The Kaplan Group Awards its 5th Annual $1,000 Scholarship
The Kaplan Group is pleased to announce that Karli Study has won our 5th annual $1,000 Scholarship! Karli is in her third year of law school at Widener Commonwealth School of Law in Harrisburg, PA. Karli’s winning essay is reprinted below and was in response to the following prompt:
SHOULD YOU SUE A CUSTOMER?
Let’s start out with the obvious question here: should you sue a customer? People have the right to be paid their bills. There is never a time when an individual or a corporation should not be paid for diligently providing services or product(s). However, what is fair and ethical is not the same playbook our world lives by sometimes.
To determine whether to sue a customer that is long past due on payments or that is just bluntly refusing to pay on invoices, individuals or corporations must follow an assessment process which dictates whether to pursue a lawsuit, depending on the situation. Let’s look at two scenarios with Mr. Fred Flintstone and Barney Rubble and see why in these scenarios the outcomes are different for two cavemen.
Fred and Barney, who work at the Bedrock-Quary together, come up with a side business to offer construction services to the good people of Bedrock. Thereafter, they name and register their business as Flintstone Construction, LLC.
Not long after completing one of their first jobs for the DINO-SUBWAY, Fred and Barney realize that the owner of the restaurant is delinquent in paying them. Fred’s wife, Wilma, contacts the owner of the restaurant and inquires why the invoice hasn’t been paid. The owner replies that they forgot about it and will get to it “when they have the time.” Three (3) more months continue to go by, and the restaurant still hasn’t paid. Should Barney and Fred sue their customer, the DINO-SUBWAY?
In this scenario, the answer is yes. Why you may ask? Let’s access the situation, step-by step. DINO-SUBWAY is a company that is still operating. Due to this reason, one must look at whether the restaurant has any tax liens, creditors, or judgments against it. From what Barney and Fred know, the restaurant is in good standing and has none of those things. Further, they expect that the restaurant will still be in business for another year since most of Bedrock loves to eat there. Therefore, Barney and Fred must assess whether there are any counterclaims or legal disputes that could be brought by DINO-SUBWAY and whether pursuing debt collection for the unpaid invoice would proceed to appear to be profitable still? Barney and Fred claim they provided adequate services to the restaurant and received no complaints from the owner, so it is unlikely that a legal dispute or a counterclaim would be brought forth by the owner. Even more so, the cost of the invoice is $7,000 while the expenses to pursue to a lawsuit would amount to a minimal fee in small claims court. Thus, the best option for Barney and Fred is to sue DINOSUBWAY.
But what would happen if DINO-SUBWAY had judgments against it? Barney and Fred would have to then look towards the owner of the restaurant and see if they had any personal liability or proprietorship for the business. If the owner didn’t, Barney and Fred would be out of luck in pursuing their debt collection. Moreover, even if the owner did appear to have some guarantee for the restaurant, it would provide little resolution for Barney and Fred if the owner was to have his own set of personal financial problems. Thus, Barney and Fred would once again be forced to forego suing their customer for their best interest.
Therefore, before a debt collection lawsuit can even begin, many factors go into the equation to answer the time-old question of: “should you sue a customer?” However, just like Barney and Fred, it depends on the situation, and hopefully leads to a “yabba dabba doo” outcome.
We started our annual scholarship in 2014 in the hopes of encouraging today’s aspiring students to consider a career in the Credit Industry. The Credit Industry offers lucrative and interesting careers relying on excellent analytical and communication skills. Our hope is that our annual scholarship will provide student applicants with a glimpse of our industry, giving them a potential career option that they can pursue upon graduation.
The Kaplan Group has provided free Credit Industry education and supported youth organizations for many years through The Kaplan Group website, blog and ebooks as well as Industry sponsored seminars and published articles. Our annual scholarship is one more way that we continue to promote our industry and give back to our community.
All undergraduate or graduate students attending an accredited 2 or 4 year college or university including graduate programs were invited to apply for the scholarship. The eligible fields of study were: Accounting, Business Administration, Economics, Entrepreneurship, Finance, Management, MBA or Law.
About The Author:
Dean Kaplan is Principal at The Kaplan Group. Dean's expertise is widely recognized in the debt collection industry. His advice has been published in a number of industry newsletters such as Credit Today and InsideARM and he is a frequent speaker at industry events.