The following is a very useful “thread” from the Live Audio Board (LAB) forum on ProSoundWeb.
Question posted by D.D. Pawley
I know most everyone has had to deal with this sort of issue before. Two sides of the same coin.
What is the generally used policy on deadbeats? Do you wait for em’ to pay? Take them to court? Arrange a mob hit? Give them bad press?
What do you guys do? (I like he mob hit thing, but I don’t know the local mafia chapter.) How is this sort of thing written into a contract?
Second thing. A month ago, a renter dropped my older Peavey board that was out of warranty. He’s a great guy and paid for the minor repair. Works like new.
But what about the guys who break stuff, and don’t pay for replacements? How much of a security deposit is usually asked, and how flexible should our policy be, if the renters are trusted people and they can’t afford rental and security deposits.
The reason I ask, is because I’m having a friend of mine (paralegal) draw up a contract. The info on the workers liability a while back sure helped. But what if your friends help you? Can you be held responsible if they get hurt? Should I make sure they have their own insurance?
I know they can’t sign anything, but is there any way of getting around the union help? I mean, I never have union grade loading/unloading, but it does take time to unload and hook up our usual stuff, and I can’t do it w/only my little bro when the other guys are working.
Reply by Simon Adams
When we did hire (for 30 years) in the later years we simply got a credit card slip signed if they broke it or didn’t bring it back they owned it on expensive things we got a clearance from their bank before letting it go. This made some customers walk away, but we lost a lot less stuff, and if their integrity was solid, they didn’t mind We still do this on appro gear like camera, wireless, etc.
Reply by Hasse Queisser
I had to think I while about this, but here’s my two cents. I have just been in this situation this spring when I lost a rig (don´t count on the police doing squat for you if it happens). I also had a couple of gigs where the client blew a fair amount of speakers.
The best thing is of course to never get any deadbeats to hunt down for money. It takes I while in the business to learn to spot them before they do any harm. I have had my company for almost ten years now, and I´m just getting a hang on it now.
Our policy right now:
1. Cash up front for everyone except official institutions (government, state ...) and loyal customers who have never been late yet (this is especially true for clubs and restaurants).
2. If someone is late on payment, cut the credit at once. They will have to earn the trust again.
3. If someone is late, let them know you will hunt them until it´s paid, no matter if it takes you 10 years. Let them know you´ll never drop a debt, EVER. That can make some pay up, understanding they will not get away with it.
The mob thing is tempting indeed, but it will get you in trouble instead. Not just legally, what if they get back at you the same way.
Badmouthing someone can also kick back at you. Warning other sound companies is a good thing though, they will eventually return the favor.
How is this sort of thing written into a contract?
Like someone else said, the contract can only help if the client HAS money at all.
Try to protect yourself from having to hunt them for money at all. (Following goes for dry rentals):
1. If it´s a rock show, take a deposit for the cost of replacing diaphragms in the HF drivers.
2. If it´s a Rave, take a deposit for the cost of reconing the LF-drivers.
3. Invest in some good limiters for all gear that goes out on dry rentals. Make sure the client can´t get to them. One pretty cheap unit with sense-return function (also x-over) we use for small rigs is the Master Audio VP-2 (www.master-audio.com).
Now for the most important thing, protect yourself against theft (I learned this the hard way):
1. When you get the booking, take name, address, social security number, landline phone number. Then check everything out. If some of the information doesn´t match, skip the gig, chances is he´s hiding something. Also try calling the number to see if you can reach the client at that number.
2. At pickup (if he passed the test). Take ID (if you want to be real sure, make a copy of it). If you are not sure if it´s the guy on the picture, get ID from one more person (they are almost always more than one guy picking the gear up). If there is only one and you´re not 100 percent sure, skip the gig.
3. Help them load, and write down the license number of the car. If they used a phony ID or skip for some other reason, this will help you track them down.
We had a client lose a wireless mic at a pretty high profile gig not long ago. The guy who introduced the artists never came back with it, probably just left it lying around and someone picked it up. This time I did not hustle the client for payment, because it was good pay for the gig and there will be more like it. It´s a judgment call when to claim payment and when not to. For dry rentals I charge for every cable and light bulb.
