Newsletter - February 18, 2010

WHEN Do You Need A Coach?

The question is not whether you need a coach, the question is when?

Unfortunately most people do not seek out a coach until they have either fallen too far behind or they are at a point of no return. A coach helps you improve, achieve your goals, and sharpen your tools and skills from a positive position. However, most business owners hire a coach when there is a set back, a painful experience, or it's too late to save the business.

We should always be proactive and try to stay ahead of the learning curve. Successful executives, athletes and business owners try to stay ahead of the curve and many do it with the aid of a coach. More and more business owners are enlisting the help of a coach everyday. A coach is an investment into growth and improvement, not the last option before failure. Coaches, for the most part, are not miracle workers.

Perhaps a better way to look at why you shouldn't wait too long to enlist the help of a coach is to use your car as an anaology. We all have a car, be it business or personal, and many of you have cars, vans, or trucks that you use in your business. Why do you get your oil changed every 3,000 to 5,000 miles? You do it so the car runs more efficiently and to prevent a major set back down the road if the engine seizes up and needs to be replaced. It protects and prolongs your investment. Some of you may not be doing this either and what is usually the end result? Why should it be any different with your business?

Whatever you invest in, you are expecting a return on that investment. That is why you can't wait until the car is smoking and the engine is seizing to put the oil in. Invest when times are good to enhance your improvement and growth and receive an even larger return on your investment. You will avoid many painful experiences and major setbacks and have a solid growing business for years to come.

Set up a Complimentary Assessment with Coach Paul paulcurrie@actioncoach.com

Collecting Depts in Pennsylvania - An Overview

By: Michael A. Hynum, Esquire, Hynum Law

Real Life

When someone owes your small business money, refuses to pay and often, even ignores your efforts to contact them, you certainly feel like a victim. And rightly so. You’ve provided goods and/or services in good faith. Someone has taken those goods and services and not shown the same good faith to you. You may feel like someone has done the equivalent of "stealing" from you and now you are at your wit’s end. But the reality is, there may be more options available to you than you realize. One who extends credit to another is often referred to as a "creditor" while one who receives goods or services with the understanding that they will pay for them at some later point is referred to as a "debtor." Debts can be consumer (owed by individuals) or commercial (owed by businesses). There are important differences between the two. While certain protections are offered to both, consumers are generally provided more protection with regard to the ways in which creditors can pursue debts that are owed. A typical rationale for protecting the consumer is based on the notion of policing market inefficiencies, such as inequalities of bargaining power between a consumer and a business. Accordingly, the implications and limitations imposed by federal laws such as the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), Truth in Lending Act and Fair Credit Billing Act, as well as various state-specific consumer protection laws must be taken into consideration when collecting consumer debt. There are also many legal principles (contractual, procedural, and jurisdictional) which are implicated when enforcing both consumer and commercial obligations.

So what then, are those options referred to earlier? First, you should be monitoring your outstanding receivables on a regular basis. For some businesses that may mean once a month; for others, it may mean weekly or even more frequently. The frequency may vary based on the size of your business. But it is important for every business to determine a schedule for A/R review and be sure to stick to it. Second, you should be regularly contacting clients whose bills are past due. Some choose to use correspondence, often referred to as "dunning letters" to remind customers about delinquent accounts. Dunning letters are normally sent monthly and contain increasingly stern language based upon the age of the receivable (i.e. 30, 60, 90 or more days past due). Others will make telephone calls to customers with delinquent accounts. Still others will use a combination of the two. If internal attempts to collect delinquent accounts prove unsuccessful, many creditors choose to engage the services of a third-party debt collector or collection agency. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed. Some agencies also offer (usually for a nominal flat fee) pre-collection" or "soft collection" service. The service sends a series of increasingly urgent letters, often ten days apart, instructing debtors to pay the amount owed directly to the creditor or risk a collection action and potential negative impact to the debtor’s credit report. Finally, there is the option for a creditor to pursue legal action against a debtor. This can be done directly by the creditor, or referred to an attorney by a collection agency on behalf of a creditor. In Pennsylvania, debts not exceeding $8,000.00 can be pursued via suit filed at the District Justice ("DJ"), or Magistrate. This is sometimes referred to as "small claims" court. Debts exceeding $8,000.00 must be filed in a Court of Common Pleas. Common Pleas courts are located in each county throughout the state and are often referred to as the "county" courthouse. Additionally, some suits filed against debtors to recover money are assigned to compulsory arbitration (mandated by court rules with respect to civil suits in which the damages allegedly at issue are less than a prescribed dollar amount). The dollar threshold for cases assigned to compulsory arbitration are determined by jurisdiction and generally range from $25,000.00 to $50,000.00. Compulsory judicial arbitration was created as a means of efficiently disposing of smaller civil cases and conserving judicial resources by requiring as a first step that such cases be tried before a panel of three local court-appointed attorneys, with the understanding that any party can later appeal from the decision and obtain a new trial. Essentially, this establishes the automatic right of any dissatisfied party to appeal from the arbitration award and to demand a trial de novo, after which the case will ultimately be assigned for trial to a judge (and a jury where requested).

While there is no requirement that creditors file suit at the DJ level for claims not exceeding $8,000, there are advantages to doing so. Pursuing debtors at the District Justice level are that the costs are almost always less and a hearing is normally scheduled much more quickly than at the Common Pleas courts. Many times, debtors do not respond to the suit and creditors are granted what is known as default judgment. Default judgment is a binding judgment in favor of the creditor when the debtor as not responded to a suit filed against them or fails to appear in court. It can be compared to a forfeit. One common disadvantage of pursuing claims at the DJ level is that there is an automatic right of appeal. Within 30 days of a judgment (even default judgment), a dissatisfied party can file an appeal to the court of Common Pleas. The process then moves along as if the matter had been filed there in the first place. While there is an automatic right of appeal, it should be noted that debtors often do not file such appeals, leaving the creditor to pursue enforcement of the judgment against the debtor, if the debtor still does not satisfy the debt. This process is known as "executing" upon a judgment. Through this process, a debtor’s personal property can be sold and bank accounts can be garnished and applied toward the amount of the judgment.

If you have needs regarding your company’s debt collections or have questions or issues you would like to discuss, please call attorney Mike Hynum at Hynum Law (717) 774-1357. Hynum Law welcomes your calls, and Mike will gladly talk with you over the phone or in person without charge.