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!