Faust

I feel for you, I really do.

As Karen said (hi Karen) you really need to set some systems in place immediately.

I know that this is a difficult time for you so please don't shoot the messenger here, but the fact that this keeps happening to you should be sounding alarm bells!

Sadly, even if you pursue this through the courts it can still take ages before you receive your money, if at all. I know of people who went through Fair Trading and were awarded in their favour $15k and they still haven't recieved a dime.

A customer of mine was actually ordered to pay me $6000 for work done. That was about 8 years ago, I am yet to see a cent!

You say that these people are known to you. The last thing that you want is to develop a reputation as an 'easy target'.

The law is a crazy thing. Does anyone remember about a year or so ago a publican was sued by an intruder who came in through the roof in the middle of the night. The publican lived on the premises with his family and hearing a disturbance in the night, came out swinging........literally, with a bat. He got sued. Just like in the movie Liar Liar. It is ridiculous but it happens.

Unfortunately the laws aren't always there to protect the honest hard working people of this world. I would contact a debt collector and get them to chase these debts on your behalf. Sometimes the threat of legal action is enough to get these type of people to act, but some still won't.

I am not sure of the legal process here but can you take them to the small claims court or whatever it is called. Maybe some of the legal eagles here will jump in.

I understand you not wanting to write it off. It would be very hard to do.
Apart from the financial loss though, this type of thing causes an enormous amount of stress, as I am sure you're already experiencing.

Do I have a right to take the cars back and not let them go until they pay ?

Definately not. I once had a client with a concreting business. He poured a driveway for a customer and was owed in the vacinity of $18k. The customer wouldn't pay and then 2 months later left on an overseas holiday. While he was away my client went to the house and dug the driveway up until it was rubble. The customers neighbour called the police. My client was taken away by the police and had to go to court etc.

I can understand his frustration and know that he was usually a reasonable man that had been pushed to his limit. The fact that the customer returned from his holiday to a pile of rubble really was no consolation.

If you haven't already, considering putting up barriers to restrict customers access. If customers find it this easy to move their own vehicles from your premises you have to be mindful that there is the possibility of someone stealing someone elses vehicle from your workshop.

Also if someone was on your premises and slipped or hurt themselves I suspect that workcover would be in there like a shot.

I do know how it feels and you can take steps to pursue this, ie through debt collectors etc. But I think that what Karen said earlier is sound advice, you need to stop this happening again.

I am not sure where you are situated but there are many people here who can help you with implementing systems for your business.

I would start with getting some signs professionally made. I assume you have a desk area in the workshop. Have one that says, no cheques accepted, under any circumstance. And another that says, Payment must be made on completion of job. These will at least be a deterant. Whether you choose to accept cheques is up to you but a sign will stop most from even asking.

Remember that it is your business. You can choose your own policies. You could implement a policy that says that jobs over 'x' amount require a 50% deposit or whatever arrangement you as the owner chooses.

If you are worried that some people won't cough up they are probably the types of customers that you don't want anyway. If my mechanic requested a deposit on a larger job I wouldn't hesitate in giving it to him.

I would also find out where you stand legally if a customer doesn't pay on collection of the vehicle.

Please keep us posted.

[DebtCollector]

Wow..

Ok, first off they all owe you the money. We collect for a few automotive workshops and we always tell them never give them the car until they pay, especially one off customers. Period. If you have the car overnight, lock it in the workshop.

I don't want to ramble on, as each case you present needs a different strategy for collection. It sounds like you have done all you can to try and collect. You seriously need to consider giving this to a debt collector as debtors are far more compliant once a third party (debt collector) is involved.

If you want some outside assistance give me a ring on the number below.

[Credit Manager]

Hi Faust,
I agree with all the above and thought i would add a couple of suggestions.

If it is feasable, and if you are not already doing so, start providing written quotes that allow you to gather information about your customer, ( i tried to place one here as an attachment but it exceeded the size limit- email me and i will send it to you)

Make sure that you have adequate terms and conditions on the back of the quotation, and a disclaimer above where they sign, which is their acceptance of these terms.

Obviously your terms will need to address a range of issues in your business, but going by your post, i would suggest for starters;

"The Buyer hereby agrees that the Seller has a particular and general lien over any Goods tendered for the purpose of maintenance and or repair with respect to any outstanding monies owed by the Buyer to the Seller."

To hold their vehicle until work is paid for.

"The Buyer shall inspect the Goods upon delivery and notify the Seller within three (3) days of any alleged defects. The Seller will be given access to any Vehicle within a reasonable time after delivery in order to inspect any alleged defects in the Goods.

Should the Buyer fail to give such notification, the Goods/Services will be deemed to be in compliance with those ordered, and free from any defects whatsoever."

To eliminate the excuse of not being happy with the vehicle.

"At the Seller’s sole discretion, a deposit may be required before the supply of any Goods or Services."

To collect a deposit if you think it is required.

I would also include a default clause to allow you to charge penalty interest and any associated collection or legal fees.

There are obviously many other issues that need to be covered but i hope this has been helpful, feel free to give me a call if you would like to have a chat about others.

Unfortunately this will not help get the money back that you are already owed, but it sounds like debt collector would be worth a shot.

Cheers

[Profcoll]

Hi my name is Mark and I work in the debt collection field. We work with a number of mechanical workshops and relates industries. My advise is to pass the collection over to a third party who is used to dealing with customers like the ones you described. To protect your goods and services in the future a professionally written Terms Of Trade Document is a must have tool for any sized business. These agreements can be Taylor made to suit you specific business and should be authorized by all new customers prior to you providing any good or services to them. If they don't want to sign off on your terms of trade you most likely don't want to be dealing with them. If you need any help with the above mentioned matters I can be contacted by email at mfogerty@profcoll.com.au or by phone on 0417 157 490

[hmirz]

Hi Faust

Which State are you in?

Please tell me that you get your customer's to sign some type of paperwork or contract when they bring their cars in....

I have worked for a client in a slightly different industry (selling and hiring of heavy machinery) and what we have done is draft certain clauses in the agreements he has his customers sign.

The clauses work in his favour if the customers exhibit any rogue-like tendencies (in fact he really comes out on top financially if customers do the wrong thing to the extent that he would be begging them to be rogues) and with the documentation in his favour, contact details etc captured, it becomes game, set and match for him in court and he has won quite a few undisputed or default judgments.

However, there are nuances involved, there are ins and outs, so get legal advice as to how to incorporate the best risk management into your particular business and your bad debt concerns will largely vanish.

Cheers,

Hamid MirzaBarrister-at-Law
www.panachelegal.com
mirza@panachelegal.com