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Customer signed contract and disappears? How do you get your money?

by mrdeflation
18 replies
You run a consulting business that signed a customer to a contract for 6 months at $xxx per month. After 2 months of payment the customer completely disappears and is never heard from again despite numerous attempts from the business.

What would you do to collect in this situation? Would you have any recourse or just write it off as a loss??You run a consulting business that signed a customer to a contract for 6 months at $xxx per month. After 2 months of payment the customer completely disappears and is never heard from again despite numerous attempts from the business.


What would you do to collect in this situation? Would you have any recourse or just write it off as a loss
#contract #customer #disappears #money #signed
  • Profile picture of the author Alexa Smith
    Banned
    For me, it would depend on the circumstances, the amount of money, the customer's location (country) and so on.

    If it's all quick, easy and local, I might serve a small-claims-court summons C/o the customer's mailing address, which I'd have before starting work. I don't pretend that this is a complete or "definitely productive" answer, of course.

    You have to try, somehow, to assess the cost/effort/aggravation factors of attempted recovery against the chances of actually being successful, don't you? Sometimes it's better to walk away. But which those times are depends on a multiplicity of factors, none of which you've mentioned.

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  • Profile picture of the author Raydal
    I'm not sure I understand this situation. Why would you want money back from
    a customer? I thought the customer was the one who paid the money and would
    want a refund.

    -Ray Edwards
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    • Profile picture of the author Alexa Smith
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      Originally Posted by Raydal View Post

      I'm not sure I understand this situation.
      Ray, I think the OP is referring to a situation in which the customer has a contract to pay an agreed amount of money, per month, over some period of time, and has defaulted on his ongoing contractual payment obligation?

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  • Profile picture of the author mrdeflation
    customer pays you for your consulting service work per month $300 and signs a 6 month contract stating he/she will pay you $300 every month for the next 6 months.

    After the 1st month payment the customer disappears but still owes you the next 5 months of payments totaling about $1500
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    • Profile picture of the author Raydal
      Originally Posted by mrdeflation View Post

      customer pays you for your consulting service work per month $300 and signs a 6 month contract stating he/she will pay you $300 every month for the next 6 months.

      After the 1st month payment the customer disappears but still owes you the next 5 months of payments totaling about $1500
      OK, so are you saying that you already have delivered the 6 months
      of service? Because if they stop paying then you stop providing the
      service, no?

      -Ray Edwards
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      • Profile picture of the author joseph7384
        Originally Posted by Raydal View Post

        OK, so are you saying that you already have delivered the 6 months
        of service? Because if they stop paying then you stop providing the
        service, no?

        -Ray Edwards
        No he delivered 2 months of service but the fact is that the customer signed a contract agreement for 6 months.

        It's no different then signing a lease for an automobile for x amounts months, you have to finish out the term of the lease.
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  • Profile picture of the author fast2net
    Were you paid for the work that you actually did for the client? If so, don't stress about it as long as you didn't get completely ripped off.
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  • Profile picture of the author Jack Gordon
    What does the contract say about default?

    The whole point of a contract is to bind the parties to a defined set of rules that answer questions like this.

    If your contract doesn't do that, you need a better contract. One that spells out how default will cause the balance to be handed to an attorney, with all costs of collection becoming the responsibility of the client.

    Clients sign those, because nobody ever plans on being a defaulter.
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    • Profile picture of the author mrdeflation
      Originally Posted by Jack Gordon View Post

      What does the contract say about default?

      The whole point of a contract is to bind the parties to a defined set of rules that answer questions like this.

      If your contract doesn't do that, you need a better contract. One that spells out how default will cause the balance to be handed to an attorney, with all costs of collection becoming the responsibility of the client.

      Clients sign those, because nobody ever plans on being a defaulter.
      thats the thing.. the client signs the contract and agrees to pay $1794 for service over the next 6 months. The contract states that if he/she basically disappears he/she still owes the money.

      The normal price for 6 months of service is $2100. However if they sign a 6 month contract up front they get a discounted monthly rate but ONLY if they sign a contract agreeing to use the service for 6 total months agreeing to pay $1794 over the next 6 months.

