The annual LCT Operator of the Year Awards recognize the latest and most current in business achievement.
A Facebook group called Deadbeat Affiliate Limo Companies has gained quite the social traction lately as operators vent about a longstanding pet peeve in the industry.
The page speaks to a major pet peeve of operators and provides an industry forum for airing dirty laundry. The page has been quite active with some well-known big name companies getting called out in a negative and very public way.
Andi Gray, President of Strategy Leaders, on May 14 presented, “Effective Strategies to Maximize the Profit and Potential of your Business,” to members of the Greater California Livery Association at a regional meeting in Los Angeles.
She cautioned operators that if they lack the financial resources to carry the debt of affiliates, they should not be doing it.
There is no doubt social media has given everyone the ability to expose companies for all types of misdeeds. Social media review sites like TripAdvisor, Yelp, Google, and others give consumers a powerful voice. The voice can be so powerful that too many bad reviews can crush a business reputation. Affiliates are now using the same tool to rat each other out on stiffed payments.
Most operators using this power are usually able to collect their money quickly once they post about someone not paying them, says the page’s founder, Doug Schwartz, owner of Executive Limousine on Long Island, N.Y. Operators message him once they have been paid and ask Schwartz, one of two page moderators, to take the post down.
Schwartz says he steadfastly refuses to do so with good reason. “If they posted it, there was a problem. There is a likelihood it will be repeated.”
Schwartz launched the Deadbeat Affiliate Limo Companies group on Facebook on Sept. 7, 2016. He created it as a result of an operator discussing his frustration about operators who fail to pay their affiliates but post photos on social media of lavish vacations, presumably paid for with money that should have gone to the affiliate before going on a vacation. Schwartz and fellow operator Ken Carter, owner of Aadvanced Limousines, moderate the group page with a heavy hand. The official description of the Facebook group page says: “This group is to notify others about operators that don't pay. It is not to bash operators who have a dispute with you...only ones that avoid paying! Only limo company owners and upper level management will be admitted!”
As of May, the group had a total of 1,291 members, with each member personally approved by the two page administrators. In February, Schwartz posted additional rules to follow. The debt must be at least 45 days old and numerous collection efforts have been ignored. Added requirements include no known issues in the delivery of service and the name of the affiliate must be clearly stated. No posts of any other type are allowed on the page.
When banks or credit card companies extend credit they use a formal credit application to complete a credit check. They have subscription access to credit reports from one of four agencies that store credit information. Those are TransUnion, Experian, Equifax, and Dun & Bradstreet. The latter maintains credit reports only for businesses and will sell you a report on any business for $122. You don’t even need permission from the business. Reports from the others average $15 to $100 per credit check based on whether you are a monthly subscriber or ordering a single report. The fact is most operators assume if someone works in the industry, attends trade shows, and belongs to trade associations, they are likely good for the money. That is not a sound business decision and no company in the business of lending money would make a decision based solely upon those characteristics.
You might have a Target credit card in your wallet or more likely a gas credit card from a major oil company like Chevron or Shell. If you look at the contact information on the card or your monthly statement, you might notice the credit is extended by another entity. Target uses Retailers National Bank and Chevron uses Synchrony Bank. They are not in the business of financing for good reason. The risk of loss is too high. They elect to let banks take care of what they are good at — loaning money. They concentrate on selling their product rather than chasing bad debt or worse yet, incurring a loss on uncollectable debt. Since no operators in this industry run businesses the size of major oil companies or retail stores, why would we think extending credit is a good idea?
Before you decide to float someone money, and that’s what you are doing, you must ask yourself if you can sustain the loss, and more importantly, are you willing to do so? It’s a huge risk. You are essentially loaning your own money. You will pay your chauffeur, fuel costs, and associated payroll out of your pocket. You will incur vehicle depreciation and the costs of making the vehicle ready for service and the ancillary costs of the reservationist who took the order and the dispatcher who monitored the ride. The longer it takes to get paid, the less the money is worth. In simple terms, you cannot buy a gallon of gas today for the same price you were paying in January. Each dollar has less value as time goes on. Don’t loan money unless you have piles of it lying around.
If you haven’t been paid for affiliate work, here are some steps you can take to try and get your money:
No. 1: Send a “final demand” letter to the business and the owner or corporation officers residences via certified letter through the postal service. Be sure you request a return receipt. This final demand should clearly state the amount of the debt, details of the debt, and a specific date when you will take further action. Having the return receipt will be invaluable to you in your attempt to collect. You should have the owner and/or corporate officers’ home addresses as a part of your credit application for this reason.
No. 2: Once the time has passed, you can complete small claims paperwork online for most states. Search the internet with the term: Small Claims Court in (county name). All of the information and forms you need will be provided. If the court is within driving distance, you can appear on your own behalf. In the event it is too far to drive, you can hire a company like Courtlinked.com who will work with you to represent you for about $100.
No. 3: You will need to hire a process server to serve the affiliate with a subpoena to attend court. You cannot do this yourself nor can any of your employees or anyone who is a related party to your business. If you operate under a dba, you will need to offer valid proof you have a fictitious business name filed with your county or you will have to file under your personal name.
No. 4: Once you appear in court or a representative appears on your behalf, you will receive a judgement. Many times this does not happen in court. The judge will tell you he will issue a verdict by mail.
No. 5: Once you have a judgement there are many ways to collect your money. You may legally seize something of value to sell. You can perform a “till-tap” by demanding any cash that’s in the business. You can apply a lien on property. You can serve an order on their bank. It would be highly advisable to hire a collections company to handle these things for you.
The best way to avoid being ripped off is to implement an equally applied policy of requiring a credit card at the time service is rendered for everyone. Your affiliate cannot make a hotel reservation without a credit card. The world we live in today revolves around plastic.
There may be a few companies like BostonCoach who will hold out on this idea but they have their own system, AFNET that facilitates quick payments to their affiliates. Other networks are known to take 60 days or longer to pay. If you have delivered good service in the past and had no issues, your affiliate should value your work enough to respect your decision to discontinue acting as a bank.
Amazon has caused a major disruption to the retail industry with many big name brick and mortar stores such as Sears, Toys R Us, and K-Mart closing. When you purchase from Amazon, you must pay by credit card before your items are shipped. You also can’t purchase an airline ticket without a credit card, and there is a reason why these companies operate this way. It’s called financial success.
The annual LCT Operator of the Year Awards recognize the latest and most current in business achievement.
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While efforts were cut short, the enforcement actions provided valuable insights to everyone involved.
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