
Can anyone recommend a good collection agency? - optik
One of our clients owes us ~$9400 in back advertising invoices and refuses to pay us. They are a small company (&#60; 10 people) which recently had a change of leadership. The new CEO did not return my calls for 3 months and the finally told me over the phone he was not going to pay, since it was the old CEO who made the deal with us.<p>I have an agreement (written by our lawyers) signed by their old CEO which spells out the agreement quite clearly. I've Fed-Ex'd a copy of the agreement and the outstanding invoices to the company and have heard nothing.<p>I don't have the time to keep pursuing this issue and I would like to pay a collection agency a percentage of any money that they can recover. We are also a small company (&#60; 5 people) and recovering a portion of the $9400 would be significant to us.<p>Has anyone used a collection agency in the past? Any experiences to share? Can anyone recommend one?
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tjic
Debt collectors are a reasonable approach, but take one more step before you
do that.

1) find a lawyer who you can hire for an hour or two for $200-$400. You're
paying for his letterhead, not his skills.

2) Get him to write a letter saying "you have 14 days to pay 2/3 of the
amount. If we receive that, the debt is discharged in full. IF we don't
receive that by 14 days from today, we're going to court, and we're asking for
the full amount of the debt, lawyer fees, and damages. Please pay now."

I've collected LOTS of debts in my time, 95% successfully.

This technique works.

~~~
optik
I think your suggestion is a good one. However, I'm not prepared to spend the
time and legal fees to take them to court and I don't make empty threats.

~~~
mechanical_fish
_I don't make empty threats._

Why on Earth not? Make empty threats!

What are you afraid of, that these guys will learn that you're capable of
bluffing and then push you around? _That appears to have happened already._

Though I actually agree that you shouldn't bluff a lawsuit. You should give
fair warning and then _file_ the lawsuit. What are you waiting for, someone to
cheat you out of _twenty_ thousand bucks?

------
boredguy8
Collection agents aren't how you want to resolve this. Instead you have an
opportunity to solidify a relationship and create opportunity by showing
you're serious about what you do, and you are worth being paid. Threatening
people is hardly ever the right way to accomplish any of your goals

One of the best bosses I know in a rather small manufacturing company, after
not being paid for 9 months _, called up the CEO of the indebted company and
said, "Hey Steve. I need directions from the airport to your office and then
from your office to the nearest golf course, because Monday I'm going to fly
out there personally, pick up this check, and then go play some golf. Feel
free to join me if you want." Not only did he get his money, but the other
company realized they were dealing with someone that was going to pursue every
issue, no matter how small, and they started ordering far more product.

I'm not saying the exact same approach will work for you (though it could!) --
I'm saying get creative and get serious, and prove it.

_ His team was already set up to effectively pursue late payments. Less than
1% of their invoices make it past the 90 day mark.

~~~
tjic
> Instead you have an opportunity to solidify a relationship

Who wants a solid relationship with a sleezebag who tries to get out of debts
by claiming "yeah, it may be the same corporate entity, but I'm the new CEO,
so I'm not paying?".

You want nothing to do with a person like that.

~~~
boredguy8
Are you serious? I want a solid relationship with everyone, no matter what
they've done in the past. I'm also going to protect that relationship in a
legally binding way, and not just take someone's word.

But I work with some great people that are total jackasses. But they know I'm
not going to take their crap, so they don't try and dish it to me. Or
sometimes they do, to test the water, and I say 'nope'.

I mean, I hate to be so basic as alpha dog level analysis, but that's how you
get through to some people. And I don't mean blustering and cursing up a
storm. I mean growing up and dealing with stuff head-on.

_EVERYTHING_ is an opportunity.

------
YuriNiyazov
"Progressive Financial" was excellent at getting money out of me when the City
of Philadelphia decided to put a lien on my house.

~~~
optik
Thanks for the reference.

I just got off the phone with them. They seemed very professional and they
said they typically charge 25-30% of the collected amount, but they usually
don't do one-off collections. They typically work with companies that have at
least 10-15 non-paying customers.

------
thrill
You'd be better off actually bringing suit against them to force them into
bankruptcy - they will also need to pay you for damages if your paperwork is
solid. Collection agencies are highly inefficient.

------
idgaf
IMHO, COLLECTION AGENCIES DON'T WORK

At a previous company, we hired United Mercantile and they never collected a
cent from either of the two accounts we sent them.

They made things up like saying the one guy's corporation was surrendered when
it wasn't and on the other one, I later reconciled with customer and he said
he NEVER received a single call or letter from them.

Both were relatively small amounts (about $5k and $10k) and it would appear
that they never lifted a finger to get their 30% or whatever it was.

I like the lawyer approach -- the more names on their letterhead, the better!
:) No company likes the threat of legal action.

Good luck!

