The right way to issue credit to your clients

The problem:

We are all, unfortunately, familiar with this scenario.

You finished the job for your customer or shipped your product. Your invoice is now past due so you call to give your client a little nudge.

No one takes your call so you leave a message. And then another message and an email for good measure. After getting no response for several months or a “we’ll look into it”, you have had enough.

No one has responded at all, it is 90 days past due and you are furious. You delivered on time, the least they can do is get back to you. You point all this out in an email but still get no response.

So you send them a final warning – if this isn’t paid you will turn the matter over to someone else.

Finally, you get a reply, but to your surprise, they suddenly bring up problems they have never mentioned before. You do not believe their complaints are valid but at this point, you just want to get paid and say farewell to these people. Fine, you say, if I give you a credit for this amount will you pay the rest? After getting assured that they will pay your bill you send them a credit, glad that you can put this behind you.

You go back to doing what you do best and 3 months later it comes to your attention that they still have not paid you. Now after reducing the amount of the invoice, you will have to hire someone to collect your money for you.

“That”, you think, “is the last time I issue anyone a credit.”

The solution:

It may not be a bad idea to issue a credit to a customer, even if you feel it’s not really a valid request, as long as you resolve the payment problem with some finality. What you do not want to do is paint yourself into a corner so that you are stuck with the delinquent client and a reduced invoice.

The way to avoid that is to make the credit conditional on it being paid by a certain date or it expires.

Make sure your client understands that you are doing this to maintain the relationship and that this is a onetime offer. It should be clear that if the reduced amount is not paid right away, the credit will be canceled and you will take steps to collect the full amount.

This should all be done in writing even if you have discussed it on the phone already.

Remember the pen, or should I say the keyboard, is mightier than the phone; at least when it comes to unpaid accounts.


Learn this to increase your chance of winning your case!

This week we will go back to defining legal terms

Today: Pleadings

FIrst things first- naming the defendant(s)

We will cover what pleadings are and what needs to be in them for you to increase your chances of winning your case.

Before we get to pleadings which are the written documents you supply the court with which lays out your story, make sure you have named the defendants by their proper legal names. That applies regardless of whether you are suing an individual or a company.

If you file papers with an incomplete name, or you sue a trade name, or you name the company incorrectly, the process will not get you the desired result.

The same holds true if you are suing an individual. Be extremely careful that you have spelled both the first and last names correctly. Does this defendant have a middle initial that would distinguish him from others with the same name? Better put that down.

I know of folks who have gone to the tremendous expense and effort to get a judgment that was essentially useless when it came to getting the judgment enforced because they had not named the party correctly.

PLEADINGS

Pleadings are what you write to convince a judge of the righteousness of your claim.

It explains the cause of your claim. Why this defendant should be liable. Why and how he or she caused the damage that you are now looking for restitution for. You need to explain what happened, where it happened and how.

You then need to lay out exactly how you came to the dollar amount you are claiming for.

The more documentation you have to back up your numbers and story the more likely you are

to get what you are asking for.

Writing good pleadings is very much an art form. It can be done simply or it can be done in a very lengthy, convoluted and meandering manner that will often leave a judge scratching his head or worse, frustrated.

Save money and avoid aggravation by following these tips

Not being on top of your case and asking the right questions can cost you money and cause you significant aggravation. I would like to show you how to avoid that kind of pain.

Someone came into my office this week seeking advice and help to collect from a debtor that owed a balance for quite a long time. It turns out that she had retained a lawyer to file a claim against this debtor over two years ago.

She was waiting for certain steps to be taken on her behalf and assumed, without checking, that things were going along as they should. This turned out not be the case. The steps were not taken, the necessary forms were not filed and the date for a court appearance was not obtained.

The unfortunate part of this story is that this individual waited for over a year before attempting to contact her lawyer. When a phone call was finally made there was no reply. Nor was there a response to emails sent.

Needless to say, remedial action will have to be taken, after first looking into what has and has not been done so far. This will take time and money, while further diminishing this plaintiff’s prospects of recovery of the funds by the loss of time.

All of this could have been prevented by better and more frequent communication.

