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What to Do When a Big Client Misses a Staffing Payment

When a big client misses a staffing payment, it can have significant implications for your business. In such situations, it’s crucial to have a clear understanding of the recovery system and the necessary actions to take. This article provides insights into the recovery process and recommendations for dealing with this challenging scenario.

Key Takeaways

  • Act promptly when a big client misses a staffing payment to maximize the chances of recovery.
  • Understand the three-phase recovery system, including initial actions, legal actions, and recommendations.
  • Consider the possibility of recovery and the associated costs before deciding on legal action.
  • Be aware of the costs and rates involved in the recovery process, including attorney fees and collection rates.
  • Evaluate the recommendations provided, including the option to proceed with legal action or pursue standard collection activity.

Understanding the Recovery System

Phase One: Initial Actions

Upon a big client’s missed staffing payment, immediate action is crucial. Within the first 24 hours, a multi-pronged approach is initiated:

  • A series of four letters is dispatched via US Mail to the debtor.
  • Comprehensive skip-tracing and investigations are conducted to secure optimal financial and contact data.
  • Persistent contact attempts are made through phone calls, emails, text messages, and faxes.

Daily contact attempts continue for 30 to 60 days, aiming for a swift resolution. Failure to settle the account escalates the matter to Phase Two, involving legal steps and potential litigation.

Phase Two: Legal Actions

When initial recovery efforts fail, the legal phase commences. Attorneys within our network take the helm, drafting demand letters and making calls. If these efforts don’t yield results, we present you with a critical choice.

  • Decide to proceed with litigation, incurring upfront costs.
  • Withdraw the claim, owing nothing, or continue standard collection activities.

Upfront legal costs typically range from $600 to $700, depending on jurisdiction.

Should you choose litigation, our affiliated attorney files a lawsuit for all monies owed. Failure to collect via litigation leads to case closure, with no further obligation to our firm.

Here’s a snapshot of our competitive collection rates:

Claims Submitted Accounts < 1 Year Accounts > 1 Year Accounts < $1000 Attorney Placed
1-9 30% 40% 50% 50%
10+ 27% 35% 40% 50%

Remember, the decision to litigate is significant and should be made after careful consideration of the potential costs and benefits.

Phase Three: Recommendations

After a comprehensive review, our recommendations hinge on the feasibility of recovery. If prospects are dim, we advise case closure—at no cost to you. Conversely, should litigation seem viable, a critical choice awaits.

Opting out of legal action means you can retract the claim without owing us. Alternatively, standard collection efforts can persist. Choosing litigation necessitates upfront legal fees, typically $600-$700, based on the debtor’s location. These fees empower our attorney to pursue all owed monies.

Should litigation not yield results, the case concludes, absolving you of further financial obligation to our firm or attorney.

Our fee structure is competitive and varies with claim volume and age:

  • For 1-9 claims:

    • Under 1 year: 30%
    • Over 1 year: 40%
    • Under $1000: 50%
    • With attorney: 50%
  • For 10+ claims:

    • Under 1 year: 27%
    • Over 1 year: 35%
    • Under $1000: 40%
    • With attorney: 50%

These rates reflect our commitment to tailored, effective collection strategies.

Frequently Asked Questions

What is the Recovery System?

The Recovery System is a three-phase process designed to recover company funds from debtors. It involves initial actions, legal actions, and recommendations for further steps.

What happens if recovery is not likely?

If recovery is not likely after a thorough investigation, the case will be recommended for closure. In this case, there will be no obligation to pay the firm or affiliated attorney.

What are the options if litigation is recommended?

If litigation is recommended, the client has the option to proceed with legal action or withdraw the claim. If legal action is chosen, upfront legal costs such as court costs and filing fees will be required.

What are the rates for collection services?

The collection rates depend on the number of claims submitted within the first week of placing the first account. Rates vary based on the age and amount of the accounts, as well as whether they are placed with an attorney.

What is Phase One of the Recovery System?

Phase One involves sending letters to the debtor, skip-tracing and investigation, and attempts to contact the debtor for resolution. If all attempts fail, the case moves to Phase Two.

What is Phase Two of the Recovery System?

Phase Two involves forwarding the case to an affiliated attorney, who will draft letters demanding payment and attempt to contact the debtor. If all attempts fail, further recommendations will be provided.

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