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  • How do I get them to pay?

    Posted by chopshopcustoms on November 17, 2010 at 1:17 pm

    OK so now the economy has hit me- my clients just arent paying as fast as they normally would (some just not at all)

    Work on the vehicles in question has stopped but I NEED the cash to keep the shop open.I have rent to pay (which luckily has been financed through other avenues for a few months) and hard working staff to pay salaries.

    Im scared that a few clients are going to be ther downfall of my business and Ive worked too hard to get it to this point.

    Since these are ongoing projects- how the heck can I get them to pay up?

    Yes I have their cars but I dont have the space to become a bone yard until people saunter in to pay me.

    Is there anything legally I can do since I still have the cars and they havent completed the jobs?

    Asking for storage fees wouldnt work- they arent paying now- whats to say they will pay if I add on my $25 a day charge?

    I send invoices, make calls , sometimes even get to speak with them and hear their sob stories about what broken in their house , daily driver who is sick ,bla bla bla- well Im not able to put food on my table because of THEM.

    What do your shops do for people who get invoiced for some services before the job is complete and then they become delinquent? Would a collection agency work? An attorney letter? I know some of them are just clueless the urgency of having to pay a bill on time… (yes really)

    Newer clients now have a credit card on file and are told if they are more than 15 days in arrears it will get charged. These clients arent part of the new process.

    newell08 replied 11 years, 4 months ago 7 Members · 12 Replies
  • 12 Replies
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  • guy

    Member
    November 17, 2010 at 1:29 pm

    Do you have a signed authorization and documented approval for any work you have done? If so, take them to court.

  • chopshopcustoms

    Member
    November 17, 2010 at 1:51 pm

    for some of them we do- some are so old their contracts were destroyed in a water damage situation we had a few years back.

    These project arent in and out either- some have taken 2-3 years to even get to this point.

  • rd3audi

    Member
    November 23, 2010 at 8:42 pm

    Guys , simple make them pay up front before you carry out repairs , get

    there credit card and tell them that all fees have to be paid and

    storage will be charged at 25 per day on the credit card

  • chopshopcustoms

    Member
    November 23, 2010 at 9:03 pm

    Guess you realy didnt read about my shop then. These are ongoing 2-3 year projects- I dont do collision work on Mechanical- we are a higher end classic car resto shop.

    Our invoices are due upon receipt and some clients can take up to 30 days to pay something that I should have received back in 5 days or so. Most like to come in and see their progress if they are local as well.

    Its not like I have 100 cars a week traveling through my shop- we dont do volume-I have about 15 projects right now – some in waiting because of financial delays on the client’s end and just taking up valuable shop space.

    If I push them outside- it could cause more damage to untreated metal that its worth- causing more headaches in the long run.

    Its not like we are talking $5000 restos here- we average $50K and above for work so every invoice is in the $2000-3500 range.

    I have started to ask for credit cards- which does help a bit.Still frustrating though

  • mylesj

    Member
    December 2, 2010 at 5:54 pm

    Lenny,

    To paraphrase the policies of a high end restoration shop on the left coast doing long term restorations.

    1. If you need a delivery date, don’t leave the car here

    2. Leave the car and $5,000 (this was several years ago so maybe $10K now)

    3. We will call you when the $5,000 is gone and go over the work to date.

    4. You have two weeks to decide if you want us to continue. If you don’t make a decision by then we start charging $25 a day storage fee.

    These guys were doing primarily Jags and had a contact in England finding NOS parts and scrounging barns and estate sales.

  • chopshopcustoms

    Member
    December 2, 2010 at 6:20 pm

    Nothing that I dont already tell them- time and time again-AND in writing- its so hard around this time of year.

    If I hear one more time about ‘having to get present for my kids’ …

    People always forget that OUR kids/families etc should be able to have ‘wants and not just ‘needs ‘ too.

    Myles Swift wrote:

    > Lenny,

    >

    > To paraphrase the policies of a high end restoration shop on the left coast doing long term restorations.

    >

    > 1. If you need a delivery date, don’t leave the car here

    > 2. Leave the car and $5,000 (this was several years ago so maybe $10K now)

    > 3. We will call you when the $5,000 is gone and go over the work to date.

