If your Customer is unhappy with your invoice – it’s your fault! (sorry)
Click on the video to watch it (Runtime 8 minutes).
If you’d rather read the transcript it’s here below.
One of the biggest frustrations that lots of trades business owners experience is customers complaining about the price, after you’ve done the work and not wanting to pay. Or not paying and then when you chase them up to pay, they raise objections to the job or how long it took you or whatever.
I understand it’s frustrating.
I understand it affects your cash flow and it affects your profitability – it’s a pain in the ass.
I’m Jon from Small Fish Business Coaching. I run the ‘Tradies Toolbox’ Coaching Program, and I’m going to help you and teach you how to create and set up systems so that you avoid problems like the one I’ve just described.
So I’m sorry to say, if your customer is not happy with your invoice or doesn’t pay it or is otherwise an asshole, unless they’re complete savages and have no ethics or integrity, it’s probably your fault.
I’m sorry about that, it probably is.
I’m thinking in particular about two examples I saw on Builders Talk Group (a Facebook page I’m a part of).
If you’re not clear in your quote and they’ve misunderstood, that’s your fault, right?
It’s up to you to be clear.
And another situation that occur is although you were clear upfront, people can get a bit unhappy later. That’s kind of not so much your fault, but your protection from it is not to wait until later to collect your money and I’m going to talk to you about how you can manage this a bit.
What I think your job to do is to make sure there are no misunderstandings so people can’t misunderstand what the deal is.
Be clear in your quoting, in writing.
To stay strong during this process, you challenge them before you start the job and say, “You are going to pay me after we finish and before I leave the site aren’t you.” If they don’t say, “Yes and I’ve got the money ready,” don’t do the job. And I know that’s frustrating but you’ll be more pissed off if you do the job and never get money.
So all I’m going to tell you now is going to be quite frustrating for you because what I’m going to tell you of course is if you’re confronted with a situation like that now, you’re kind of too late.
I’m going to tell you what to do to set your business up better so that you don’t get confronted with this s#!t so much:
- You need to be clear in your quote that you want them to pay on the spot before you leave.
- You need to ask if you’ve got money before you start the job and only proceed if they say, “Yeah, yeah I’m alright to pay before you go.”
- Do the job instantly, raise the invoice on your special iPad or whatever before you go, and you collect the money immediately using their credit card.
Now if you set yourself up to do this and do this properly, you’ll have much less frustration with people changing your invoice when it’s too late for you to go, “Hey look, I won’t do work”.
So some thoughts, right?
- Avoid the misunderstandings
- Be clear
- Agree the rules of your engagement early in the piece
- Collect the money.
Do this as soon as you’ve done the job while everyone’s all happy, and feeling warm and fuzzy, and they’re loving the thing.
If you wait a week, send them an invoice tomorrow and then call them in a week, that flush of enthusiasm and joy has faded.
So strike them while they’re all happy.
You’ve got a much better chance of collecting your payment.
And remember what was agreed upfront before you did the work, right? Make sure you get agreement to that upfront.
Recommended Reading: When Customers Go Quiet on You
I’ll spell this out in a second.
Remember also that this stuff:
- Protects you some
- Helps you some
It’s not an absolute protection and a thief or somebody without integrity. They won’t care about this stuff but at least you’ll cover it. At least if you go to court, you’ve got written documented evidence of what the rules were so you’re protected somehow.
Alright, so this is the process you should use.
Be very clear in your quote what’s included and what’s not:
- Supplied materials and labor and supervision
- It’s a fixed price
- And this is what it covers and what’s included.
- That payment is required upon completion of the work before we leave site.
Now that’s going to be for small single day jobs, not so much for a house build or something, where the rules are a bit different and I’ll discuss those separately. Include those in every quote.
But also this, make sure you explain it.
Now I see lots of people whose quotes are frankly a bit basic and who I know send off an email and then when the customer said, “All right. Brilliant. Start on Monday,” they do and there can be two very different interpretations of what that quote meant. And it’s your job to make sure that they’re not different and that they’re the same.
Agree those rules in writing so you explain the quote to them. It’s my belief you should be presenting quotes to people in person:
- Talking them through
- Explaining what the rules are
- And getting them to agree
Now that only works if it’s a big enough job for it to be worth your while to do that, of course. But agree the rules in writing, email the quote.
Check before you start the job, that they’re okay to pay you when you’re finished and they’ve got the money. And if they say, “No, I won’t be able to”, go home because they’re going to be a tit. Especially if you explained on the phone when you book the job in that that was the rule.
Make this the rule.
We booked the job in, it’s going to be $200, we’ll collect the money before we leave, is that okay?
And if they don’t think that’s okay, consider not doing the job.
And then take payment on the spot.
Set yourself up with systems with a mobile credit card machine, with Tradify or AroFlo or SimPRO or something similar like that, that sets you up to collect your money, raising invoice and collect your money on the spot as you finish the work, okay?
Now this all sounds like quite a lot of work. I expect. And quite a frustrating position. But I’m telling you it’s better than finding yourself in a place where you don’t collect all the money for the work you do. So I’m sorry.
I’m sorry that I’m giving you boring news:
- You’re going to have to spend time and effort
- Set up systems
- Write terms, and conditions on your quotes
- And make it clear for people to understand.
You have to be disciplined and methodical and bit boring about this. But if you want to grow and scale, I’m afraid you have to.
Now just thought I’d end with:
Once it’s too late and you’re in a situation, what your options are?
And you’ve got a few. And I see a few of these considered in the ‘Builders Talk’ group.
Go and have a fight with the customer. Tell them what for. You can take some natural justice and smash the work, or repossess your stuff.
Now both of those, I don’t advice.
You don’t get paid. It’s briefly satisfying. You probably break the law. And you can get in trouble. You can refer to legal and you can go to a collections agency. And you might do that if it’s big enough for it to be worthwhile. And you might just write it off to experience if it’s not big enough for it to be worthy well.
Either way, you’re unhappy, you probably don’t get all your money, and you probably spend money trying to get it.
So back to the beginning:
- Set your process up so you minimize the occurrence of this stuff in the first place
- Write your processes
- Write your terms and conditions
- Stick to them
- Be a bit diligent
- Be a bit deliberate
- And don’t do work for the people who don’t accept that your process is fair