Some years ago I also had a guy disappear with some stuff (used a stolen ID and managed to fool me). What I did was get on the phone and warned other companies in town, and asked them to look for my gear. Three days later I got a call from a company not far away (that we work with from time to time). The guy called them and was coming to pick up gear in a couple of hours.
So I called the cops, they came down to the shop and waited for the guy to show the ID, and then THEY NAILED HIM. He got four months in jail and had to pay me for the gear he stole (it was never recovered), although I haven’t seen one cent yet.
Reply by Teri Hogan
You’re asking a lot of good questions and most of the answers aren’t going to be palatable, but step into the real world of sound rental, and it’s an ugly place where you have to cover your butt from every angle.
What is the generally used policy on deadbeats? Don’t let them become deadbeats. Get your money up front. We get 25-50 percent on contract signing (depending on the client) and the remainder before load-in. Our regular customers are an exception and you have to use your own good judgment about that.
You might ask “Why insist on your money up front if you have a signed contract?” Because the contract isn’t worth the paper it’s printed on. If you take a defaulter to court, the judge will probably rule in your favor, but (at least in the State of Texas) he will also turn right around and tell you his court is not a collection agency and it’s up to you to collect the money.
So you’re right back where you started, right? Get the money up front!
We work closely with a backline/lighting rental company. Their policy, evolved from hard experience, is no credit card, no rental. Anyone renting anything from them produces a credit card. They swipe the card and hold the paperwork until the gear is returned.
If the gear is not returned or is returned damaged, the charges go straight on the credit card. Period. If your customers don’t have a credit card, it’s most likely that they can’t get one. How secure do you feel about that? Don’t let wanting to be a nice guy cost you your livelihood.
But what if your friends help you? Can you be held responsible if they get hurt?
Of course you can and will be. You ARE responsible. It’s your job. Forget about trying to verify insurance on individuals. They won’t have it.
You have two choices:
1. Hire professional labor. This can be union or (I believe you’ve said you live in LA) there are professional stagehand companies outside the union (sorry IATSE brothers but you do have competition) that are usually a little less costly, but if you think about using them, ask for a copy of their current liability certificate and ask for and check out their references before you employ them.
2. Get your own liability insurance. You should do this anyway, no matter what else you do. The premium is usually based on your past year’s payroll and gross income. If you hire and pay the labor yourself, you count that in your payroll. If you hire professional labor, you don’t include it in this figure. Here’s a tip. If you join the American Federation of Musicians, they offer a group liability policy that is half what you will pay for it on the open market. Most regional companies cannot take advantage of this because you can’t get “Also Insured Certificates” with this coverage, but at your size, you probably won’t run into the need for these, so this coverage would be just fine and you’ll be surprised at how cheap it really is.
We finally wised up to good business practice. This was the first year we went “bad debt” free and I intend to keep it that way!
Reply by Tim McCulloch
We have several clients that get production on credit. We bill “Net 10.” Most of the time our check is there. We get a 50 percent deposit when the contract is signed, and (depending of the client) get the balance upon arrival, or before the show.
If a client doesn’t have the money at the agreed upon time, I won’t do the show. The advice in this thread about legal action and bad press apply. You have to attempt to collect the debt before you can sue - how long and how hard depend on your local laws.
Be very careful about what you say to others. Don’t “characterize” a non-paying client. Calling them a ‘no-good, child molesting, non-paying…” will get you sued. Stick to the facts, i.e., “he is 30 days past due” or “she didn’t have the money at the end of the gig as promised, and I’m still waiting.”
As for contract language, you can ask for almost anything. Whether or not its enforceable depends on where you live or work or the contractually stipulated jurisdiction. (“This contract is made under the laws of the state of ________, and in the event of litigation it is agreed that the court of competent jurisdiction is the ______ court of ________.”)
If you do sue, remember that judgment is NOT collection, and you could be tied up for years chasing money that loses value every month after judgment.
As for the mob hit - dead clients can’t pay. And somebody would have to owe you huge amounts of money to get you indebted (even if you paid cash) to the mob for a broken leg or arm to “convince” your client to pay up. It sounds like fun, but you don’t wanna go there. Trust me. 