      This way people who buy one month pay the full price but others who wish to sign a contract get a discounted rate.
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      • Profile picture of the author kilgore
        OK, I'm going to come at this a little differently.

        If I were in your shoes, I wouldn't be worrying about how to get my money, I'd be worrying about what was so bad about my service that my customer decided to discontinue. Was there something that you could have been doing better? Were you not living up to their expectations in some way?

        Yes, it sucks losing a bit of revenue. But trying to collect on a single contract seems short sighted. If they were unhappy with your service, at the very least I'd want them to be able to tell their friends, "I wasn't satisfied with their product, but they stood behind their work and didn't try to eek out every single dollar when I wasn't satisfied." The fact is that sometimes you have to take a short term loss to build a long term business.
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        • Profile picture of the author mrdeflation
          Originally Posted by kilgore View Post

          OK, I'm going to come at this a little differently.

          If I were in your shoes, I wouldn't be worrying about how to get my money, I'd be worrying about what was so bad about my service that my customer decided to discontinue. Was there something that you could have been doing better? Were you not living up to their expectations in some way?

          Yes, it sucks losing a bit of revenue. But trying to collect on a single contract seems short sighted. If they were unhappy with your service, at the very least I'd want them to be able to tell their friends, "I wasn't satisfied with their product, but they stood behind their work and didn't try to eek out every single dollar when I wasn't satisfied." The fact is that sometimes you have to take a short term loss to build a long term business.
          they disappear because they are broke and want to try to continue service for free hoping that I forget to collect payment. When I dont forget to collect payment this disappear. Just wondering how to get my money otherwise a contract is useless
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          • Profile picture of the author kilgore
            Originally Posted by mrdeflation View Post

            they disappear because they are broke and want to try to continue service for free hoping that I forget to collect payment. When I dont forget to collect payment this disappear. Just wondering how to get my money otherwise a contract is useless
            If they're broke, you're not going to be able to collect anyway. Why risk your reputation for a small amount of money that you'll likely never see? Instead, I'd just ask them what went wrong and offer to release them from the obligations of their contract. Obviously I wouldn't give them free services, but I also wouldn't charge them for something they no longer wanted, contract or no contract. From a long term perspective, it's just not worth it.
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  • Profile picture of the author Jack Gordon
    I should add that, in my experience, judges rarely would enforce an contract for a service that can simply stop being performed like this. Even if it is spelled out in the contract.

    If they contested it, it is far from a slam dunk that you would win.

    Having a good contract is more useful for preventing things like this from going to court.
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  • Profile picture of the author abbadox
    One other option is if the contract is based in the United States you can often sell it to a collection agency, you will only get small percentage of the value but in some cases it's better than nothing.
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  • Profile picture of the author Angshuman Dutta
    Originally Posted by mrdeflation View Post

    You run a consulting business that signed a customer to a contract for 6 months at per month. After 2 months of payment the customer completely disappears and is never heard from again despite numerous attempts from the business.

    What would you do to collect in this situation? Would you have any recourse or just write it off as a loss??You run a consulting business that signed a customer to a contract for 6 months at per month. After 2 months of payment the customer completely disappears and is never heard from again despite numerous attempts from the business.


    What would you do to collect in this situation? Would you have any recourse or just write it off as a loss
    If you've provided your services for two months and also got paid for the same, I think you should stop worrying about him further because that's going to cost you your resources. If you have already provide him 6 months worth of service and got paid for two, it's a rip off and you should take action provided you two are from the same location.

    If you are not from the same location, you can just post a review on one of the several consumer review forums so other people don't get ripped off. If the client cares about his reputation he would approach you once he knows about the review you left.
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  • Profile picture of the author kindsvater
    write it off as a loss
    You probably can't do that. General rule for a service like this where you are not paid is no deductible loss is generated you can write off. It's just income you did not receive.


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  • Profile picture of the author mrdeflation
    so then in fact what is the incentive to offer a discount for a contract in the first place?
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