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Ask Dave

Handling Collections As A Christian Business

Randy is the executive director of his church's preschool. Nineteen families collectively owe $9,000. How does a Christian small business collect this debt when the people who owe money refuse to respond?

QUESTION: Randy in Colorado says his pastor asked him to be the executive director of his church’s preschool. He has a $300,000 budget for the school. He has 19 families who collectively owe $9,000. How does a Christian small business collect this debt when the people who owe money refuse to respond?

ANSWER: We attempt to run our business as best we can figure out on a WWJD basis, the way you just asked. In other words, try to figure out how God would want us to do this. Number one, we have to remember that if we don’t do a good job of operating the business, then we will close. We’ll not be able to provide the service. Dr. Stephen Covey says where there is no margin, there is no ministry. You’ve got to operate business in a wise way, and the Bible says to be diligent and know the state of your flocks and herds. You’ve done all of that. That is a good thing. It’s not an unholy activity. It’s a very holy activity, as a matter of fact.

Then we come down to what happens when we have a collections problem. Our rule inside these walls is if we have a collections problem, we don’t have a collections problem; we have a sales problem. We’ve set the business model up wrong to where we are having to collect from people. When you’ve got $9,000 out of $300,000 annually outstanding, that’s an unacceptable ratio. If you had $1,900, it’s a one-off. It’s an odd thing. It’s an anomaly. It’s enough that it aggravates you, and you have to have a policy, a mindset, a value statement on how you’re going to operate with these people. We have a rule of thumb that goes like this. We want to be kind and gentle to those who are hurting. If a man comes into our office and says, “I’ve got financial problems. I’m in a mess. I want to pay you. I can’t right now. Help me. Work with me,” we would. If a guy doesn’t do that and ducks me and hides from me and is spiteful and angry when we talk to him and we determine that he has no money and that’s the reason he’s misbehaving, no matter how hard we hit him, it doesn’t make him cough money, because there’s none in there to cough out. What we’ve decided to do is discontinue doing business with him, and we write that off as saying we shouldn’t have let that guy in the door in the first place. It’s our fault. The third possibility is they’re mean, spiteful, contrary, don’t answer the questions, don’t return the phone calls, and they have money. Then you have to decide if you’re going to take court action at that point, if it’s worth it to you to fool with.

There’s a lot of argument about suing someone biblically and a lot of discussion and teaching out there on it. From a practical standpoint, aside from the spiritual implications, it’s almost never worth it. It costs more than you get, and all you do is aggravate everybody involved. I guess that’s why Jesus said that, you know? The lawyers get all the money. It doesn’t work out. Why bother with it? Again, I’m going to discontinue service, and I’m going to try to ascertain earlier in the process what kind of a problem these people are going to be. I don’t want them to get further into me next time. Next time, as soon as there’s a moment and I get that response, I’m going to discontinue service right then. We almost never consider a lawsuit. I will if I have to.

From a spiritual perspective, this is a Christian daycare, and a lot of the people you’re interacting with are believers and people in your church. You have a spiritual responsibility to be up front with them about changing their habits and paying their bills. Early in the process, as soon as you smell a rat, shut it off or make a decision we’re doing this pro bono.

There is public education available to them. If Mom and Dad can’t pay because Mom and Dad are broke and you want to allocate a portion of your budget for charity, for giving, then that’s good and you should do that. We can extend a scholarship, but they need to come in and talk to you about it. We need to see their budget. They need to be in Financial Peace University so they can learn to handle their money. If they’re willing to do those steps, we’re willing to help you.

You will run into the one who is obstinate and will even accuse you of having put their kid on the street, and it’s not you who did. They did. “You’re not a real Christian. You’re a bad Christian because you won’t let me take advantage of you.” That kind of toxic misbehavior, that has nothing to do with you, your ministry, your business. It has everything to do with that person who is misbehaving.

I wouldn’t fool with collections. I’d write it off and learn my lesson each time. Every time you write it off, ask yourself, “How can I learn my lesson?” I’ll tell you one last thing that we’ve done where someone just absolutely was bent on paying us and had no money. But they really wanted to make it right. We let them work it off. We ask what their favorite ministry is. Whatever they owe, we pay them toward that bill per hour if they log their time volunteering. Then you can call it even, and everybody in the Kingdom got lifted.