Money up Front – When to Ask for Prepayment

One of the most common financial issues that process servers encounter is collecting payment for services rendered. Many process servers and process serving companies will accept a request for service, execute the service, and then bill the client. While this works with long-established customers, with new customers you may encounter unscrupulous people who will run up a bill you, not pay you – and then start using someone else for their service of process needs. It can be very difficult and frustrating to secure payment in these situations, eating into your valuable time and your bottom line. In this article we will talk about when and how to ask for prepayment to avoid these situations.

Requests from Pro Se Clients

Pro Se Clients are individuals who choose to represent themselves in a legal action. They do not have an attorney representing them and often require more customer support. Any work received by a Pro Se client should be prepaid. They are an unknown individual coming to your business to make a purchase. You know you will deliver the service, but can you really trust that you will get paid afterwards? Pro Se clients not only don’t understand the details of serving process, but they aren’t a professional legal entity, so they have no motivation to maintain a good reputation in the industry. Regardless of how much work you do, everything should be prepaid.

• If you need to go to a second address, you should ask for prepayment before you go.
• If you need to run a Skip trace, you should receive payment before you run a skip.
• If you need to do a stake out or wait time, we suggest setting a minimum time frame and ask for prepayment of that minimum time. For example, you may advise your Pro Se Client that wait time is a minimum of 2 hours at $75/hour. If they accept, you should ask for prepayment of your 2 hours. If you don’t end up using more than one hour, you may choose to do a refund – it is always easier to refund money than do collections.

Requests from New Clients

For the purposes of this article, new Clients refers to attorneys and paralegals, who may often find you online through Google or directories. When this type of Client request services for the first time, we suggest a policy of having the first job prepaid. If this first-time Client balks at the request, beware! Their reticence might indicate cash flow problems, or a lack of respect for your services, precursors to slow payment or nonpayment.

In addition, always ask questions to determine if this would be a prospective long-term Client or will likely be one-time Client only. Where are they from? How did they find you? Are they looking for a company to take care of all of their service of process needs? The answers will be good indicator of whether you may receive more work in the future and establish a customer-Client relationship.

If this Client is from out of state, we suggest that prepayment should be required for all jobs, not just the first job. Out of state clients are less likely to establish a long-term relationship with you, increasing your risk of nonpayment.

Requests from Other Process Servers

Similar to new Clients, for other process serving companies – also known sometimes as affiliates – we suggest you always ask for prepayment on the first job. Also, always ask what associations they are members of, such as NAPPS or your state associations such as FAPPS, CALSPro, NYSPPSA, etc. – and verify their membership on those association websites. This is especially important in case they become a repetitive Client, because members of an association are subject to the association’s documented arbitration and grievance process. Many non-payment complaints are resolved with the help of these associations, because no one wants to lose their membership.

• If they are not members of an association, they may not have been in the profession long enough – or it may be that they do not wish to operate under the code of ethics these associations expect of their members. At your discretion, you may require prepayment of all jobs of non-association process servers.
• If someone claims to be an association member, but they do not appear to actually be a member, not only should this be reason to expect prepayment, but you should contact the association(s) and identify the individual and let them know they claimed membership but you couldn’t verify this. The association should either verify their membership or reach out to that individual to cease the membership claim.

If this process serving company is out of state, you might also request prepayment for all jobs, rather than just the first job. However, if they provide a steady stream of work, you may consider if a regular payment schedule (e.g., weekly, bi-weekly, monthly) is in the interest of the relationship. If you do agree to extending credit and billing on a calendar basis, make sure to get your payment terms agreed to in writing, including how long they have to pay upon receipt of your invoice.

Things to Consider

Regardless of how you choose to run your business, keep in mind that you are not a financial institution. You provide a service and expect to be compensated at in a timely manner. We all have too many stories of Clients that do not pay or are always behind in payment. Here is a list of things you can do to decrease your risk of slow or nonpayment:

• Always get the first job prepaid.
• Accept prepayment online, making prepayment easy and timely, eliminating excuses about a delay in payment.
• Enact a policy that a Client who is “X” days past due must prepay for all new work, until all past due invoices are resolved. This helps encourage Clients to keep current on payments, instead of running up a bill.
• Keep good notes about Clients who have a history of slow payment or nonpayment. Hopefully your case management system provides a way for you to enter notes about a Client that automatically pop up for new jobs, like PST does. This way, you can have a note that anyone entering a job will see that directs to get prepayment from this Client.

Final Thoughts

While collecting payment up front should be your general policy, in order to stay profitable and reduce the burden of collection, you can always make an excpetion, based on your discretion and the situation.