4 ms·

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

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 18y ago
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 18y ago
  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 18y ago
    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 18y ago
      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 18y ago
        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 18y ago
        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"."
optik 18y ago
I understand that you find collection agencies "scary" but at this point I've exhausted all other avenues. My responsibility is to my company, not their company and staff.
- maryrosecook 18y ago
  People view debt agencies as a last resort. To me, they are no resort: they are just plain mean. A company being a dick to your company doesn't give your company the moral right to be a dick back. boredguy8 made an excellent suggestion of an alternative approach.
  - modoc 18y ago
    This isn't about moral rights to be a dick. This is about business and how you handle companies that owe you large sums of money and have made it clear they have no intention of paying. Boredguy8's suggestion seems odd to me, in that it's unlikely to work too often, and even if it does, the attitude of the other company in the OP is such that I would want nothing to do with them going forward.
    - maryrosecook 18y ago
      But it seems to me like an unkind ("dickish") way of getting the money back. Other people have made suggestions for alternatives: tptacek (small claims court), tjic (scary lawyer letter), boredguy8 (a social engineering approach).
      - modoc 18y ago
        Small Claims Court: usually limited to 2-3k, so you're giving up 7-8k, AND you have to spend your time in court. Doesn't seem like a wise expenditure of time versus revenue given the other options. Lawyer Letter: TJIC's suggestion is a very good one. However he's already sent them a copy of the legal contract the company signed, so it's possible this could likely be a waste a few hundred bucks of attorney fees. If he tried this, and they continued to ignore him, would a collections agency be a logical next step? If not, what would? Social Engineering: Frankly it sounds like the new CEO isn't going to say "Oh you're going to fly here, man I better cut a check quick". So you're probably out a plane ticket a day of work. The last thing a small business needs to do is to have a key person wrapped up for hours/day/weeks trying to recover money from a clearly uncooperative/belligerent person. They need to find the best balance of revenue versus time spent. After the threatening legal letter (which is sort of dick-ish I guess), I think a collections agency is the next logical step.
jm4 18y ago
What is this guy supposed to do? Show up with a bouquet of flowers and ask nicely? It sounds like he's already tried the carrot and now it's time for the stick. These people owe almost $10k and basically told him to go piss up a flagpole. Of course it's going to hurt the other company and its employees, but think about how it's going to affect the submitter's company and small group of employees if they don't get paid for their work. It's a bad situation all around, but it's not the submitter's fault that these people have a employer who doesn't pay bills and he shouldn't have to suffer because of it. I would probably talk to a lawyer first. For minimal fees you could have a few nastygrams sent out and the threat of a lawsuit might do the trick. If that doesn't work selling the debt to a collection agency for cents on the dollar might be the most cost effective solution. [edit] Or you could get creative as boredguy8 suggests. I think it's a fantastic idea. It may or may not work, but it doesn't cost much and there's no PR fallout.
nfriedly 18y ago
I disagree with you. I think collection agencys and legal battles should be saved for a last resort, but it sounds like they have tried all of the "nicer" methods. The amount is a little too high for small claims court, so I think a debt collection agency is a reasonable choice.

tptacek 18y ago

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 18y ago
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 18y ago
  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 18y ago
    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 18y ago
      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 18y ago
        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"."

optik 18y ago

I understand that you find collection agencies "scary" but at this point I've exhausted all other avenues. My responsibility is to my company, not their company and staff.

maryrosecook 18y ago
People view debt agencies as a last resort. To me, they are no resort: they are just plain mean. A company being a dick to your company doesn't give your company the moral right to be a dick back. boredguy8 made an excellent suggestion of an alternative approach.
- modoc 18y ago
  This isn't about moral rights to be a dick. This is about business and how you handle companies that owe you large sums of money and have made it clear they have no intention of paying. Boredguy8's suggestion seems odd to me, in that it's unlikely to work too often, and even if it does, the attitude of the other company in the OP is such that I would want nothing to do with them going forward.
  - maryrosecook 18y ago
    But it seems to me like an unkind ("dickish") way of getting the money back. Other people have made suggestions for alternatives: tptacek (small claims court), tjic (scary lawyer letter), boredguy8 (a social engineering approach).
    - modoc 18y ago
      Small Claims Court: usually limited to 2-3k, so you're giving up 7-8k, AND you have to spend your time in court. Doesn't seem like a wise expenditure of time versus revenue given the other options. Lawyer Letter: TJIC's suggestion is a very good one. However he's already sent them a copy of the legal contract the company signed, so it's possible this could likely be a waste a few hundred bucks of attorney fees. If he tried this, and they continued to ignore him, would a collections agency be a logical next step? If not, what would? Social Engineering: Frankly it sounds like the new CEO isn't going to say "Oh you're going to fly here, man I better cut a check quick". So you're probably out a plane ticket a day of work. The last thing a small business needs to do is to have a key person wrapped up for hours/day/weeks trying to recover money from a clearly uncooperative/belligerent person. They need to find the best balance of revenue versus time spent. After the threatening legal letter (which is sort of dick-ish I guess), I think a collections agency is the next logical step.

jm4 18y ago

What is this guy supposed to do? Show up with a bouquet of flowers and ask nicely? It sounds like he's already tried the carrot and now it's time for the stick. These people owe almost $10k and basically told him to go piss up a flagpole. Of course it's going to hurt the other company and its employees, but think about how it's going to affect the submitter's company and small group of employees if they don't get paid for their work. It's a bad situation all around, but it's not the submitter's fault that these people have a employer who doesn't pay bills and he shouldn't have to suffer because of it. I would probably talk to a lawyer first. For minimal fees you could have a few nastygrams sent out and the threat of a lawsuit might do the trick. If that doesn't work selling the debt to a collection agency for cents on the dollar might be the most cost effective solution. [edit] Or you could get creative as boredguy8 suggests. I think it's a fantastic idea. It may or may not work, but it doesn't cost much and there's no PR fallout.

nfriedly 18y ago

I disagree with you. I think collection agencys and legal battles should be saved for a last resort, but it sounds like they have tried all of the "nicer" methods. The amount is a little too high for small claims court, so I think a debt collection agency is a reasonable choice.