Reply posted by Teri Hogan on December 16, 2000
Hi D.D.,
You're asking a lot of good questions and most of the answers aren't
going to be palatable but you're looking to 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% 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 judgement about
that. You might ask "Why insist on your moneyup 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!
Second thing. 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 renatl and security deposits.
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.
Share all stories, of no paying slimes too! I like to use examples
of such things when talking shop to the guys off the board.
We averaged
one a year until we finally wised up to good business practice.
This was the first year we went "bad dept" free and I
intend to keep it that way!
Happy Holidays to you, too!
Teri
Hogan
Sound Services, Inc.
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