When you hire a lawyer or paralegal, they are there to serve your best interests. One of the ways they do that is by keeping you informed. Because of how busy legal practitioners are this will sometimes not happen in a timely manner, but most lawyers and paralegals, involved in a collection, small claims court or other matter will ensure they keep you informed of what is happening with your file.

Often something that needs to be done within the court process does indeed take a lot longer than we all would like it to. In that situation, there is nothing to do but wait. frustrating as that may be.

But…unless you have specifically been told that action has been taken already and that “now we wait” you should not allow much time to go by before contacting your lawyer or paralegal.

Something being missed, forgotten or misplaced can always happen. As the client, you have the greatest stake in the matter and your role is to make sure that:

1. You have given your representative all the information you have so best represent you without holding back any relevant information.

2. That you know and understand what is happening and what is being done on your behalf.

Some steps you can take to protect yourself and help your representative.

First of all, don’t be shy and make sure you communicate regularly with your representative.

You are paying for your lawyer/paralegal’s time so be sure to prepare before you call.

Prepare a list of the questions you want to ask.

The matter you are dealing with probably has a significant emotional component, which will make you want to vent and express your frustration at length. Don’t. Remember this is costing you money and going over familiar territory will not help. Save your rant and venting for someone who is not charging you by the hour.

Keep a pad and pen handy so you can jot down what you are being told.

Keep your questions succinct and to the point.

It is OK, to ask when you can expect to hear further about this, Note that on your calendar.

Follow up if you do not hear back.

If something new develops let your representative know as soon as possible.

Generally, I find most of us get over-excited when dealing with legal matters that involve us. I therefore strongly urge my clients to do all the above in a short email. This helps keep them focused and limits the information to what is really important. It has the added benefit of giving everyone a record of what was said.

Last but not least, do not forget to review your email carefully before you hit “send”.

Four things that will help reduce your write-offs

I want to share a few tips with you that will help eliminate disagreements with your customers/clients and get you paid faster.

You will have much fewer write-offs and greatly reduce the need to use services like mine to help in the collection of bad debts you may have.

The truth is we all know how to do this but we are busy with a million different details that take up our energy and time every day,

The net result is that we are constantly looking for short cuts and taking the path of least resistance. After all, who doesn’t want to save time?

And yet these short cuts which seem so right and convenient at the time can come back to hurts us when a hiccup occurs

4 things worth taking the time to do.

1. Give your prospect a written quote so there are no misunderstandings.

2. Draft an agreement even if it is a short one to cover important things like:

The scope of work to be done or services to be rendered.

Is there a timeline for the work or a deadline for delivery?

What if there are extras requested beyond the scope of the original request?

When and how are you supposed to be paid?

What happens if there is a cancellation?

3. Stay on top of your accounts receivable and send them statements/reminders at the 60 and 75-day mark that the account is past due and that after 90 days delinquent accounts are assigned to a third party if no payment has been made.

4. Take action if you have not received at least a partial payment 90 days after your invoice was due. Waiting too long is almost always a bad idea that results in a loss.

Remember- if they are not paying you they are probably not paying other creditors as well. You do not want to be the last in line.

When debt collection meets the judicial system: terms that you should know

Superior Court

This court handles civil matters above $25,000.00. It also deals with injunctions, construction liens and criminal matters . It has Family Courts that obliviously deal with family issues and criminal matters over $5000.00

Court of Appeal for Ontario

This is where cases wind up when a litigant is not satisfied with a judgment from the Superior Court and strongly feel a mistake has been made. It is not enough to believe that the judge has not been fair or that the judge believed the “wrong” party over the other. Being unsatisfied with a judgment rendered is not enough give it standing in front of the Court of Appeals. The appellant (person filing the appeal) has to show that the judge made an error in law or that evidence that was not allowed in should been entered.

The judges on The Appeal Court make their decision based on the entire court transcript of the trial that is submitted with your lawyers arguments on specifically what error the judge made.

Since the Supreme Court of Canada generally deals with very few cases per year it means that over 90% of the time this court is usually pretty much the last stop for a litigant unless the case is dealing with a very unusual matter or legal issue

Deputy- Judge

A deputy Judge usually sits on the Small Claims Court bench, and makes decisions on cases of $25,000.00 or less. They are generally practicing lawyers who sit as judges several times a month.

