In these economic times, horse industry businesses need to make sure they are effectively managing their credit, as well as their client relationships.

Many equine-related businesses owners have occasion to extend credit to their customers or clients. First of all, it is important to get everyone on the same page with respect to billing. “Everyone” includes you, others in your office who have client contact, and the client. For example, everyone who deals with your accounts should know when statements are mailed, when payment is due, and when or if the client may spread out payment over a number of installments. Similarly, your customer or client needs to clearly understand your expectations regarding payment. 

Your spoken words and your actions must match your paperwork and billing terms. This is one of the weakest areas for many horse businesses in debt management. I have seen, for example, many people who believe someone is boarding or training their horse for free in exchange for a commission when the horse is sold, only to receive a bill in the mail months later for thousands of dollars of boarding and training services. When this occurs, there is a much higher potential to really upset a client who believes your rules have changed between what was verbally offered and how they were actually billed. 

The following are some things you can do to avoid having to collect a debt in the first place:

1. Have clear, written terms from the outset.  You need to give your client a written confirmation of the product or service you will be providing before you provide the product or service.   The initial agreement should be signed by both you and the client.  

2. Publish your terms frequently.  Your terms should be published frequently after the original agreement. For example, the payment due date should be printed on each statement.

3. Send out detailed statements.  You should bill your clients at least once per month, and the bill needs to be as detailed as possible. People are more likely to pay a bill and pay it on time when they fully understand all the services that were performed. When a client sees a general entry such as “vet services” on a bill, for instance, when the client had no idea a veterinarian had treated their horse, the client may become suspicious that you are divvying up your vet expenses equally among all clients, whether that particular client received the vet service or not. 

4. Invoice clients on a consistent billing cycle.  Once a product or service has been delivered, invoice the client as soon as possible. Whichever date you choose to send out bills, send one out at least once per month on that same schedule as long as you are providing services or waiting for payment.

5. Encourage prompt payment.  To encourage the prompt settlement of bills, offer an incentive such as discounts for early payments (while always balancing the extent of the price cut with the benefits of an improved cash flow).

For more debt collection tips, continue reading.

Continue Reading How to Successfully Manage Credit in a Tough Economy

Fortunately, unlike many states, Texas does not require lien holders to file suit or involve the courts in order to enforce the stable keeper’s lien—provided the enforcement provisions in the statute are precisely followed.

If you are boarding someone else’s horse, the board bill is 60 days or more past due, and you still have possession of the horse, you have an enforceable stable keeper’s lien under Section 70.003 of the Texas Property Code and may sell the horse in a public sale to satisfy the debt.   In order to enforce a stable keeper’s lien, you must follow the following steps:

STEP 1

If the owner’s residence is not in Texas or not known, you do not need to send the notices set forth in Step 1 and Step 2 below. You may sell the horse at a public sale without notice to the owner—provided the board bill is at least 60 days’ past due and you have possession of the horse. Still, it is advisable that you keep some proof that you billed the customer and they did not remit payment before proceeding with the sale.

If the owner’s residence is in Texas and known, you start the lien enforcement process by sending a demand for payment by certified mail and regular mail to the owner’s last known address.  Form Demand Letter.

STEP 2

If the owner does not pay the amount owed before the 11th day after the date you sent the demand letter referenced above, send out a notice of sale by certified mail and regular mail to the owner’s last known address.  Form Notice of Sale.

STEP 3

Sell the horse at a public sale 20 or more days after you send the notice referenced in Step 2.   

Note: If you are fortunate enough to get more for the horse at auction than you are owed, you must pay the overage to the owner. If the owner has moved out of Texas or its residence is unknown, you must pay the overage to the county treasurer of the county in which you boarded the horse.

Remember—the stable keeper’s lien is a possessory lien. This means that if you give the horse back to the owner before the bill is paid, the stable keeper’s lien is, practically speaking, no longer enforceable. In that case, you will need to file suit against the debtor to collect the unpaid board. This is why it is essential to obtain a written board agreement from every customer that contains the date you started boarding the horse, sets forth your fee for board, and includes an agreement that your customer will pay out-of-pocket expenses for care such as worming, farrier, supplements, and vet work.