Collection Pain – Stop Giving Free Service Calls

All alarm dealers have experienced the pain of not getting paid.  It’s a terrible feeling to have the joy of signing a new contract dashed to pieces with the revelation that you have expended time, labor and materials for nothing in return.  Having received a down payment helps to ease the hurt, but if you intended to give the customer a 50% discount, that would have been included in the contract price.

So, what can you do to protect yourself from irresponsible or even predatory customers?  There is no demographic that is likely to result in a bad debt.  You can’t predict failure to pay from where customers live or what kind of car they drive.  Even running a credit check may help to identify high risk, but not always.  No dealer ever enters into a contract expecting bad debt.  All you can do after the fact is to take immediate and decisive action.

Filing a lien is costly, time consuming and sometimes complicated.  Legal forms must be completed and filed to exact standards. Failure to provide appropriate details will often negate the entire process.  Also, every state has different lien laws.  While the lien laws in general are generally intended to protect the contractor from unjust enrichment of the customer, every state does it differently.  If you serve customers in more than one state, you need to know the lien laws that govern the site where work was performed.  You should locate and develop a relationship with a lawyer, competent in construction practice, before you actually need to take action.  To make life easier, there are lien filing specialists on-line that practice in all fifty states.

Unfortunately, filing a lien is not always effective.  Liens can only be filed on equipment affixed to the real estate.  Unpaid RMR is not subject to lien.  Unless the real estate is scheduled to be sold, there really is no pressure on the customer to pay.    You may have to wait for a bank foreclosure or bankruptcy.  That may take years. Just having a filed lien in hand, doesn’t get you paid and may not cover your cost of filing.  Make sure your contracts include provisions to add attorney fees to the claim, according to your state requirement for that language.

Leased systems cannot be protected with a lien.  Title of the equipment never passes to the customer, because leased equipment is not sold.  Make sure you protect yourself with a UCC filing with the appropriate office of the Secretary of State.  That creates a public record that your equipment is on site and is not part of the real estate.  While you may have to endure the expense of removing it upon sale of the building, at least the new owner doesn’t get a free system.  If your equipment is not UCC registered, the new building owner will likely have someone else monitor your equipment that you "generously donated" by not exercising your legal rights.  Ouch upon ouch!

More than likely a competent collections attorney may be your best shot at recovery.  If your contract allows for added attorney fees, the once customer now debtor will be required to pay the attorney upon settlement.  When a collection attorney wins a judgement, that automatically becomes a claim against any asset of the debtor.  That includes cash in the bank, vehicles, equipment and real estate.  You also have a secured interest in the event of bankruptcy.

The road to winning your case and getting paid is paved with documentation.  The judge does not care what you know, your opinion or in some cases even what you say.  Tangible evidence and substantiating documents are the holy grail of legal collections.  You need to create documentation starting day one of the sales cycle, because bad debtors are never identified up front.  Evidence cannot be created after the fact.  Gathering evidence late in the game is more time consuming and likely to not be complete.  Missing documentation increases the chance for the judge to find in favor of the defendant.  Be prepared.  Your company will be painted as unreasonable, irresponsible, deceptive and predatory by the defense.  You have to prove to the judge that you are not a bad plaintiff.

Here is how AMS Pro can help ease the pain.  You will have detailed documentation of sales proposals, contracts and change orders.  Your Quote Master software and Job Management system will include details to explain every action of installation and subsequent service.  The Job Reporting function will provide the last date worked, if a lien must be filed within a specific time.  Mobile Tech, also known as Tech Online Access, will provide contemporaneous images of the site, customer signatures and details written by the tech will at the premises.  Comments entered into Control Center will detail every call, written notification, broken promises and attempts to collect through reasonable settlement. The Accounts Receivable module will provide copies of all open invoices, statements and payment history on the account.  It’s easy to bundle the evidence into an organized, printed file for your attorney to submit to the court.  Such credible evidence created on a contemporaneous basis will be difficult for the debtor to refute.  Your attorney will thank you for excellent preparation.

We also suggest creating a turnover document, which is a checklist signed by the customer at the time of completing the installation of a security system.  The customer indicates they understand central station procedures and operation of the system.  They acknowledge satisfaction with the system, the installer and conduct of the salesperson.  When the customer fabricates complaints to the court, just produce the signed turnover document.  The credibility evidenced by the AMS Pro documents will buttress the credibility of the turnover document.   This mountain is more than a significant climb for any defense.

This may be the most important aspect to AMS Pro documentation.  When the customer and their counsel understand the depth of evidence, they are more likely to settle without having to go to court.  You can concentrate on running your business rather than wait for your case to be called on the docket.

Call us to discuss how we can make things better for you.  AMS Pro is created by an alarm dealer for alarm dealers.  We know your pain and we would like to help.

Bob

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Levelset.com  We provide this link strictly to provide an example of an internet-based lien filing service.  Alarm Management Software makes no endorsement and we are not affiliated by ownership or have any financial interest.  The reader is encouraged to make their own determination for suitability of any lien filing service.

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