Ask Michelle – Contract dispute

This question is from someone who owns and runs a locksmith company.

I run a mobile locksmith business in Colorado. A local used car dealership requested my services to make new keys for 6 of their repossessed vehicles.  I provided them with the cost of the service in writing and had them initial this paperwork before I began the job.  Once the job was completed I asked them what form of payment they would be using.  They informed me that they cut checks on Fridays and would mail me the check.  That was several weeks ago and I have not received payment.

I contacted the general manager about the late payment and he then informed me that he was not happy about the charges on my bill and was not going to send the payment until we renegotiated the price of my services.  I told him he had agreed to this price before the job was done, initialing the bill/estimate and then signed the receipt, promising payment, when the work was complete.

My question is what can I legally do to expedite payment from this company?  If I hire a collections attorney or collection agency can I add the attorney or collection fees to the unpaid balance?

The answer is if you do hire a collection agency or collection attorney, the only way you can add those fees to the unpaid balance is if you had provided for those fees on the paperwork signed by the customer before the job was done and if your state law allows it.

Another option is to file with small claims court if the amount due is less than what is allowed and the court will add any interest and fees.  Once you have a judgment you can attach any assets if they still do not pay.  It is important to remember that just because you win in court doesn’t mean you will get paid, once you have a judgment you will still have to collect on that judgment.

My suggestion is to begin with sending a final demand letter in a flat rate priority envelope with delivery confirmation.  Include the letter, the copy of the signed paperwork and any other paperwork such as the invoice, or work order.  Make sure you are specific in your letter about the date you must have payment in your hands by.  If you don’t have the payment on that date, file with the courts.

Once you send the demand letter with a specific date to have payment  – make sure you don’t accept another payment promise that can be broken, don’t back down from the date you chose.  If you don’t have payment on that date – take action.  If you don’t and you accept another payment promise and then don’t get paid (again!) you lose all credibility.

Don’t waste any more time on the account, process it through the small claims court or through a collection agency.  Also, before ever doing any work for any customer – get a signed contract. Every business owner needs to have contracts ready and available for each customer they work with.  You can have a template for a contract and use the same one with each customer or customize it for each customer, but if you don’t have a contract you will end up without a leg to stand on when you want to be paid.


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