Statue of limitations: When hesitation thwarts debt collection

Statute of Limitations

I bet it sounds familiar. You may have heard this term used on a television show or read it in a news story. Usually it will refer to how long after a criminal act can someone be prosecuted. A Statute is a law (usually) passed by State or Provincial legislature setting a time limit on how long after an act was committed can legal action still be taken.

Very interesting but what does this have to do with what we have been talking about : debt collection, account receivables or collecting on an outstanding loan? I mean….

If I am owed money I have a right to sue on it and collect it and anytime I like right ?

Alas no, this is wrong.

I never cease to be amazed at how many folks in business and even in the professions are unaware of the Statute Of Limitations or, for reasons that continue to mystify me, simply ignore it.

I was recently contacted by a company that is owed $US 50,000.00 since 2015 and they had done nothing to collect except to keep sending email requests and statements. I see this all the time

You do not have forever to collect on monies owed you. So if you are being nice and patient with your debtor it is very commendable. Just be aware that if you wait too long you may lose the chance to collect forever.

The Statute of Limitations used to be 6 years. That was reduced in Ontario and in most of Canada’s other provinces to two years.

This two year period will start running from the time you knew or should have known that you were owed money or knew you suffered damages. Depending on individual circumstances there are different ways of calculating this period but once it is passed, pleading the Statute of Limitations is an absolute defence and you are then barred from collecting what is owed to you, regardless of how just your claim is.

The way to “reset the clock”

One sure way to extend the limitation period, is to get a promise of payment from the debtor in writing. In the alternative, get a partial payment on account, this will keep your claim options alive. But be aware that it will do little to increase the probability that you will get paid. The only way to do that is to act as soon as you know your client’s or customer’s account is delinquent.


Going to court? Learn these terms first:

Some debt collection cases may end up in court. Winning a case in court requires comprehensive understanding and compliance with relevant laws and regulations.

As our client, you’ll benefit from working with top rated professionals who represent clients in court for over 30 years – and achieve an impressively high success rate.

Here are some relevant terms for this stage:

Service

We are not talking about getting your dinner order served quickly here. In the context of debt collection and court action, whether it is Small Claims Court or Superior Court, unlike on television and in the movies, there are no ambushes or surprises allowed. At least not when it comes to the documents and paperwork you file with the court.

When you file a court claim ( sue someone), you have to let the other side know as soon as possible. This is done by giving them a copy of everything you have filed with the court. In the legal language this is called service. You are obligated to serve every person ( in this context a company is also considered a “person” ) that is named as a defendant.

The manner in which they are required to be served is specifically prescribed by the rules of the court. How you serve a company and how you serve an individual have different rules and may differ from jurisdiction to jurisdiction. Once you have given the other side a copy of your claim they are considered to have “been served” and the clock starts ticking on the time they have to file a defense to your plaintiff’s claim if they wish to do so.

Affidavit

A sworn declaration made in writing, filed with the court attesting to certain facts as sworn by the person making the declaration. It is used to give evidence in a court case where giving live evidence is either not possible, appropriate, or necessary.

Affidavit of Service

An affidavit providing the details of the service of a specific document on a named party, laying out the place, date and time this was done. Usually sworn by a process server who has been hired by the serving party.

Without the filing of this document the case will not move forward. In many jurisdictions the court sets a time limit from the time a court claim is initiated to when it must be served by. In Ontario for instance, you are given 6 months after which you will be notified by mail that your claim will shortly be dismissed.

Planning to sue? Here are some helpful terms:

Small Claims Court

Every province in Canada and state in the United States has a court like this set up for ..as the name implies, small claims of money. It is also a court where the rules are simplified so that the parties involved can represent themselves if they want to.

It is also known as a court of equity, meaning the main function of the judge is to look at doing what is fair in the eyes of the law even if not everything was done procedurally correct. Each side must bring evidence to support either their claim or defence but parties are given a fair bit of latitude when they haven’t followed all the rules of evidence or form of the court.

How much money can I claim for?

In Ontario, initially the limit was set at $500.00 but over the years it was raised to $3000.00, then $10,000.00 and now it is set at $25,000.00 . You can make claim for more than that but you would have to give up on the rest of the amount over the $25,000.00.

