How To Collect Payments At Time of Service

To make money in the computer repair industry, you need clients to pay you.  Many clients want you to send them a bill or invoice.  The phrase “payment is expected at time of service” is common in many industries and it should be in ours.  If you don’t collect payments at time of service your standard practice, you’ll continue spend more time chasing bills.  Wouldn’t you rather be helping your clients instead?

Why Clients Don’t Pay The Bill Immediately

Clients give you lots of reasons why they want to be invoiced.  These same reasons apply to MSPs who have clients late on their payments. Some of these excuses clients will tell you, some they won’t, and some are combinations of more than one of these.

• It’s Our Policy

It could be a big corporation where checks need to come from the main office or be written by the CFO.  The checks go into an accounting system and in a few weeks a check is processed to you.  They may even put money directly into your account by ACH.

• Nobody Here Can Write a Check

In a smaller business, the person who authorizes payment isn’t always there.  Your client may not be in possession of the checkbook. That’s a common problem with residential users.  A spouse or parent has the checkbook and they’re not home.

• We Can’t Afford You…Right Now

They won’t tell you this, but not being able to afford the service is a common reason with business clients.  They need the computer fixed to get the job done, but they just don’t have the money.  If they write you a check, it will bounce.  If they put money aside for you, they may not meet payroll.  They hope in 30 days they’ll be able to pay the bill.

The unethical clients have no intention of paying.  I had this occur one time.  When the bill came due, they were in bankruptcy and I was way down on the list of creditors.  Another time a client skipped town.

• We Don’t Respect Your Work

Bryce covered this when discussing beginner mistakes, but clients might think or say “Well, I could have done that.” But you didn’t and that’s why you called us!  Another reason they may not respect your work is your professional appearance, as Micah explains.

• We Want To Make Sure You Fixed It

This reason bothers me the most.  Clients will even say that to me as we close out.  They feel they want to create a money-back guarantee after your service call.  If they have problems after you leave, they won’t pay you until you come back.  A few times the client even admitted to me that the CFO or CEO wanted to wait for this reason.

• We Need to Control You

Like the classic carrot-and-stick training method, if the client keeps you wanting payment, you are more likely to accommodate them.  If you don’t do want they want, they threaten not to give you the check.  They’re creating their own terms of engagement.  If your response time isn’t fast enough, they’ll create their own discount.  I had a client say one time “We’re deducting 10% every hour we wait on you.”

Set Proper Expectations at the Beginning

The key to insure payment on time is to set the proper expectations and continue that throughout the process.  The minute we talk with a client, we explain to them that payment is required at the time of service.  It’s part of our scheduling script.  We confirm the date, time, and location of the service call first.  We then tell the client that payment is required at the time of service and our cancellation policy.

Sometimes I have my doubts the client understands our policy.  They might respond with “whatever” or focus on the urgency of the service request.  At this point, I’ll ask them “So I need to mark on your service ticket how you’ll be paying at the time of service.  Will you be using cash, check, or charge?”  That reminds them of our policy and lets our technician confirm payment before service begins.

When we first see a client, we have them sign a contract. Right on the signature line is the phrase “Payment is required at time of service unless arrangements are made in advance.”  They can’t easily claim ignorance about our collect payment policy at that point. If needed, we’ll ask the client about the payment form before service begins.  For example:  “According to my notes, you’ll be paying by company check, is that still correct?”  If not, that’s the time to have a discussion about payment.

What to Do With Payment Problems

Clients have legitimate and bogus reasons why you can’t collect payment at the time of service.  As business owners, we provide a service and that service requires payment.  Both residential and business customers understand they can’t walk into a restaurant or grocery store and walk out with a product without tendering some form of payment.

• Give an Estimate to the Client in Advance

Especially during the first visit with a client, it’s hard to know how much the bill will be.  That’s why they need to wait:  approval for the amount. Sometimes the client needs someone to write a check or set money aside.  In those cases, give them a good faith estimate and ask them to have that payment ready.  If you go over the estimate, then you only have to bill for the remainder.

• Take Credit Cards

Most computer repair business owners can easily sign up for Square’s credit card reader, Amazon’s Local Register or Paypal’s Here program.  All of these programs don’t have a monthly fee and are nearly instant to sign up.  You’ll pay a fee for using credit payments. To keep your fees low, offer credit card payment for those situations where it’s either a credit card or an invoice.  When clients ask if you take credit cards, tell them you prefer a check.  That will minimize credit card usage.

• Invoice Before You Leave

Technicians who do billing internally often forget to bill the client immediately. That causes delays in payments.  Derrick has an excellent article on the right ways to invoice. Fast invoicing means faster payment. Our contract is a combination of a service order and invoice.  If we have to invoice the customer, we circle the word invoice on the form and hand them a copy.  If you use an online or other invoicing software, generate your invoice before you leave the client.  Then confirm they received the invoice and the due date.  This practice avoids the excuse the invoice went into a spam filter or went to the wrong person.

• Negotiate Payment Terms and Price

Since most clients should be paying you at the time of service, your pricing should be based on that fact.  When you schedule the client, remind them that payment is required at time of service.  If they can’t pay at time of service, charge the client more.  You’re offering them an additional service (deferred payment) and you should get paid for that service.  Some companies will phrase it as “That price includes our discount for immediate payment.”  When they ask for terms, don’t automatically give them Net 30.  Negotiate this with the client.  Offer Net 3 or Net 7 and see if they’ll accept it.  Larger clients might ask for 2/10 Net 30.  That means they get a 2% discount if they pay the bill within ten days but pay full price if they pay between 11 and 30 days.

If you pay your credit card bill late, they charge you interest and a fee.  You should do the same.  You’ll need to chat with an attorney to make sure it’s legal and you use the correct language in your jurisdiction, but lots of businesses charge interest and fees for late payment.

When They Don’t Pay Their Invoices

• Don’t Provide More Service Until They Pay

The last thing you want to do with a slow paying client is continue running up a bill.  If they want you to come out, payment needs to be made.  This applies especially if you’re an MSP. If you can’t do that, the next best thing is to set a limit in advance.  You might agree that you won’t provide service if the bill gets over $500.  If I’m late on my electric bill, the electric company will eventually shut me off.

• Start Debt Collection Procedures

Bryce covered this issue in depth and explained how to do collections without upsetting the customer.  Your time is money, so you need to charge for that time in fees and interest.  A properly executed work order along with a written collection policy legal in your jurisdiction helps. Collection agencies typically work on a contingency basis and take 1/3 to 1/2 the amount owed.  They’ll tack on interest and penalties, but you won’t get your full amount back.  While you want to use agencies as a last resort, it’s best to find one now.  That way when you run into a payment problem, you’ll already have a relationship with an agency. That might give you more confidence in your negotiation.   I’ve never had to use one for client non-payment, but have had to use them more than once for bad checks.

• Fire Them!

A client who doesn’t pay you is a charity.  I have no problem with charity work as long as all parties understand that’s the way it is.  When a client doesn’t pay you promptly and you chase them down, you’re losing time and money.  That’s not fair to clients who pay and respect your service.  The time you’re arguing or collecting from a client could be spent selling to new clients or servicing them.  You might say you can’t afford to fire a client, but if they aren’t paying, then you are losing money off the relationship.

The Real Reason Clients Don’t Pay The Bill

We let them operate that way.  Computer repair business owners often do it and clients start to expect it.  When a consultant changes an industry practice, the clients push back.  That doesn’t mean you should avoid any invoices.  Make invoicing a perk reserved for your trusted and most reliable customers.  Everyone else should pay at time of service.

Written by Dave Greenbaum