~~~
optik
Did you have to pay anything to the collection agency?

~~~
idgaf
No, not up front--part of their pitch was "we don't get paid unless you do".

------
mattmcknight
What about name and shame? Does everyone know that this company doesn't pay?
Do all of their employees know? Does their bank know? Do their customers and
other vendors know? The threat of going public might help you, if you know
anything about their business.

Just think about what a collection agency does, they have no special powers,
they just start calling people and don't stop. It doesn't take too long to
have your (outsourced?) admin go through calling everyone that works there
each day.

~~~
HeyLaughingBoy
And it can also get _you_ sued for interference of trade.

Name & shame works only when the named party would hurt themselves more by
suing you than not.

This guy has a breach of contract case (assuming his ad agreements were
written properly): he needs a lawyer. Odds are he will be paid as soon as they
get a letter from his attorney. None of this 2/3's stuff either: demand the
full amount.

------
buckwild
I don't know why the CEO of that company is being that obstinate about paying
you money you clearly have rights to (the agreement). Given the fact that he
now knows he owes you money, assuming he didn't before (although the old CEO
should have filled him in right?), and he still doesn't want to pay makes me
think he is going to have trouble coming up with the money, even if he wants
to pay you. The economy is... well, you know.

I don't know the details of whats going on here, but from what information I
do have, I suggest you work out some other form of payment (with lawyers of
course...keep in mind this is to make it easier for them to pay you the $9400
they owe you, you aren't making a "new" deal per say). Instead of forking over
$9400 in cash, maybe you could work it out so that company can pay in you
$9400 in services, or something along those lines.

If that doesn't work, then by all means sue the guy. You have every right in
the world to do so. Don't worry about if it looks "dickish" or not, you need
to get that money back in one way or another.

Good luck.

------
freemanindia
I'd love to hear advice on hiring a collection agency as well. My lawyer
renegotiated terms several times with a guy who defaulted on a business loan I
made him. Each time he agreed to a repayment schedule, but never paid
anything. My lawyer went to court. The other guy never went, and after a few
visits we got a judgement against him. Still there was nothing forcing him to
pay. The lawyer went back to court and after more $ I all i was able to do was
put a lien against any 'real' property in California he may someday purchase.
The next step was to force him to court and audit his accounts 'under oath',
but I lost my faith in the whole process.

------
mynameishere
Collections agencies are persistent, I'll tell you that much. I've been in the
same apartment for 4 years, and for 4 years I've been getting weekly calls for
a person who lived here two tenants ago.

------
checkwit
I am looking for one too. I have a judgment for over $12K from 2 different
tenants. I sent one of them to a collection agency about a year ago.
Nothing...

------
tptacek
The percentage of $9400 you might be able to recover in small claims court
probably exceeds the amount you'd get from anyone who would buy your debt.

~~~
tjic
Most small claims courts cap suite sizes at $2-3k.

Thus, I disagree with this statement.

~~~
tptacek
Way to just make shit up there, guy.

<http://bit.ly/V9Zg8>

The mean limit for all the 50 states is $5964 (more than he'd get from a
collections agency). The median is $5000 (also more than he'd get). In
particular, in some major tech business jurisdictions:

NY: $5000

WA: $5000

CA: $7500

IL: $10,000

GA: $15,000

(MA is $2k. That sucks, lots of tech companies in MA. On the other hand, PA is
$8k.)

Note also that typical fees for collections agencies appear to exceed 50%, and
that's a contingency fee.

~~~
tokenadult
_Way to just make shit up there, guy._

From the Hacker News guidelines:

<http://ycombinator.com/newsguidelines.html>

"In Comments

"Be civil. Don't say things you wouldn't say in a face to face conversation.

"When disagreeing, please reply to the argument instead of calling names. E.g.
'That is an idiotic thing to say; 1 + 1 is 2, not 3' can be shortened to '1 +
1 is 2, not 3.'"

I always like that it says, "can be shortened to" as a gentle reminder that
disagreeing with statements of facts doesn't serve as an excuse to throw in
personal insult.