    > 4. You have two weeks to decide if you want us to continue. If you don’t make a decision by then we start charging $25 a day storage fee.

    >

    > These guys were doing primarily Jags and had a contact in England finding NOS parts and scrounging barns and estate sales.

  • mylesj

    Member
    December 3, 2010 at 2:02 am

    Two things.

    I had the same problem the first few years I had my shop. Receivables jumped and I didn’t have Christmas money. I set a total credit amount for the shop, not to be exceeded. It got interesting. A few times a customer needing credit embarrassed a dead beat into paying.

    You have the advantage as you are keeping the cars inside and you have a legitimate lien. You need to come up with a storage rate based on your cost per square foot and the extra insurance to cover stated valuations. That may be $50 a day or more in order for you to turn a profit on storage.

    The bottom line (more ways than one) is, are you willing to go to small claims court or exercise your lien? You need to put that decision in your original paperwork with them. That way they know what will happen if they fail to deliver on their side of the contract. It is very hard to threaten people with these actions. When they fall x dollars behind, they need to get a letter from you with a copy of the original paperwork saying you will be performing action certain on date certain if not paid by then. No drama, just business.

    You probably want your lawyer to help you with the right wording for your jurisdiction.

  • roebigd

    Member
    February 8, 2011 at 3:51 pm

    When a vehicle gets left and the customer will not reply to phone

    calls, mailings etc. We send a certified letter with delivery

    confirmation ( make sure you make a copy for yourself) If it is

    returned to you or not you can file for a mechanics lien or we just

    apply for a title to the vehicle , This is easy to do if you show

    storage charges from the first time you tried to contact them ,

    invoices not paid, pictures of incomplete vehicle. Once we have a

    title to a vehicle we call and leave messages for the customer letting

    them know we now own the vehicle and have a new title from the state

    it is

    amazing how fast they come up with the money to retrieve their

    vehicles so that we do not sell them. Also another shop that does

    restoration and custom work has them bring in the title up front and

    puts their name down as the lien holder and keeps a copy of it in

    their files in case the problem you are having comes up.

  • danrsauto

    Member
    February 15, 2011 at 8:11 pm

    In Ohio you can apply for abandon Vehicle title – If they do not contact you and or pay the bill – The bill has to be certain percentage of vehicle worth not to pay the difference of value.

    Vehicle is worth $20,000 and they owe $15,000 dollars you may have to pay a portion of the difference.

    It helps when you send a notice your going to apply for title , but not always just disposed of two left here.

  • chopshopcustoms

    Member
    February 16, 2011 at 1:01 pm

    thats the thing- they arent abaondoned. They are one-two year projects in a resto shop where they just take a few months off of paying. How do I get the clients to stay on schedule with their payments?

  • mylesj

    Member
    February 17, 2011 at 12:09 am

    Lenny,

    I work with one shop that has a post card sized power of attorney over the car that is good until the work is fully paid for, similar to Dennis R’s suggestion above. Good for the future but that doesn’t help you now.

    I may be mistaken but I’m assuming that getting storage fees will not solve your problem? It sounds like you want something along the lines of progress payments, but the owners are not authorizing any progress.

    One of my customers recent had to let one of his vintage British mechanics go, just not enough work available.

    Looks like the best way forward for you is to tell your customers to either pick up their cars or authorize progress. Any progress gets made under the new rules your have established for newer customers. You can educate them as to the costs and time involved of exposing surfaces to weather etc. Even if half of them take their cars, you have shop space that you don’t have now and lower liability.

    Ever talk to your insurance agent about that liability? We used to call our agent when we went over a certain value of vehicles inside to get a temporary boost in coverage instead of paying a higher rate all the time.

  • newell08

    Member
    February 21, 2011 at 6:56 pm

    Lenny, As was already said in Ohio you can file for a “mechanics lien”. I have been in your shoes as I ran an auto shop and a resto shop at the same time. Sounds like you were where the shop was when I took it over. I made a half up front requirement on all resto work. You may send certified letters with your attornies oversite with the intent to file for titles. Each state is different and you want to follow the law. find as much paper as you can because the court system loves paper. good luck.