DennisBeaverMay 12, 2012 (Original publish date) • By Dennis Beaver

The survival of any business — from a giant corporation, to a mom and pop, family-run store — depends on being paid for the products they produce, services which they perform, or the things they sell.

The boss might be terrific at sales, but if the person in charge of collections doesn’t do their job correctly, the company and its employees will be at risk.

That person must be loyal and always put the employer’s financial interests ahead of anyone else, especially non-paying customers. When that doesn’t happen, and if permitted by management, the seeds of failure are planted and will surely grow. There is an old saying, “No one cares about your business like you do,” but in reality, there are so many business owners who care more about signing up new customers than in collecting the money that is owed them and often long past due.

That’s the reality of one of our clients, a family-run disaster restoration company we will call The Kleen-Up Crew. One of their key employees, “Doris,” is more than just incompetent, she is downright disloyal, helping a crooked customer hang onto an insurance payment which should have gone to her employer.

The customer was an office supply company, which suffered water damage from a burst pipe. The Kleen-Up Crew was dispatched to handle the claim, and later — because Doris failed to send contracts to the insurance company — payment of their bill was sent to the customer.

“We knew the check was really yours, but we used the money for our payroll,” the owner and his wife arrogantly told Doris. Of course, this was theft — a felony — and Doris should have made a police report.

But she had sympathy for the crooks! “Oh well, they had some problems and would have eventually paid us,” she explained in a non-caring tone of voice. Doris also agreed to a payment plan, received checks that bounced and wasn’t upset.

This was one scary, dangerous employee, and we advised our clients to send her packing. But they had known of her strange behavior for years — tolerance for non-paying customers — and had put up with it.

What you can’t say legally

Without filing a lawsuit or involving law enforcement, is there a way to encourage a thief to do the right thing?  Our approach is to always begin with a phone call. But you have to be very careful with the precise language used. Here is what you cannot legally say:

“If you don’t pay us immediately, we’re going to the police. This was theft of our money and you knew it. Not only that, don’t pay us and I will tell everyone I know that you’re a thief!”

While that certainly seems to makes good common sense — and would feel oh so nice to say — this is one area where common sense actually violates the law, and could get you tossed in jail. No kidding!

So what’s wrong with telling a crook that if the money or property isn’t returned, you will report them to the authorities?

There’s nothing wrong in giving them a chance to make things right, and you can say, “Look, all I want is my money.” You can also say, “I’m going to the police.” But if you connect the request to a threat of being reported to the police or to reveal their wrongdoing in some other way, that becomes the crime of extortion or blackmail as it is commonly referred to.

Impressions matter

In this case, with my client present, we talked to their customer on a speakerphone. He knew who I was, as our paths had crossed before. The conversation went like this:

“Your keeping the money was grand theft. Had I been aware of it at that time, you would have faced prosecution. All we want is to be paid and it is not my present intention of going to the police. Were we to file suit, punitive damages would be awarded, so it is in your interest to pay promptly.

“You tell me how it is going to be paid, and tell me right now,” I said in my best Clint Eastwood-Dirty Harry-“Make my day” tone of voice.

I had said nothing that violated the law and yet left the impression of options available — when in fact there were none. By agreeing to accept payments, Doris converted a criminal matter into a civil dispute, but he didn’t know that.

“I will pay $500 in cash every Friday and come to your office. Is that OK?” he meekly replied.

My client nodded yes, and every Friday at 4 p.m. an envelope has been delivered to my office.

And that makes my day.

Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.