I think your suggestion is a good one. However, I'm not prepared to spend the time and legal fees to take them to court and I don't make empty threats.
What are you afraid of, that these guys will learn that you're capable of bluffing and then push you around? That appears to have happened already.
Though I actually agree that you shouldn't bluff a lawsuit. You should give fair warning and then file the lawsuit. What are you waiting for, someone to cheat you out of twenty thousand bucks?
You don't have to intend to sue, the debt collection agency has that option. And while the collection agency probably won't do that, they might. Never know.
I just got off the phone with them. They seemed very professional and they said they typically charge 25-30% of the collected amount, but they usually don't do one-off collections. They typically work with companies that have at least 10-15 non-paying customers.
I understand that you find collection agencies "scary" but at this point I've exhausted all other avenues. My responsibility is to my company, not their company and staff.
People view debt agencies as a last resort. To me, they are no resort: they are just plain mean. A company being a dick to your company doesn't give your company the moral right to be a dick back.
boredguy8 made an excellent suggestion of an alternative approach.
How weird that you'd call out B2B collections as "dickish", but say nothing about the idea of one company screwing another (small) company out of a receivable.
This isn't about moral rights to be a dick. This is about business and how you handle companies that owe you large sums of money and have made it clear they have no intention of paying.
Boredguy8's suggestion seems odd to me, in that it's unlikely to work too often, and even if it does, the attitude of the other company in the OP is such that I would want nothing to do with them going forward.
But it seems to me like an unkind ("dickish") way of getting the money back.
Other people have made suggestions for alternatives: tptacek (small claims court), tjic (scary lawyer letter), boredguy8 (a social engineering approach).
Small Claims Court: usually limited to 2-3k, so you're giving up 7-8k, AND you have to spend your time in court. Doesn't seem like a wise expenditure of time versus revenue given the other options.
Lawyer Letter: TJIC's suggestion is a very good one. However he's already sent them a copy of the legal contract the company signed, so it's possible this could likely be a waste a few hundred bucks of attorney fees. If he tried this, and they continued to ignore him, would a collections agency be a logical next step? If not, what would?
Social Engineering: Frankly it sounds like the new CEO isn't going to say "Oh you're going to fly here, man I better cut a check quick". So you're probably out a plane ticket a day of work.
The last thing a small business needs to do is to have a key person wrapped up for hours/day/weeks trying to recover money from a clearly uncooperative/belligerent person. They need to find the best balance of revenue versus time spent. After the threatening legal letter (which is sort of dick-ish I guess), I think a collections agency is the next logical step.
Just a reminder: look upthread, it's not "2-3k"; in many of the places you're likely to be doing business, it's over $7k; the mean is ~$6k, the median is $5k. Yes, MA is $2k. That sucks.