~~~
tptacek
Apparently you never pull things out of your ass in message board debates.
I've done it enough not to be insulted when I get called on it. If I offended
you by calling out someone else, tokenadult, I sincerely apologize.

~~~
tjic
> Apparently you never pull things out of your ass in message board debates.
> I've done it enough not to be insulted when I get called on it.

So you both lie and call names.

Delightful.

~~~
anamax
> So you both lie and call names.

It looks like he documented that the small claim suit limits are typically
considerably higher than the claimed $2-3k. Is he wrong? If not, what lie did
he tell?

~~~
tokenadult
I think in the parent to which the insulting reply was made, there was a
statement that was actually TRUE (not made up) in the parent post's author's
jurisdiction. It is, of course, helpful to add other facts that pertain to
other jurisdictions, but there is no necessity to add any personal dig in such
a reply. Yeah, I think I would enjoy having a beer with and making mocking
comments in person with most people who post on HN, but while we haven't all
had the privilege of meeting one another, we may as well follow the civility
guidelines here. (Upvoted comment downthread expressing apology.)

------
tzury
too bad the Sopranos are not available anymore ;-)

------
reg4c
I know this guy Tiny Mike from Chinatown For a small few he could "pay them a
visit" and get you back your money with interest.

He charges about one third of what he gets Whadduya think?

------
maryrosecook
I'm shocked that a small business would think of using a collection agent to
get money out of another small business.

First, collection agents are threatening and scary. Their presence will affect
both the debtor company and its staff.

Second, by selling your debt to a collection agency, you usually give them the
right to sell it to other - perhaps more menacing - organisations.

Third, collection agencies primarily work by first sending scary letters, then
visiting the debtor in person, then confiscating things of value. None of
these are efficient: the debtor loses far more than they owe, and you don't
get all your money back.

~~~
tptacek
I'm not sure why this is shocking to you; these are all the debtor's problem,
not the creditor's. The creditor just wants some return on the debt, and a
long-term deterrant to other deadbeats.

I don't know you, but you might be surprised how big an issue this is; back in
the '90s, I was a key employee at a regional ISPs, and the deadbeat problem
was significant.

The standard answer to this problem seems to be having a lawyer draft a letter
(hundreds of dollars) threatening a civil suit, and then actually taking the
deadbeat to court. If you think a stern letter will get someone to cough up,
this is a fine route to take. If you think it'll require an actual court case,
forget it. Business civil suits can take years just to get into a courtroom;
if your opponent hires their own lawyer, your odds of winning aren't awesome
compared to the investment you'll have to make with your counsel; in the end,
if your debtor simply goes out of business, you end up with nothing even if
you win.

~~~
maryrosecook
Deterrent? Why would collecting one debt discourage other debtors? (whoops,
I've taken a wrong turn into Alliteration Central).

What I'm getting at is that using a debt collection agency is an exceptionally
nasty way to recover money. There are other avenues to explore, one of which
was suggested by boredguy8 and another by tjic.

~~~
tptacek
The delinquency letter you send out to deadbeat clients that says you work
with XXX debt collection agency to recover fees is likely to get a better
response rate than the one that says you'll "pursue all options".

Note also: a good corporate collections agency might know tricks you wouldn't
think of to spur repayment. For instance, you can ding people's D&B reports
with collections issues (who knew?), which can cause problems for some
companies with their other B2B transactions.

Some unrelated case-in-point: I'll pay parking tickets in jurisdictions where
they're handled by collections. I won't bother paying parking tickets
elsewhere, even when they have hard-and-fast "3 tickets and then we boot you"
rules. The collections agency is just a bigger headache than getting a boot
off.

~~~
maryrosecook
I am not disputing the efficacy of debt collection agencies at recovering
money, in the same way as I would not dispute the destructive power of a bomb.

~~~
tptacek
You just disputed the idea that a relationship with a collections agency would
deter future debt collectors. I responded to that. I'm not arguing about any
other problems you might have with them.

~~~
maryrosecook
I'm sorry, I thought that was what you were arguing when you said:

"The delinquency letter you send out to deadbeat clients that says you work
with XXX debt collection agency to recover fees is likely to get a better
response rate than the one that says you'll "pursue all options"."

