MD lawyer writes book to help businesses collect on unpaid accounts

Hardly a day went by when lawyer Eliot Wagonheim didn't receive a call from one of his business clients seeking help with a collections problem.

When the outstanding balance was big, it was worth the client's money and Wagonheim's time to pursue it. But most times, the complaints were about small collections - a few hundred or a few thousand dollars. In those cases, Wagonheim couldn't offer a cost- effective solution.

I came to understand that for most small businesses, the big problem was not the account where six figures were past due, but the dozens of accounts where less than $1,000 were past due, says Wagonheim.

Wagonheim recalls the words of Eric Sevareid, the famed broadcaster who once compared dealing with network executives to being nibbled to death by ducks.

Strange as it may sound, said Wagonheim, that's the best description of business accounts receivable as I have ever heard. Each overdue or unpaid account takes its bite from the business' bottom line. Too many bites and the business dies.

Wagonheim realized that most small claims were not worth the cost of hiring a lawyer or even a collection agency, and Maryland allowed business owners to represent themselves without an attorney for small outstanding accounts. The problem was, Wagonheim couldn't find any instruction manual that he could give to his clients.

So, he decided to write one - The Art of Getting Paid.

Wagonheim couldn't find a publisher interested in picking up a Maryland-only book. So, in February of 1996, he took out a loan and published the book himself.

I decided that $39.95 was a fair price for my work, says Wagonheim, but when I went to the booksellers, they all laughed, saying that no one would buy a business book at a coffee table book price.

The Art of Getting Paid sold out three printings, and was picked up by the District Court of Maryland as a teaching tool for its clerks. Wagonheim is releasing the 2004 edition of The Art of Getting Paid, wholly updated and expanded for 2004.

I'm coming out with the new edition because - believe it or not - seven years after its first release, I'm still getting thank-you notes from businesses across the state. And can you imagine, he says with a smile, a lawyer getting thank-you notes?

Actually, he explains, I didn't start out to write a book. Once I realized there wasn't any material on the market to help my clients collect their money without having to pay me, I decided to develop a software program.

Lawyer in a box

Wagonheim envisioned this software package as a lawyer-in-a-box that would ask the same questions he would have asked, generate collection letters, file suit, and even collect on judgments by attaching bank accounts and garnishing wages.

Unfortunately, the software project didn't pan out and The Art of Getting Paid became a book instead.

Wagonheim shelved the idea of developing a software application for six years. Then, about two years ago, Wagonheim had a meeting with Pat Stout, the owner of Baltimore Window Factory. Recalling a long past conversation, Stout asked him if he had ever given thought to developing a software package based on the book.

I use the book constantly, Stout told him, and I would think many other businesses could really use software that automatically does everything the book teaches. What's more, if you form a company to develop the software, I'd consider investing.

Stout's comments revived the software concept. Wagonheim left Stout's office and devoted weeks to drafting a business plan.

I needed to research all of the costs and project a realistic return, he says. If I was going to find investors, I had to show them something solid.

Wagonheim circulated the rough draft of the plan to friends and business contacts.

I asked them to punch holes in it. I wasn't looking for investment at that point; I was looking for criticism. 'What did I miss?' 'Which key assumptions are wrong?' 'Why won't this work?'

I had advised business clients countless times on seeking investment and the drafting of business plans and Private Placement Memoranda, he says. Now I was in their shoes.

After incorporating the suggestions, Wagonheim and his law partner, Stephen Tucker, began talking with prospective investors - and succeeded in becoming oversubscribed in the worst possible money- raising environment.

Fully funded, Wagonheim and Tucker formed BluePoint LLC and went about assembling a team to execute the business plan.

Wagonheim interviewed several software companies, and finally settled on Mind Over Machines, based in Towson. He chose the Natoli Design Group for the interface design, and Carolyn West-Price of Impact Marketing & Public Relations in Ellicott City to help them market the product.

The result of their work is a highly sophisticated piece of interactive software called The DebtCollect Recovery System that is just now available online (www.debt-collect.com) or through a toll- free number (1-800-527-6880).

It includes a copy of the latest version of the book, plus the new software. When users log on and enter a case, the first question they get is, Who owes you the money?

True to Wagonheim's initial vision, the software compiles information exactly the way a lawyer would - by asking questions.

The software then completes any one of a number of different actions requested by the user from drafting custom collection letters to filing suit or even collecting on a judgment by garnishing wages or attaching bank accounts.

Price, wearing her business-owner hat of 14 years, says collections are an issue for all small businesses because they can have a crippling effect on cash flow. This effect is only compounded when you have to devote productive time that could produce revenue to chasing bills that clients rightfully owe and don't dispute; they're just lax in paying.

She adds, DebtCollect will be as vital to an organization as its computers and phones - once owners realize the power at their fingertips both for avoiding bad debt and then collecting it if it does happen.

Neil R. G. Young, CLU, ChFC, is president of Young & Company, a financial planning firm in Lutherville. If you have any comments or questions, you can send him an e-mail at neil@yco.com or call at 410- 494-7766. The Web site is http://www.yco.com.

Copyright 2003 Dolan Media Newswires
Provided by ProQuest Information and Learning Company. All rights Reserved.