June 14, 2011
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Question
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Ken :
4 years ago client contracted for $15k of residential security system. We received $6,000 deposit. The work took 7 months to fully complete due to
construction. Painfully with dozens of phone calls and statements sent- Client has trickled us the balance due ($9,000) over the past 4 years on erratic payment
schedules. The balance due on original contract is still $1,800.
Last December 2010 The client had made separate payments on Monitoring fee 1 year in advance for 2011. I now find out that this client is shopping for another alarm company And bad mouthing our services.. The other company is my friend... So I now found out their true intensions.
In short vendor hopping!
For 4 months now they have not responded to any phone calls or
invoices/statements.
In the past I was once advised by an industry attorney that if we accepted a
payment that was earmarked for Monitoring , then we will have to keep
monitoring this house either till account can be eligible late 2011 for 60 day
noticed of our intent to not renewal.... Or perhaps give him prorated refund
of monitoring service with a termination notice of reasonable time 30 days.
If client does not cash refund check - then this is a sticking point says
attorney .
And NO it was not your agreement although there were various clauses that
allow Dealer to cancel at will...
Although we Have collected most money (without late fees) we do not want the
client.
PS.. He is an accountant
PSS.. He owes electrician $18 k and has agreed with electrician to pay $250 a
month for 6 years (interest free)
PSSS .. He is a non desirable client and we want to send him to collections-
anyway.
Sorry for long story!
Just looking to create policy in particular the part of accepting and applying
payment toward invoice of monitoring.
Keith
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Answer
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You created your own problem. First by not using my Standard Alarm Contract - in this case the Sales and the Monitoring, and second, by accepting money for the monitoring when the installation had not been paid for.
You're on the right track however, because I know you now have my contracts, and I guess you've learned your lesson on how you accept money.
There is no reason to accept money for monitoring when the installation isn't complete or paid for.
Your advice is essentially correct. If money is tendered for a specific purpose it generally has to be applied that way. If not specifically earmarked you are permitted to apply it to the earliest invoice. Of course your contract can alter payment applications as well by providing how you can apply payments. I don't know how much of an issue this is and I don't have such a provision in my contracts. It would have been more common for you to have a problem with the monitoring contract after a delayed installation.