Hi Foreclosure Cleanup Business Owners,
The below post is a subject matter on which we get a ton of queries. Thought you could benefit from reading it along with the real-world
Golden Nuggets insight below the article. We've given two private email queries and responses as it relates to bill collecting in the Nuggets. I tend to be a bit more blunt in my consultancy-type responses to email queries, so the below advice will be helpful as you grow your business. Cassandra
How to Collect On Overdue Invoices in Your Foreclosure Cleanup Business
How to Successfully Collect Past Due Invoices
Part of business, any business, encompasses bill collecting. A foreclosure cleanup enterprise is no exception. Foreclosure cleanup encompasses the interior and exterior clearing out, cleaning up, repairing and maintaining of homes that have been foreclosed upon. As a business owner, if you have outstanding invoices in your cache of foreclosure cleaning paperwork, here are some insightful tips to help you collect on what may be thousands of dollars in outstanding invoices.
Bill Collecting Scenarios
As the owner of a foreclosure and real estate cleanup business in Atlanta, GA, I personally have had four scenarios where I've had to be a bull-dog collecting outstanding invoices. One was from a realtor colleague; another, a large property preservation company in another state; the third, a real estate broker who'd given my company a great deal of work; and the final one, just recently, was from a private investor (this one was not really late; they simply did not want to pay the final fifty percent because they wanted us to remove an automobile from the property that was not part of the original estimate). But, ultimately, all four collection processes yielded checks for work performed.
Standard Bill Collecting Tips
Here are some standard bill collecting tips that can help you collect monies due your company for foreclosure cleanup work performed.
- Contact your clients immediately upon the invoice(s) becoming late. Present them with another copy of the invoice(s) via fax or email as quickly as possible so they can have quick reference. (It really just may be an oversight; give the client the benefit of the doubt initially.)
- If the client still does not pay the invoice in due time, call them often to remind them of the overdue invoice, keeping legalities in mind. (Some clients may request that you only contact them in writing.)
- Be professional in your dealings, but be firm and consistent in your contact. Squeaky wheel gets the oil.
- Where necessary, offer a payment plan arrangement to the client. Remember, ultimately you simply want to collect your money. It's not ideal to get paid in dribs and drabs; but it will certainly beat not getting paid at all.
- If your attempts prove futile, don't discount turning the account over to a lawyer or collection agency.
- If you are still working for the client, tell them you cannot perform any more work for them until the overdue invoices are paid.
WARNING: You may lose the client; but it will beat working for free.
Keep it Legal
In conclusion, remember, use only "legal" tactics when collecting on overdue invoices; try as best as you can to preserve your company image when working with those who owe you -- this may not always be possible when you're threatening to sue someone. And, finally, ultimately, keep the end goal in mind: collecting our money for work performed.
Real estate, in any scenario, is a tough, tough industry, and if you're soft in going after monies owed you, you'll find yourself busy as a bee, but working for free.
Learn from Bill Collecting
Always use experiences like bill collecting from which to learn, grow. Perhaps revisit the scenario that landed you in a position to have to "bill collect" and tweak your industry contract (our foreclosure cleanup contract has been revised several times). Also, dissect how you came about this particular client who does not want to pay or who is not in a position to pay. In short, muddle the bill collecting scenario and examine what you could have done differently to avoid overdue invoices. Likely, it's not (or won't be) your fault at all; but the savvy entrepreneur will examine all nuggets of a negative situation and vow to learn, grow, and become stronger and better in their businesses as a result of the experience.
My mama used to say, "You can't avoid how people behave, but you can learn from it." She was right. In large part, most clients will pay and pay on time; but some clients will inevitably try to skip out on invoices. But if you present a no-nonsense front, go at them hard and fast from the beginning, and have your contract, procedures and knowledge of area legalities in order, you will collect.
Good luck with your foreclosure cleanup business.
