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Dealing With Bad Customers as a Computer Technician
If you’ve spent any time at all in a service industry, you’ll probably have a lot of stories about bad customers, unpaid invoices, and individuals who think they don’t have to pay invoices unless they’re threatened with legal action to pay them. I know I’ve run into a few myself, unfortunately.
When it comes to unpaid invoices in the Tech Industry, there’s a few things you can consider when it comes to what you might call deadbeat customers, and there are actually a few things you can do as far as avoiding them altogether now that the internet has become a huge database of complaints from customers and businesses alike. What can you do to deal with them?
Avoiding Bad Customers
Depending on the job, you may decide to ask for a deposit on your work in the form of 50% of the estimated invoice amount, but this is mostly applicable to large jobs where there may be a lot of materials or hardware involved.
Out of all the clients I’ve requested the deposit from, none have found it unreasonable or refused to consider paying it, so if you’re offering reasonable rates and they refuse the deposit, that could be a red flag, especially if they manifest a bad attitude about it. If you’re in the middle of the job and you receive periodic payments for the job, and they discontinue payment, discontinue the job until they resume payment, rather than work for free with promise of payment at the end of the job.
If you’ve had non-payment issues again and again with a particular client, perhaps it’s time to just drop them and let the competition deal with them, especially if they’re more trouble than they’re worth. For many, this is a tough economy, so be reasonable and understanding if there are legitimate emergencies or tough months that put your clients in a tight spot. If they’re having trouble paying on the basis that has been set up, try to set up a payment program with a small amount of interest, if that would help.
Dealing With Non-payment
If there is no indication they’re a non-paying customer, and you have already started working with them, what steps can you take to convince customers to pay their invoice? If you haven’t received payment yet, make sure you’ve sent it to the right person, and the right department.
In the corporate workforce, invoices are often ignored if they come to the wrong individual, because it’s not their job to handle payment, or pass on invoices to the correct department, and it’s no ‘skin off their back’ if your invoice isn’t passed on.
The worst-case scenario is the one where you’ve fully completed the job without any deposit, it was an expensive job, and now that they have a fully functioning system, they refuse to pay for your hard work. If you’ve sent courteous reminders, and payment still hasn’t been sent, send it certified mail to make sure they physically receive the invoice.
If you’re in touch with them but they still refuse to pay the invoice, you could just inform them as a matter of standard operating procedure that you report non-paying customers to online databases for other contractors to review. You don’t want to threaten them with ‘I’m going to get you blacklisted with every contractor in the region’, but just inform them it’s done as a matter of courtesy to your fellow contractors because none of us can afford to work for free.
If you have a lawyer or can draft a ‘legalese’ letter, and all services involved are financially less cost than the actual invoice amount, that’s the next step. This is generally the point at which most stubborn non-paying customers finally take you seriously, and you generally don’t have to pursue it further.
If they still refuse to pay and the invoice amount would be worth taking to court, perhaps with an invoice of around a few thousand dollars, small claims court is your next step. Make sure you have everything in writing, including all contracts, material receipts, etc. If the disputed amount is larger, you’ll need to take it to a superior court, and for that, you should definitely have a lawyer or get legal advice.
Once they get the notice to appear in court over non-payment, even the most stubborn non-paying customers usually settle the debt.
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Funny you should right this, I have been operating for years I have never had problems with non paying customers and all of a sudden I just went through 3 months of hell where customers were not wanting to pay bills.
I suppose I had it coming, most of regular customers I had let get into the pattern of doing bank transfers after I had left which meant I could race off to my next job.
As counter I went and bought a coloured wrist band to remind me now that I would not leave the job until I get payment.
I think things have cooled down abit now, but it was a good wake up call.
I’ve had many problems over the years with non paying customers, but 98% of the time managed to get paid with perseverance.
After you’ve reached the point where you know you aren’t going to get paid unless you really hassle them I find this usually works:
1) Call the customer each day to ask for an update on the payment status. (This works 90% of the time) – It’s really true the squeaky wheel gets the grease.
2) Visit the customer if they still haven’t remitted payment. People tend to have a different attitude in person than over the phone. (Providing they are close enough)
3) All of our invoices state that the equipment is still owned by us until paid in full so repossession of any hardware is an option. I find the really stubborn ones will pay if you call and ask when you can come out to pickup the equipment. (You might want to check local laws about this one)
Hey all. Yes i have had my share of non payers of late. I have been thinking of ideas to combat this. I like the idea of including in the invoice that all equipment belongs to my company until full payment of invoice. Does anyone know if this law would apply in australia, more particularly in Queensland? I have had some clients with me for years on 14 days invoices then all of a sudden they go into 60 days overdue etc. I would like to think i could keep my longterm clients on 14 days but when 3 or 4 pay late i have instant cashflow problems. I think i will have to get payment on receipt and if they don’t like it i will walk away. Any thoughts on that? Cheers
I’ve been in this business for a few years and luckily I’ve only had 2 customers not pay their bills in full and both were for very small amounts. A lot of companies on 30 days payment notice forget but after a polite email they soon pay up. I state that all goods belong to my company until paid for but this I think only applies whilst I hold the goods. Having said that I am the type of person to walk in to a company and pickup something that I paid for that the customer didn’t and walk out with it with my finger raised. With the 2 customers who didn’t pay I notified them that all warranties on goods supplied to them and services are void and that no IT Services will ever be provided to them by my company again. I have threatened this to a company and then thy paid up. If I did get a non paying customer and the amount was substantial then I would hassle for my money until I received either full payment, a court order for them to pay up or a restraining order against me.
I have 35+ years of computer experience, and I have been self employed in one business or another, for over 25 years now.
I have run the gambit, when it comes to non paying customers, and the many ways to try and collect.
The best advice I can offer, is to not let any amounts owed, ever get too large. I now offer no credit terms, period. All repair work is payed for at the time of pickup or completion. No payment, no computer. And yes, I will take it with me, to the shop, until they can pay. (I have not had to do that, in over 5 years now.)
Also, make sure your payment terms are clearly spelled out, in advance of any work. Note it on any forms, place signage in your shop, etc,..
On the large jobs, the 50% or more down in advance, is the best course of action. In most cases, the 50%+ covers all your costs, or it should. So that the remaining 50% that needs to be collected, never hurts you, if it can not be collected immediately.
And, in a lot of places, a computer tech worker, performing repair, is somewhat like a car mechanic. And in lots of places, there are specific laws regarding professional practices when it comes to payment, and collection practices regarding businesses that perform repairs on tangible items. So the best advice here, is to investigate that yourself, and then, bring in an attorney for assistance in drafting up any specific boiler plate forms or contracts for use if you want to.
But in the end, remember, any collection efforts, take away from the work at hand, so if you can avoid any of it in the first place, do it.
Thanks for all the great tips! Especially the persistent personal touch, like you mentioned, KCW. And voiding warranties if the bill isn’t paid by a certain point is definitely a motivational factor especially if the equipment is very important to the business.