Since we posted about how to handle non-paying customers in your field service business, we've been hearing from a lot of business owners who have suffered from the curse of the customer who refuses to pay.
Alastair Barton, managing director of the 14-employee Boiler Care 24/7 Plumbing & Heating Limited in Sandbach, posted about his recent experience with a non-paying plumbing customer on LinkedIn. 'I am having a completely wasted day today and probably tomorrow as well', he wrote. 'Have done the plumbing and heating work for a company, they have been paid yet ignore all our calls.' Barton visited the company only to discover they'd called in the insolvency practitioners. 'So I have just kissed goodbye to £10,000', he posted. 'Thank god we pulled off site when we did or it could have been treble that.'
Barton agreed to share details and advice to help other field service businesses avoid the same fate.
Commusoft: Can you tell us a little about the project?
Barton: We were asked to price for the plumbing and heating works on 300 houses for the mechanical and electrical contractor, which we did, and we secured the contract. They were being built on behalf of the local authority in Wales.
Commusoft: How do you usually handle contract payments? Do you take a deposit, take a credit card number, or have the customer pay in installments?
Barton: When you are working for a contractor you normally invoice at various stages throughout the job.
Commusoft: You mentioned on LinkedIn that you pulled off-site before you lost even more money. Why did you pull off-site? Was the customer already late with a payment?
Barton: The site was problematic, with too many issues on health and safety and regulations. Whilst we uphold regulations, this site was ridiculous and prevented us from getting on with our job. We also decided that we would only do so much work, and wouldn't do any more until we received payment. So we dodged a bullet there, really.
Commusoft: It sounds like this customer is going bankrupt. Is there anything you can do at this point?
Barton: They are, and there's nothing that we can do.
Commusoft: This particular company's listing on Companies House was good, but in general are there red flags you look out for that tell you a customer may not be able to pay you?
Barton: There isn't a lot you can do other than check the company out as best you can. In future, we will now be insuring against this risk.
How to avoid non-paying customers: 'Do your due diligence, but if possible insure against the risk. It's the only way to guarantee being paid.' Learn from the sad experience of @Boilercare247, who lost £10,000 when a customer refused to pay: http://bit.ly/2oiQECl via @Commusoft [TWEET IT OUT]
Commusoft: I notice that on LinkedIn you named the contractor who was at fault. Is calling out non-payers on social media a good way to get paid?
Barton: To be honest I'm not one to do this, but I was so annoyed that I thought, why not—as in effect he had just stolen money from me and my staff.
Commusoft: You mentioned on LinkedIn that you have yet another non-paying customer. Is this a common problem in the building/plumbing/HVAC trades?
Barton: Unfortunately, yes. It's not just our trade and it's a common problem.
Commusoft: In this case, there's not much you can do...but how do you normally handle non-paying customers?
Barton: Normally we attempt to negotiate with them and come to an agreement. If all else fails, we go to court.
Commusoft: Do you have any advice for your peers on avoiding non-paying customers, or how to handle them if it happens?
Barton: Do your due diligence, but if possible insure against the risk. It's the only way to guarantee being paid.
Commusoft: What did you learn from this experience?
Barton: Not to work for a limited company unless we insure them.
Customers are the lifeblood of any field service business. But let's be real, even the ones that pay as agreed and on time can be irritating, nerve-racking, and all-around difficult to deal with. That's why we created a cheat sheet of expert-approved tips and scripts for handling the most challenging customer scenarios. Just click the banner below to get your free cheat sheet!