So following on from my last blog about sacking clients that are not respecting your process and paying their accounts, taking them to court is a situation that you may just find yourself in when all else fails.
This is not a situation I share loosely with people because a) it’s not a nice situation to be in and b) it has been such a lengthy ordeal (one that is still ongoing) that I prefer to put it in the back of my mind and chalk it up to experience. However, a lot of my colleagues, particularly small businesses, have found themselves with no option other than to write off outstanding invoices and sometimes you just have to stick up for yourself and your business.
About five years ago now, when I was pretty much working solely in the business bar a handful of transcriptionists, I received a quote request from a virtual assistant/transcription business. Immediately a red flag went up which wasn’t because I am not a strong advocate for the virtual assistant industry – because I am, I pretty much started out that way – it was more the fact of knowing roughly how they charge and how affordable (or unaffordable in this case) our service can be for them. Regardless, I emailed back our usual quote information coupled with our rate chart. The way our rate chart works is the client knows upfront how much the audio is going to cost them so they can prepare and budget for their transcription needs.
This particular quote was urgent overflow work that could not be completed by the virtual assistant, was required within a four day period and was around 10 hours of audio (this equates to around 50 hours of transcription) – not a small job given the timeframe! So you can imagine my surprise when the (let’s name the client “VA”) replied advising to go ahead. Because of the red flag moment earlier, I decided that a Terms of Service Agreement should be drawn up …
I INTERRUPT THIS BLOG TO ADVISE A VERY IMPORTANT POINT –
ALWAYS TRUST YOUR INSTINCTS!!
… as I did not have a Terms of Service Agreement in place and my previous five years of business had been built on trust with my clients. After consultation with my Lawyer, we produced a solid two page Agreement that would protect both the client and myself.
So we set about getting started on this job, it happened to fall on a weekend and I had lined up four of my best transcriptionists at the time to get through this massive project. My transcriptionists worked very hard to produce the transcriptions, I proofread all of the audio/transcriptions as I usually do with new clients and we successfully delivered the transcription within the four day timeframe, invoiced the client and went back to our business.
At the time, I had a bookkeeper that came in once a week to do the invoicing, general accounts and follow up of overdue accounts etc which we had to do with the VA. Little did we know at the time of sending the first overdue notice, we were going to be entangled in one of the most unpleasant business situations I’d ever experienced (to date).
Generally it went something like this; my bookkeeper ended up emailing three overdue invoices after the due date had lapsed and left three voice messages. On the fourth week we received an email from the VA advising “She was interstate, loved the transcription, thanks very much, will pay upon return to office”.
A few more weeks went by (around eight weeks by this stage) and keep in mind, I’d already paid my transcriptionists by this stage and we were talking over $2000 worth of work, when we received another email. To our shock, this email was abusive and unsettling and pretty much advised that the VA’s client was not happy with the transcription, seemed that foreign people had transcribed it and that she was not prepared to pay. Although shocked but not defeated, I replied in a very business like manner advising my concern with the contents of the email, advising that we had terms in place, that she had signed an Agreement and asked if she could be more specific with what “the” client wasn’t happy with.
The reply: “I’m not prepared to pay the invoice and I am prepared to drag it out for as long as it takes”.
The shock I was feeling immediately turned to anger. Are you kidding me? Five of us had given up our weekend to transcribe this urgent overflow work and this was the response! After I calmed down – and it took a good while – I realised, it wasn’t about our transcription quality, the VA was never going to afford to pay us for the work, which proved true when we went to court.
Unfortunately, it did come to that. It became not about the amount of money the VA owed us, it was about the principle of the thing. The way it was handled was totally unprofessional on her part and what angered me the most was the reputation of the virtual assistant industry this person had tarnished! Most of my transcriptionists are small micro business owners or virtual assistants and I could not believe that someone could take advantage without a care in the world.
So I set about liaising with a debt collection agency first, major problems there, this VA had done this before, had no fixed address, was evading all communication however the VA did have a website and continued to provide a service.
Another good lesson, you can hide but you can’t compete with Google!
Eventually there was a mediation set up to try and appease the courts having to deal with this although the VA walked out halfway through, the VA offered to eventually pay a quarter of the invoice – I refused; some time later half of the invoice – I refused again. As the VA and debt collection service was based in Melbourne, it became necessary that a court hearing was going to be the only way to resolve this problem. I had to inconvenience my transcriptionists once again for this person and obtain testimonials for them for the court.
My daughter Lily was only a baby, so I had to arrange for my mother to take time off work to look after her and Oliver (who was three at the time), we cashed in our frequent flyer points to fly to Melbourne, we used our discount loyalties to stay at a hotel and off we went. By this stage, it was about a year after the work had been transcribed and everyone was being inconvenienced!
Although the opportunity to be in Melbourne was nice, it was overshadowed by the nervous, sick feeling I had. I was still very angry about the whole situation and how flippant this client was towards our service and now I had to face her. I spent a considerable time in the court bathroom, nauseous and anxious and just wanting to go home and not deal with it. (And yes, for all of those readers that know me to be quite strong in character – I was extremely scared)!
With five minutes to spare and armed with my husband, two reps from the debt collection agency and their Lawyer, I was willing to face this, not ready, but willing. I was so appreciative that this was a closed court and not something out of Judge Judy where it’s a free-for-all to come and watch so my nerves started to settle. They settled even more when the VA arrived – in jeans and a t-shirt – and settled into a chair at the bench with her Coca-Cola and book. To my delight – when the Judge walked in – his first words were “Get your drink and book off my bench”. I knew she was toast!
I spent the next 45 minutes being drilled about my business, our process, our Terms of Service and the transcription. The VA spent ten minutes being drilled about where her client actually was to advise they were not so happy about the transcription – all she’d bought with her was a printed out email. The saving grace? Our Terms of Service Agreement.
No matter what went on in that courtroom for the few hours we were there, the VA had signed our Terms of Service Agreement which states “Any claims of defect by the Client must be submitted within five days of the completed Transcript being forwarded to the e-mail account the Client specified when establishing an account with The Transcription People Pty Ltd”. Because the VA failed to do this, the Judge did not take anything else into consideration. It was irrelevant whether the transcription was to her satisfaction or not and just for the record – our quality is second to none!
The VA was ordered to pay not only the original invoice, but the interest accrued on a “daily” basis since the date of invoice (keep in mind it had now been a year); the costs of our flights and the relevant court costs. The VA had now drummed up three times the amount of what the original invoice amount was and the sad thing was, the VA had to submit her invoice to her client to the court which was no where near enough to be able to pay for our service.
Did I feel triumphant? No, just relieved but disappointed about having to go through the whole process and yes I get that things like that always make you stronger but it hurt and it was hard but I am glad I protected myself and my business and went with my instinct and produced that Agreement and since then, every client signs before we proceed further.
To date: the VA entered into a monthly payment arrangement which has been defaulted five times in the past four years and only half of the ordered amount has been paid. The VA still has a website offering transcription services however under the current law, there is no protection for small businesses dealing with these kinds of situations. It is still an open invoice and a bonus if we receive money; it was the principle of the thing!