Foreclosure Cleanup Consultancy
Cassandra Black is the Author of How to Start a Foreclosure Cleanup Business, Property Preservation & Real Estate Contracting & Subcontracting Directory,
How to Start a Foreclosure Cleanup Business: FREE Articles & Advice Blog, How to Register Your Business with HUD & Other Government Contracting Agencies: One-Stop Resource to Locate Government Contracts, Pricing Guide for Foreclosure Cleaning & Real-Estate Service Businesses, How to Market Your Foreclosure Cleanup Business, the
Foreclosure Cleanup Business Combo Estimate & Contract Form, Foreclosure Cleanup Feedback Form (and other cleanup business forms) and the Housing Authority Master Contacts List with Bonus Search Tool. Cassandra is also the CEO of
Foreclosure Cleanup, LLC, Real Estate Cleanup, Atlanta, GA, and an Investor & Landlord (TheCassandraGroup RE
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Q&As Received from Foreclosure Cleanup Businesses:
Here are a couple of snippets from Q&As received from other foreclosure cleanup business owners from which I thought you, as a Premium Newsletter Subscriber, could benefit:
Question: Hi Cassandra, I have some customers who have not paid and/or who have bounced checks do you any suggestions for getting paid? Attorney, court, collections? Thanks, JJ.
Answer: Hi JJ, Yes, file a civil suit in your county. First, send them a letter (email is fine) telling them that you plan to sue if you don't receive your monies (will cost a filing fee, though, usually less than $100 bucks, which is not ideal when you are trying to "collect" money). If they are realtors, appraisers, or industry professionals with licenses, threaten to file an ethics violation with their licensing board and to notify their broker or companies hiring them. Call them religiously. One client I called three times a day for a month and a half (of course, do everything by the books)... ultimately they paid by sending a check in the mail. Think they were too embarrassed to face me. You REALLY have to be a bulldog to get your money. TIPS:
1. If you get a funny feeling about a client (no matter how good the deal seems), don't work with them. (No fun working for free).
2. It's okay to ask for 50% upfront (certified funds) and 50% upon completion (certified funds).
3. If you need the work but are unsure the client will pay, ask for 100% upfront. If they want it done, they'll hire you. If not, move on to the next job.
4. If you're working a trashout and have a distinct funny feeling about possibly getting paid (your gut won't lie), ask for 50% upfront and the 50% upon completion at the worksite. Get all the trashout items ready for the truck, but don't load a thing until they show up with that other 50%. If they don't pay you, be prepared to leave those trashout items right where you found them -- on their property, right where you found them. (Again, always certified funds in these scenarios.)
AGAIN, DON'T DO ANYTHING ILLEGAL. DO EVERYTHING BY THE BOOKS... "MY ATTORNEY MADE ME SAY IT." Good luck and let me know how it goes.
Question (from Separate Business Owner): ... [I] HAVE NOT RECEIVED MY FIRST CHECK. I [k]now there is a 30-60 day turn around, but was thinking the worst; what if they never paid me, they are a small company, what if they went out of business, I would not really have much recourse to collect. Please let me know. Thank you, M.
Hi M. Your current situation sounds very similar to a scenario I had with a broker in the Atlanta area (smaller broker who was the front-man for about ten properties in ATL). He was getting paid, factoring his invoices and going from sub to sub to float his monies ... but was not paying all of his invoices... learned a lot on that one... What are your terms on your invoices (i.e., payment upon completion, 30 days, 60, etc.)? If you didn't outline these in your invoices, make sure you do it next time... For the scenario at hand, DON'T DO ANOTHER ASSIGNMENT until they clear up the old invoices... trust me on this one ... any company can understand that you need to be paid... if you were working directly with the bank, I'd say just hold on a bit; 60 days is not that bad. But you have a middle man (smaller company, too) in this situation and you don't have a contract, which worries me... I know you don't want to lose the client, but are you working for free? Ask them about payment. Tell them you need to clear up old invoices before you can begin the next assignment. Before you work on the next property, draw up an agreement (can be very informal) outlining your work with them going forward, your terms, etc. Consider collecting after each job if you continue to work with them.. again, know you don't want to lose the client (which you may), but it's not worth it if they are not paying.. they'll just go on to the next sub if they have no intentions of paying... again, PERSONAL experience speaking loudly here... let me know how it goes... Cassandra
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"Cassandra, Thank you for the 5 Steps. ... I'm really appreciative of your outstanding and sincere effort to support entrepreneurs in the property business. I purchased your Foreclosure Cleaning ebooks which is in line with my desire to never, ever, work in corporate America again. ... You truly are an inspiration to me. Thank you. I'll see you in the Tropics !! All the best, J., Arizona"
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Devise an in-house bill collecting "policy" and use it. It can be a simple document you type and keep in your files for your reference. I.e., what will happen the first, second, third week when a client is late paying; at what point will you stop working for them; etc.