Our rental contract specifies that equipment be returned in the condition it was given to the client. We test (in front of the client) every major piece of gear in their package; amps, speakers, mics. Most of our “carry-out” rentals are powered mixers, speakers on sticks, etc. so its pretty fast.
We have them initial a checklist indicating working status and physical condition (just like renting a truck from Ryder). WE test each with the client when it comes back.
Discrepancies are noted on their contract and arrangements for additional monies are then made. Security deposits depend on our comfort factor with that client… we’re going to a credit card based system where we will get an “authorization” for up to the total value of the equipment if we think we might need it. If the card won’t go through, we tell the client they can’t have the gear.
Our contracts state that all rentals are conditional upon credit approval. Some existing clients are not required to do this. You are the person granting approval, so as long as you don’t withhold that approval based on race, religion, national origin, etc. you should be OK.
The info on the workers liability a while back sure helped. But what if your friends help you? Can you be held responsible if they get hurt?
Your friends are employees unless it is explicitly agreed they are volunteers, which makes them free to come and go as they please, even not show up. If you require them to do anything, they become employees.
You also have to pay them at least minimum wage for every hour or portion thereof that they are “permitted or suffered to work…” And “waiting for work is an integral part of working.” (from Department of Labor docs) You’re damn right you can be held liable for their injuries, and if they do something (or fail to do something) that results in injury or loss to a third party, you’re on the hook for that, too.
As for union labor, the major deterrent for you is that you probably don’t need the minimum number of hands that might be required for a call. And it can seem silly to have (and pay for) a four hour call when you need help for 45 minutes.
But you build this into your bid as a separate line item. You can have your client directly pay the Local’s business agent or the call steward (however they handle it), and you won’t have to do anything but make the phone call. My experience is that on church gigs and community festivals I need the paid labor on the *out* because the volunteers who were so eager to help set up suddenly have more pressing things to do…
Reply by Bob Cap
First, I always go with my gut feeling. That feeling means I’m hungry and I like to eat. Hence, I like to be paid for the work I do.
If I have a client that wants me to bill them for services rendered, I have them fill out an application for credit and I pay to have the credit check run. The same thing happens when we want to buy gear on credit. Credit checks are a normal part of doing business and are factored into our charges.
If they are a promoter, band, etc, there is no such thing as a deadbeat in my area. The word is deposit and final payment when we arrive. Deposits can be in check form if there is enough time to clear the bank before the gig. Balance in CASH only. (Certified and bank checks can have payment stopped.)
Same thing with rental gear. Credit check first. Or large cash only deposit. I’d rather lose the rental than lose the gear. I’ve had people come in to rent gear that I didn’t feel good about. Deposit covers cost of gear, final.
Trusted people can be just that until something happens and you’re left holding the bag. If your friends help you, you’re the person that assumes the liability, period. If somebody gets hurt while “helping” you you’re the “employer”.
CYA, liability insurance is really cheap when compared to a lawsuit. Of course, my uncle Bruno used to say, “If I got nuttin’ to lose, they can’t get blood from a turnip.”
Reply by Chris Kathman
I mixed a show for the Hell’s Angels once in S.F., and the person taking money at the door (it was a benefit) left without understanding that the club did not pay the sound company. The head of the chapter listened to me, and promised to show up the next day, and did, on his bike, blowing the minds of my co-workers at the shop when he roared up and walked in wearing his colors and gave them the dough - in a brown paper bag.
One small piece of advice - don’t make threats, make promises. And carry them through. If you say the gear doesn’t roll off the truck until cash is in hand, then it is important that the gear not roll off the truck. Irresponsible promoters may really love music, but field production people have enough to do without having to spank them. But it’s part of the game.
A friend of mine held up two concerts a year apart for one of the biggest rock stars in the world when the artist’s manager did not come across with the contracted balance in cash. The first time, when the artist found out that his management was jerking around the sound company, he was furious and ordered them to pay the bill so he could play his show. The second time, he went BALLISTIC on his manager.
Gigs that I do as a designer/mixer, I make the client pay half of my bill and the sound company’s up front.
I read a funny quote once by a guy who was the agent for the novelist William Burroughs. Someone stiffed them for the fee for a reading, and then smugly told the agent, “You can’t get blood from a stone!”
The agent asked quietly, “What makes you think you’re a stone?”
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