Getting Paid For Your Work – David Krekeler, Krekeler Strother, S.C.

Posted on March 16, 2017 in Forage Foundations

Click here to download Krekeler’s PowerPoint Presentation.

David Krekeler, partner in Krekeler Strothers, S.C., said many of the principles in The Art of War by Sun Tzu can be applied to custom harvesting.  Just as Sun Tzu said, “The art of war is of vital importance to the state,” Krekeler said getting paid for your work is of vital importance to stay in business.

“All it takes is one or two people to not pay you and then you’re in debt,” Krekeler told Vita Plus Custom Harvester Meeting attendees.

He joked that the easiest way to avoid not getting paid is to get paid up front, but everyone knows that is easier said than done.  It gets even harder when customers are in financial trouble.

He said one of the best ways to get paid for your work is to have a written contract with customers, but not without doing your research and getting to know your customer first.  The more you can learn about somebody, the better your chances are of collecting down the line.

“Failure to plan is planning to fail,” Krekeler said.  “I don’t know who said it, but it’s true.”

Krekeler said one of the first things you should do is have the customer complete a credit application with the following information:

  • Name of the applicant – specify if it is a business or an individual
  • Names of any prospective guarantor(s)
  • The applicant’s current financial status
  • Any collateral that might be collected to secure or satisfy the debt
  • Social security number

He also said public information is available in many states.  In Wisconsin, you can search the circuit court access portal and find any active legal proceedings against the prospect.  If they have any ongoing bankruptcies or legal challenges, your decision just got a whole lot quicker.

After you’ve completed all of your research and feel comfortable doing business with your customer, you can draw up a contract.  Krekeler said the important items to include are:

  • Method of payment – are they paying per acre or per hour?
  • Payment schedule
  • Who is the debtor, an individual or a business entity?
  • Any personal guarantors who promise to pay if the debtor is unable
  • Identification of collateral or granting of security interest
  • Who is responsible for providing supplies, labor and equipment
  • Anticipated work schedule
  • How delays will be handled
  • Interest charges – to collect interest, it needs to be disclosed in writing under federal law
  • Attorney fees and costs of collection should legal action be required to collect payment

If a guarantor is included in the contract, the creditor should check if he or she has sufficient income or assets to pay in the event the debtor is unable.  Another item you can include is a lien to possess property until the debt is paid, but Krekeler said these can be very complicated and should not be done without a legal advisor.

Including many of the items above will help ensure you are able to collect your money in the end.  It will also help you decide if you should sue or not.

“You should know if you’ve done your homework and planning,” Krekeler said.

He commented that the decision to sue boils down to:

  • How much do they owe?
  • How collectable is the debt?
  • How much proof can you provide?

In Krekeler’s closing comments, he explained what happens if your client declares bankruptcy.  He said bankruptcy should never be ignored and your next steps depend on which chapter of bankruptcy was filed.

  • Chapter 7 – Almost no assets are available for creditors
  • Chapter 11 – Some payment is likely
  • Chapter 12 – Usually very little is given to unsecured creditors
  • Chapter 13 – A three- to five-year payment plan is enacted

When a bankruptcy is filed, Krekeler said an automatic stay is put in place and you cannot collect without permission from the bankruptcy court.  He advised attendees to follow procedures within each chapter and you will improve your odds of getting paid.

Krekeler ended with another Sun Tzu quote, “Opportunities multiply as they are seized.”  He reminded everyone they don’t have to do all of the things he advised, but seizing the opportunities as they come will help improve their position to get paid.

Category: Business and economics
Forage Foundations