Many non-paying customers?

[chris765]

Hi all.

My college lecturer was talking about another lecturer who lost his electrical business because of non-paying customers. His cashflow stopped and then he couldn't pay his guys and so on.

I'm curious, does this happen a lot out there? I hope to be self employed one day and wonder if this is something I'll come up against? If so how do you deal with it?

Thanks,
Chris

 

[Chri5]

Wear a t-shirt with the words violent psycho and client tend to play ball


On a more serious note unfortunately the contracting side of business is awash with people that have no intention of paying the due bills for work.
It's not just the electrical industry, all trades suffer.

Take some of the big house builders, last year they needed to drop cost and quite a few turned to the sub contractor and stated "discount your price by 15% or you won't get work". Not good if your operating profit margin was 15% or less !

As for home owner work most play ball. Having terms and conditions for work, for payment and for extras makes it very clear of expectations and tends to help retain a good business relationship.

On all works I do I hard copy quote, caveat any possible anomalies and include payment terms. Prior to work start I insist the customer sign and date over the quote paperwork which means the contract is legal and thus I have recourse should things become difficult.

The biggest issue I have tends to be extras, where say a single lamp fitting was quoted and suddenly they want downlights, wall lights and multiple switching. In those instances I print out a variation order and ask the client to sign as accepted before I do the work.

I've never been knocked, but the few that have caused issue have unfortunately always been ethnics- they will agree a price, sign for such and still attempt to extort further discounts post works.
You do tend to acquire a 6th sense for clients that are likely to become problems, hence I won't do work for builders (I quote direct to the client and offer a intro fee) and tend to be very careful when dealing with BTL landlords.

 

[Cremeegg]

It's a pain in the butt but document everything - people can see it as more professional.

People from certain lands always want a bargain so on the rare occasions that I play their game I price high so I can magically knock it down and give them a bargain. Generally I don't bother and expalin to them that in the UK life isn't like that - do they fill up with petrol and expect Shell to knock £20 off the bill.

Only been done once - by a Premiership footballer who earns more in a week than I earn in several years - glad he had another bad game on Saturday!.

 

[Cremeegg]

It's a pain in the butt but document everything - people can see it as more professional. Some people I know add, say 10%, to everyones bills to cover those that won't pay.

People from certain lands always want a bargain so on the rare occasions that I play their game I price high so I can magically knock it down and give them a bargain. Generally I don't bother and explain to them that in the UK life isn't like that we are not in a Arabic souk or similar. Do they fill up with petrol and expect Shell to knock £20 off the bill; or start bargaining with Tesco's over the weekly shopping?

After a fairly short time your gut reaction is the best way. Those that whinge about being hard up always, always have the most money. Those with the best cars on the drive often just have a huge credit card bill so you will be some way down their list of creditors.

Only been done once (he paid about 90% of a bill so I wasn't too much out of pocket) by a Premiership footballer who earns more in a week than I earn in several years - glad he had another bad game on Saturday!.

 

[mikhailfaradayski]

while not wishing to sound like an '-ist' of any sort, but do watch yourselves when dealing with our asian cousins.
Its not that they are taking the p (in their mind), but it is their business mentality to continue haggling right up til the work is finished, thats how their culture works and they will continue that way. Bloody annoying at times.

never leave any work with them down to a chat and a handshake, always get stuff in writing. CYA at all times.

Also, the old chestnut 'the last sparky let me down' usually has a reason that the customer will never explain to you, i wonder why?
Be cautious of picking up where someone else has left off, not only because of the difficulty/legality of signing that work off, but also because there will often be a good reason why the customer got let down!!

 

[holmslaw]

..

 

[Cremeegg]

Other random thoughts - never work for builders - never take on a half completed job - if you do any work for a landlord expect a long wait for your money - if you do any work for a large company expect an even longer wait (90 days plus) - if you can get in with local Councils although they are not the quickest payers (30-60 days) at least you do always get paid.

Domestic work can be a pain but at least you get paid quickly.

Commercial work is more lucrative but you won't see your money for months.

Good luck

 

[crystal ball]

Very hard to generalise about bad payers, the only times I have been paid in advance was by a very large UK company, an asian man, and a local millionaire

I do work for the county council and the cheque is posted within two weeks

Some companies take 90 days and more, some do not

A few pub landlords have been a bit slow in paying so its cash from the till before I leave now

Some of the worst payers were neighbours for small domestic work