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Delinquent account / contracts for cash flow v building equity /contract sale continues this week 
March 28, 2023
Special Contract Sale this week – available to everyone using code below
When's the sale?  Place your order now through Friday March 31.
Orders received starting now through March 31 will be discounted 10%.  If you're a Concierge Client [and you should be for lots of reasons] you get another 10% [that's 20% total].  CODE:  ISC.  Just add ISC to your company name so we know to apply the discount.
  These are 2023 updates with the most current changes.  
 Do you need new contracts?  Yes if you're contracts are not 2022 contracts. 
  Order on line at
Call our Contract Administrator Eileen Wagda at 516 747 6700 x 312 or email for assistance
   Don't forget to add ISC to your company name so we know to apply the discount
Delinquent account
          I have two questions potentially for the forum:
Question 1.       I have a new commercial burg-fire account that I took over about 5 months ago.  Customer asked me to fix some odds and ends on their system and take over monitoring.  I added a cell dialer and fixed everything.  Customer signed a K&K All-In-One.  Now five months later they have failed to pay all repair bills and monitoring bills.  Customer is now asking me to fix more things on his fire alarm that are new.  He acknowledged that he failed to pay the bills and that “he’ll take care of it right away.” 
          I am considering doing the new repairs if customer hands me a check for 100% up front on arrival.  However, his fire alarm has all sorts of ghosts in it that cause random troubles; his site is a half-hour beyond where I want to travel and he is a known late payer.  I could pursue collections for his delinquency, or I could fix his new problems and demand payment.  But I’m wondering if I should just get out now. 
          Do you have a form letter that allows me to cancel a customer for breach on their end?
Question 2.       An old, good customer closed their business and sold their buildings.  Old customer is on a K&K All-In-One, about 4 years in.  New owner called me and wants me to continue monitoring.  I have him sign a K&K All-In-One with no pushback.  Now I have an old customer who has paid for 2023 and a new customer who has paid for 2023 with overlapping K&K Contracts on the same property. 
          All sorts of contract law questions here.  
          Should I give the new customer the rest of 2023 for free because I have been paid for that property? 
          Should I keep the new money and refund a portion of 2023 to the old customer?  (They never sent a cancellation letter.)  Is there problem with having 2 K&K contracts with overlapping terms on the same property?
 Thank you,
          Interesting issues that arise for most alarm companies from time to time, so these questions should be of great interest. 
       Question 1.  You took over a commercial customer’s security and fire alarm systems and services.  So the first issue is, did you get two All in One contracts signed, because that’s what you need?  The burglar alarm system requires the Commercial All in One.  The fire alarm system requires the Fire All in One.  If you didn’t make changes both contracts would call for RMR services and payments for 10 years.
          It’s not clear whether there is a Service Plan for the fire alarm or if you’re on a “per call” basis.  That matters because if the repairs are covered in the Service Plan you can’t cancel rather than perform under the agreement.  If repairs are not covered or if you’re on a per call basis then you don’t have to perform the repairs and you certainly don’t have to perform them without getting paid.  Your customer appears to be in default.  You also don’t have to beg to get paid.  Your contract gives you ample procedure and rights to enforce your contract when the customer fails to perform; in this case, fails to make payment.  You don't have two contracts for the same location and you shouldn't have more than one contract for the same service.
          So to answer your direct question, I don’t have a stock letter for you unless you’re looking for a collection letter for unpaid money due.  Just a reminder, Concierge Clients get a free collection letter each month.  I believe our stock collection letter is $150.  You would have to decide if you really want to terminate and walk away or if you want to enforce your contract and hold the customer in default and pursue balance of contract as well as whatever is owed to date.  K&K’s collection department can assist in your decision, but more than likely we will recommend pursuing the customer and holding customer to the contract.
        Question 2.  The old customer breached the agreement [not sure if this is security or fire contract] but apparently paid you for the year.  You essentially have decided to terminate the old customer’s contract, either formally or implicitly by accepting a final payment and canceling further obligations.  You have entered into a new contract at the location.  You should keep all the money.
          Your old customer could have asked you to allow it to assign its contract with you so that the new customer would take over the existing contract.  You could have conditioned the assignment on terms you thought necessary, or you could have prohibited the assignment or you could have agreed readily to the assignment, in which as you likely would not have duplicate payment.
Question about contracted / uncontracted RMR, or contracts for cash flow v building equity
          I enjoyed your recent SSI article about Shareholder Agreements. In passing you made a statement I’ve been wondering about:
          “Predictable RMR that is not under contract has little or no value in the alarm industry.”
          I don’t doubt that is true when one company seeks to acquire another; the purchasing company has the gold so they make the rules. However in my experience in both large and small companies, the contract status has no bearing on future cash flows from customers.
          My question is, doesn’t this present an opportunity for a savvy acquirer to snap up bargains?
          For instance, if the selling company has some RMR under contract, some not, but all of it long-standing happy customers, couldn’t I buy this company for a low price? If it’s customary to pay nothing for the un-contracted RMR, but if this customer signs a contract for RMR post-sale, don’t I make out like a bandit?
     Best and thanks – I know you’re busy.
Mike Williams
          Let’s start by taking a step back.  If you have a history of revenue from a customer, say years of monitoring payments or years of repair service or inspection, but no written contract calling for RMR, is that customer account worth less or nothing?  Yep, that’s what I said, it’s worth much less than what it would be worth if there was a proper written contract and it’s likely worth nothing; nothing in the sense that no other alarm company is going to pay for that account.  The account will be excluded from the calculation of the purchase price. 
          As Mike points out, he may make out like a bandit if he buys contracted RMR accounts, paying the going rate, and gets the non-contracted accounts for free at closing, and later  manages to sign up those non-contracted accounts with proper alarm contracts.  Mike turns an account worth nothing to an account worth, more or less, 35 times the RMR.  Good move Mike……unless of course there’s a loss suffered by the customer while you’re providing your alarm services with no contract and the claim wipes you out; then it wasn’t such a great move.   Won’t be such a great move if your E&O carrier or your central station catches wind that you’re servicing alarm customers without a contract and they toss you out, leaving you to scramble to get new insurance and a new central station. 
          But you are correct that absent a claim or other calamity you will get your cash flow from the non-contracted account and you might get a new contract signed at some point.
          I know some of you will say, or hear someone else say, what a load of crap, I sold accounts with no contract or I have been in business for  30 years with no contracts and doing just fine and plenty of people want to buy my accounts.  What can I say?  Even a broken clock is right twice a day.  Maybe luck or providence intervenes.  Who’s to say.  As Dirty Harry said “ … you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?”
          If you’ve managed to read this email you’re smart enough to update your contracts or start using proper contracts, and yesterday isn’t soon enough.  There is a sale on the contracts this week; don't wait to order.

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301