Dealing With Deadbeat Customers

I saw a job posting for a "Collections Specialist" this morning and it got me to thinking about dealing with collections after product has shipped or installations have been completed.

In a previous company, our head of finance had a guy that was really good at collections, actually managed to get someone's car repossessed as collateral. But most of the time it was a long process of trying to chase people down or negotiate terms.

How does your company deal with collections, and is it a common thing with dedicated people chasing customers down, or a more occasional problem with only a few accounts? What's your strategy to get past-due accounts collected?


Lien on them, hard.

I like to stop by their home and office and discuss it in person. Sometimes I cry, apparently a sobbing 300 lb guy in your office is a good motivator to pay.

I have yet to be skunked by a customer, but the closest I ever came was with a Cannabis retail operation that stopped returning my phone calls and emails. With few options remaining, I took the easy way out. I set a few of their cameras to send email on motion detection (and changed the admin password) so the proprietor was getting a thousand emails a day. Needless to say, they paid up promptly!

I set a few of their cameras to send email on motion detection (and changed the admin password) so the proprietor was getting a thousand emails a day.

Longse cameras do this by default ;)

Dealing with this myself today. Terms of my sales are 50% down and rest upon completion. I am now 60 days out on a habitually late client. I will be visiting his business today to get a post-dated check. It is better than nothing.

Jon -

Can you disclose the rough amount? Is it a few thousand, several thousand, a new car?

Have you (or others) ever considered signing up with something like Square to be able to take credit cards in-person? I know the fees can be a little high, but for something like this, I wonder about showing up and asking them to at least make some form of payment via a credit-card on the spot?

I do have a Square account and have the ability to accept credit cards. I use that as a last resort, due to the 3% fee.

It isn't really that much. Just a few thousand. He's good for it. Just have to jump through hoops. He has been my largest volume client to date, so I can't complain too much. I know if he had decent cash flow, it wouldn't be a struggle.

"I will be visiting his business today to get a post-dated check. It is better than nothing."

I don't know how your state laws work. In some states, accepting a post dated check is considered like an IOU, and becomes a civil matter where you have to sue to get your money. Whereas a bounced check that is not post dated and you did not agree to hold becomes a fraudulent instrument and you can get the State Attorney's office to threaten arrest or seizure if they don't make good immediately. The trick when you accept the check is it needs to be dated no later than the day you accept it, and while you may have a verbal agreement to hold the check, the other person needs to understand you will deny there was ever an agreement made to hold it should it bounce and you turn it over to the State Attorney's office.

That's good to know. I wasn't aware of that. I will keep that in mind for future clients. This guy won't be trouble. He's been a client for many years.

...the other person needs to understand you will deny there was ever an agreement made to hold it should it bounce and you turn it over to the State Attorney's office.

Since you will be on-site while getting the check, try not to be captured by your own system when imparting this "understanding", unless of course you want to be part of what would be a landmark case regarding admissibility of evidence and 'expectation of privacy'.