How to get customers to pay up?
How to make sure your customers always pay for the job well done.
How do I make sure clients pay me for the good work?
Follow these steps to get paid.
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If I am not paid for good work, I try playing a good guy first. I set up a monthly payment plan of $50 or $200 a month plus an interest within legally permitted limits. I only want to get tough after the friendly approach method gets blown off.
I mail or email a bill to a crook monthly. Then, after three months, I file a small claim. Or I pay a lawyer to write a letter threatening legal action, or I get a lien.
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But let's start with a new customer and a very first phone conversation. Start collecting and verifying customer's personal info like full name, email, address, other contact info, etc. Then prepare a detailed contract covering all your weak points. Remember, if you omit one, you will get hit right there.
Do expect every customer to act like a criminal or a pig and you will never be disappointed. It does not mean you need to be rude or else. Just be careful and do not trust anybody. This way you will avoid most of bad customers and lose just a few of good ones.
Many of these folks are career criminals. They know how to work the system and abuse you. Their strongest weapon is becoming silent and invisible. They never reply, never pick up the phone, disappear not to be found or reached, they keep complete silence and hang up or calmly walk away if you found them.
We, as contractors, need to know how to work that system as well. If we do not sacrifice time and effort trying to punish them, they become even more brazen and vicious. Your inaction will multiply the number of their victims. If you consider yourself a good person, do everything you can to retaliate. Step over yourself and go after every one of them.
But keep in mind that honest clients also need to be careful with you. They just do not know you are a good electrical contractor and an honest person. So ask for just a 30% upfront payment for materials and get the rest upon your arrival with the materials.
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If they don’t pay an upfront deposit, we don’t start working.
We agree in advance and set up in writing interim payments at particular milestones and as often as it makes both parties safe and conformable. Depending on the project size it could be hourly, every four hours, daily, weekly amounts based on the value of work that has been completed. Such interim payments are 2% to 10% lower than they should be. These temporarily unpaid amounts accumulate, it's kinda customer insurance that contractor won't disappear for good after getting such partial payments.
The accumulated unpaid amounts must be received one hour, one day or one week for large projects before the job completion. So we get paid in full just before finishing the job. No one gets the final product before the invoice is paid in full.
If they don't make an interim payment, we stop working. No exceptions, never. Hefty penalties get activated right away as per the contract. It’s extremely simple, powerful, and always works.
If in doubt, we never start working until we get prepaid. And we never begin work until getting the amount agreed upon.
We have made up our mind. We lose bad customers before we lose any money. And we just forget it.
Some six years ago we've ignored these rules a couple of times. We lost a couple of bad customers, lost money and got a whole spectrum of nasty feelings, wasted time, bad experiences, negative thoughts, and emotions.
The choice is absolutely clear! This electrical contractor (in Toronto) has NOT been screwed eight years in the row!
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Tips to make sure you get paid by every client.
What to do when a client does not pay up.
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I take from customers all the money owed to me one or three hours before a small job completion. For very big jobs I take the money one or two days before the job completion. If I am not paid, I stop working and issue a formal document to the customer informing him/her of contract violation, penalties, extra charges, etc.
ReplyDeleteI always take interim payments.
And I put the above as conditions into all my estimates, contracts, and agreements.
I do not complete some tasks, hide wire ends so that only I can find them. And if a customer did not pay me, s/he will have to pay another EC much more $$$.
It is very simple, fair, right and profitable to get paid for the honest and good work or at least punish the crooks, thieves and criminals.
It is wrong to punish yourself for the honest and good work. It is bad, unfair and harmful to reward crooks, thieves and criminals. It proliferates their numbers, it makes them happy, it makes them victorious and brazen.
No matter how much I hate it, I always sacrifice and waste time on getting a lien and filing a small claim in court.
I often win and get paid. It does not worth it. Still we must do it to stop them!
Do not be lazy and stupid. Make a simple contract or agreement with the list of services and payment terms.
ReplyDeleteIf customer did not pay you in full, file a lien against the property. There is also small claims court. If you do nothing to punish, the customer becomes even more brazen and vicious towards future victims.
In the criminal area, there is such a thing as "theft of services." For that, try to file a complaint with the police or launch a lawsuit for fraud, which is a criminal offense.
Criminal Code of Canada
Theft Sections
Theft by person required to account
330. (1) Every one commits theft who, having received anything from any person on terms that require him to account for or pay it or the proceeds of it or a part of the proceeds to that person or another person, fraudulently fails to account for or pay it or the proceeds of it or the part of the proceeds of it accordingly.
Theft of services is "knowingly entering into an agreement for services with no intent to pay for them". The contract or agreement with the list of services and payment details is your formal proof. It makes your theft of services claim valid, provable, and winnable.
ReplyDeleteMy advice would be like this - never assume that customer and you understand each other. Never assume that customer and you see thing the same way. Never assume that obvious things are obvious to the customer. Never do anything without an agreement which clearly says what each party HAS TO DO and MUST NOT DO. And which clearly states what you are NOT RESPONSIBLE FOR.
ReplyDeleteWriting such an agreement is boring, time consuming, but extremely effective. Five hours spent on the first agreement could save hundreds or thousands of dollars over the years. And then you keep agreements as samples. Next agreement gets written faster, and faster, and faster ....
The agreement should also include indemnity clause and protection/insurance clause from customer's bankruptcy or inability to pay.
Always sign such agreements and you will eliminate a huge number of your current problems with customers including misunderstanding, confusion, ambiguities, arguments, conflicts, and non payments.
Be especially careful with women. Few of them are exceptionally vicious bitches enjoying screwing you with money.
ReplyDeleteThey would give you tea, cookies and smile at you. Don't fall for that. Separate cookies from the money. And ask for the interim payments on time.
Three times they paid me most of the money promising to pay the rest when I come back to do another job. I never heard back from any of them and never got my money, no matter how hard I pushed. Some would threaten with calling the police!
So ALWAYS get all your money right away or these bitches will torture and laugh at you - kinda taking a revenge over a strong man and enjoying it.