So if you are owed 30,000.00 and do not want to go through the expense of Superior Court, you can still file in the Small Claims Court and declare that you are “abandoning ” the last 5,000.00

The limits in other jurisdictions vary. In British Columbia for instance it is $35,000.00. while In Alberta, it is now $50,000.00.

Jurisdiction – What does it mean?

Generally it means the power to make a legal decision or judgment on an issue. So as outlined above the Small Claims Court would not have jurisdiction over monetary claims of $45,000.00 or a landlord -tenant dispute.

A provincial Superior Court would have jurisdiction over many types matters but not over a Federal issue such as immigration. There are also criminal courts, tax courts, etc. You get the idea.

But In the area of collections, when we use the term jurisdiction we are referring not only to the court with the right jurisdiction but the right geographical area to file the claim in. ie; the proper jurisdiction.

Generally you must file the claim where the defendant resides or where the action arose – that is – where the event that gave rise to the debt occurred.

File in the wrong area and the court will reject your claim.

What if you are in Alberta and someone in Ontario owes you money? Legally the same rules apply, so why not just file in Alberta? After all, you’re already there. True, but often a court judgment has to be enforced because the defendant does not voluntarily comply with the court order and if you have a judgment from a court in Province or State A and your debtor resides in Province or State B you have a problem. Make sure to discuss this with your legal representative before you begin your court claim. There is nothing more frustrating than suing someone, getting a judgment finally and finding out it is not enforceable where the defendant either resides or has assets.


Planning to file a claim? Learn these terms first

Plaintiff – The party initiating the legal action in court and looking for redress or more commonly money. Also referred to as the Complainant. This is the person or company doing the accusing.

Someone looking for redress or feels their rights have been violated is referred to a petitioner.

They will start the process by filing or having their legal representative file a court claim and having it served on the other side.

Defendant -The party against which the legal action has been initiated. They have to defend themselves. The term applies to private individuals or companies or institutions, there is no difference. In a criminal case this person would also be referred to as the accused.

A claim can be against one defendant or multiple defendants. Each one would have to file a defence if they want to avoid having a judgment entered against them.

Claim – After paying the court a fee this is the document prepared by the plaintiff that is filed with the court, laying out his or her case against the defendant.

The bare minimum necessary in a claim is :

Name address and Telephone contact for defendant

Exact amount you are seeking.

If it is a business to business claim, describe who the plaintiff is and what it does and do the same for the defendant.

For example: The plaintiff is a transport and shipping company registered in Ontario. The defendant is a manufacturer of furniture registered in Ontario.

Next describe in detail the facts that gave rise to the damages unpaid bill you are seeking payment for.

Attach whatever evidence you have to substantiate what you have stated and the amount you are claiming. If there is a provision for interest in your agreement you can ask for that too.

Defense – This of course is what the other side, the defendant will have to write up as a response to the claim and file with the court as well as serve a copy on the other side.

If the claim is unjustified state why this is so, and attach whatever documentation and evidence you have to substantiate your position. If you feel the claim is partially justified you have the option of proposing a payment for part of the claim and asking for the rest of it to be dismissed.


Get noticed and get paid – learn how to use a legal notice

What’s a Legal Demand / Notice?

A Legal Demand is the first contact by a law office with the debtor.

It lets the debtor know that the law firm has been retained (hired) by the

creditor to take action to collect an outstanding debt.

It will typically state the amount due and sometimes, if the debt stems from some

type of damages, briefly describe what the circumstances were that gave rise to the debt.

Other features of the demand letter, are letting them know that interest, legal and court

costs will be added to the balance and lastly, it gives them a deadline, usually 7 days, in which the recipient of the letter is asked to take steps to rectify the situation before legal action is taken.

What does a legal demand / notice do and what are the benefits if any?

In and of itself it has no legal force but it accomplishes a number of things.

First, it lets the other party know that you have legal representation. In a situation where you are being ignored and not getting paid this is an effective way of getting their attention.

Second, it puts them on notice that they better do something “or else” as the expression goes.

Third it injects another party into the situation so that you know longer have to deal with a stressful situation. It also allows for the calming of any tensions that might have built up.

Fourth and perhaps most important, it may get you paid without further legal expense.