Bad debt

[Tortuga James]

I had a shop call me 3 days before the charter and say he only had 2 divers. He booked the whole boat 3 months earlier and in the past always filled the boat and brought me a check. I did not have a deposit. He asked what the cancellation penalty was and I said 100% of the charter fee, but no fuel charge. So he asked me to help him fill his charter. I was able to get 2 and he sent 2 with a check for them only. So I ran with 4. I sent him an invoice for the 2 ghost divers for $600. He called and assured me he was "good for it". I even ran into him at one of the crew boat shops the morning he had checkout dives with his group. He said "Captain, I have a check for you and I will run it by tonight." Never saw him.

That was 2 months ago. Now he will not return my calls or respond to my emails. He has the labor day weekend (3 days) chartered, but I sent him a message saying that I was taking it off the calendar unless I got a check or made some sort of payment arrangement by the end of this week. Still no response.

He has been a good customer and I hate to lose his business of about 3 weekends a year, but I guess he is not a good customer anymore. I have no faith in the Labor Day booking so I need to sell that to someone else.

I am just looking for some insight on what I should do now. He is from Maryland and it is not worth small claims court. Can I give it to a collection agency and maybe recoup 50%?

I have had so slow payers, a few single "no shows" but never anything like this. Another operator told me that every policy is a result of someone getting screwed. I am much stricter on deposits now, but still don't make some of my solid shops give me one. I thought he was one of my "solid shops".

 

[Dr Dive]

I have had several shops do the same recently. All have cancelled within the required time frames, so no $ recourse, but there seems to be a lack of appreciation of the impact of a short sale or outright cancellation. Tying up seats that could have been sold, for weeks, then not selling them is devastating. Hard to recover potential customers you had to place elsewhere. Hard pill to swallow.

 

[Superlyte27]

Cut your losses. You won't see 50% of your money from a collection agency. You'll sell that debt for 10cents on the dollar. Just chalk it up to lesson learned, move on, and don't do business with him again unless he pays.

 

[Akyla]

James,

Very sorry to hear you got burned like this. It has happened to me in the past and it is not a fun thing at all, but taught me a lesson.

However, I still let some of my really long term customers book without a deposit. I have the attitude that if I know you well and you have been reliable for years, then no deposit. If you have no track record then it is %50 up front. If I Really, Really, know you then it is %100% up front and way ahead of the trip.

I would appreciate it if you would let me know who this is so I will be forewarned when they eventually call me. When they do I will be glad to turn them down letting them know they need to pay you first, before I will run their trip. I would also let the other morehead operators know about this guy too...

 

[Wookie]

He has been a good customer and I hate to lose his business of about 3 weekends a year, but I guess he is not a good customer anymore. I have no faith in the Labor Day booking so I need to sell that to someone else.... I thought he was one of my "solid shops".

Nope, your friend who said every policy is the direct result of getting screwed is a good friend. Solid shops are extremely rare, especially with so many living on the float of the credit card. You will find this more and more common, shops that were formerly good ones are losing faith that we'll ever come out of this downturn, and taking just a little more out of the retirement account (sound familiar?) to keep an nonviable business afloat just isn't cutting it any more. The divers are still diving, but they are arranging travel on their own now and not booking through shops as often. Shops are loath to ask their customers for trip deposits, so they go from a full boat to 2 divers just 10 days out, making it impossible to sell the trip.

So, what are the lessons here? First, get out and market the divers, not the shops. Used to be you could rely on a shop to fill a trip, but not anymore. Second, no one goes on the schedule without a deposit for a trip. If you have one shop running multiple trips, the deposit slides with the trip as long as the previous trip is paid in full. If the deposit is used for a trip, the rest of the trips come off the schedule. Third, it's cheaper to sit at the dock than it is to run a loser. Fourth, no one signs up for a trip without putting down a non-refundable deposit. Separate the grain from the chaff early and you'll be less frustrated, and it will let you know who is really interested, and who just says that they are going. Last, you must follow your terms and conditions to the letter. It's like letting just one of your buddies solo dive even if they aren't certified. Maybe you allow that, but if you don't, and one of your other buddies sees your first buddy doing it, they'll do it too. If you let a dive shop slide on a deposit even though they have signed a document saying that they must have one, well then, the rest of your terms are available to slide too.

Bad business is bad for business. Most businesses don't know that they have failed until some time after they've failed. Don't let someone else's bad business practices drag you down. You will leave this world with nothing but your reputation and the value of your handshake intact. Make them count for something.

 

[Tortuga James]

Fianlly got a call.."checks in the mail". We will see how long that takes to get here. Until then, Labor Day stays open for charter.

Dave, this guy has been diving with Discovery for decades. I wonder if they require him to pay upfront. I hate to ask, there is too much drama between operators down here already.

 

[Akyla]

I hope the money letter shows up and you can rebuild the relationship. But of course there is a now earned distrust with this guy and how to handle that.

Keep the drama down there if you will. We have a no friction situation in Hatteras this season. Even the fish boats are talking to us. Now if we can just get the wind machine turned off life will be good.

 

[Tortuga James]

Met me at the dock as I backed in Sunday Afternoon. Got a good portion, so I gave him back his Labor Day booking, but I am going to ask for half payment 2 weeks out.

 

[Akyla]

Cool, happy endings are always nice to have.
It might just make him a better customer in the long run.