How Do You Get Customers To Pay?

Wensdy

any ideas? I've mailed out statements, and overdue letters, but they don't respond. any suggestions appreciated. some customers stated thay were not happy with the work the men did with clean-up. is this legitimate for not paying? what do you say to these difficult customers?
My last resort is to hire a collection agency.

ProWallGuy

Did you have a signed contract?
If not, then you are learning a tough lesson.
If so, lawyer up!

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Digital Murals Installation

ajpomerleau

We do roofs, so we have it stated in our contract that the job is not guaranteed until the job is paid in full. File a lien then take them to court.

mickeyco

I could give you a list of dirty tricks that have worked about 50% of the time but I think the best way to do it is through the court system, small claims if the amount is small enough ($5000.00 and under here), if it's a lot of money get an attorney. You don't have to be a lawyer to file in regular court, sometimes the filing fees are less, but you are expected to know the rules. It's funny how customers only have problems with the work when it's time to pay. I would first start with a pleasant letter (get delivery tracking to later prove you sent the letter), remind them that they didn't complain at the time the job was finished, had they done so you would have immediately addressed the situation (this is important because you can use it in court). Don't bother trying to explain to the customer why you need the money other than you did the work and are owed payment as agreed upon. Ask them to explain any problems that they have with the work and include (and mention it in the letter " I have include a .....") a self addressed, stamped envelope for them to send payment or state what was wrong with the work, this works well when brought up at court. Also ask them if they have some type of hardship and state that you would be willing to work with them. In the letter tell them that your companies procedure for dealing with non-payment is to file suit for the amount owed plus court costs and any attorney fees and the time spent trying to collect the money owed. This works about half the time, but if they don't pay, file a lawsuit, it's quite easy, most small claims courts have a handout that explains the process. In some places you can send the complaint via certified mail, other places require service by a process server or Sheriff. I find the Sheriff works best, it gives the neighbors something to talk about and intimidates the person that owes you the money. I have personally done this and the results were 100%.

Side note:
I don't do much contracting work anymore but I did and still do take pictures of every completed project. They're great material for your website and very useful when you run into non-paying customer that tries to say there was a problem. In this situation you could have sent out a copy of the pictures and asked them to point out what was wrong.

Peladu

Personally I send over my Uncle Vito.
If Uncle Vito can't collect the funds, then the guy is (already) dead.

AtlanticWBConst

We use a collections company out of Florida with connections to our area. They work fast. Once, they got our money in 1 day, after we first spoke to them of the details.

Right now, they are after a bum that owes us $3000.00.
They are taking care of everything.
Sound pretty much like what Mickeyco. wrote.

He's been served papers by the Sherrif's dept., and if he doesn't pay, they are taking him to court for his properties, we don't even have to be present in court.

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GAK

I like to hand deliver the bill after I do a final walk around the roof and the yard with the magnet and small bucket. I am usually paid on the spot. If not I ask when I can expect payment.
The real trick is to make sure that you are charging enough and managing your money so that you aren't deserate to get the check immediately. If I haven't gotten paid in a couple of weeks I will call and ask if I can come by in the next couple of days and collect. This will almost always trigger a payment or at least get a promise for a certain date. In 12+ years I have only been screwed twice for any larger amounts. I have lost on a few small repair jobs though.

reveivl

Just came back from a collection, finished the job (re-roof), cleaned up, got the dumpster guy to pick up, made out an invoice, went over and sat with the customer, made sure there were no problems, then handed them an invoice. Walked out with a cheque ten minutes later, everybody is happy. Communication is the key, if they are not happy with you, you should already be aware of this before you expect them to pay and deal with it. Once they ARE happy with you, they want to pay you so they can get on with their life. That's just my experience, very rarely have a problem, (touch wood). Rich.

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slickshift

A letter of "intent to lien" can loosen up some purse strings and is required in many states before filing for a lien anyway
Check your local regs for any time limits (ie: 30 days from work completed)

Just not paying an invoice from a contractor because one was not happy with the clean-up is not normal..it's a dodge

At least I'm assuming they are over/past due, you call them and say where's the money, and they say "I'm not paying-I didn't like the way your workers vacuumed up after themselves"

If they are leaving a mess you have a problem that needs to be addressed

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Originally Posted by ModernStyle I have never used this crap before and I pray to the paint gods that I never have to use it again, I would rather use Behr

slickshift

Me too
It takes up time but I'll usually walk away with a check
I want to do the final walk around with the customer anyway....may as well hand them a bill

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Originally Posted by ModernStyle I have never used this crap before and I pray to the paint gods that I never have to use it again, I would rather use Behr

Stone Mountain

In most instances we have little problem in getting paid. I have written right in my contract that
1] full payment is due on completion
2] no warranty if not paid in 5 days
3] small adjustments are part of warranty and thus will be done on payment
4] payment is due to the installer
If it is a cash payment I'll go get it
Usually my men will pick up a cheque
We also have a merchant account, so this year we'll often get the payment by credit card over the phone
In May we made a deal with Wells Fargo to be able to offer people 0% financing with no payments for 12 months. When the job is done, they sign off, and as soon as that happens Wells Fargo deposits the money directly into our account.

When we do have a problem, I'll do my best to try to fix it up. Recently we did have a problem. The grass was dead because we left lumber on it too long, so they wouldn't pay. Solution: 4 rolls of sod. Cost including gas and labour: $50.00. Result, picked up a handshake and a cheque for $10,000.00
Another person complained that the lattice was rusty. We checked, and found there is only one supplier of pressure treated lattice in Ontario. They told us it's normal. The guy was adamant to have the lattice replaced. I told him to find out where else to get it and I would. A week later he hadn't found any other supplier. I offered him a $100 discount. result: got a cheque for $6000.00

Especially with fences, sometimes they just want a discount. The problem with fences is that most people put one in because they have to to keep their kids and dogs in (or other people's kids and dogs out!), or because their neighbour wants it. So, even before you start the work, they are already negatively disposed towards the job. When you're done, they'll find anything to complain about. Generally, when that happens, I just suck it in and either do the repair or give a small discount.
This is one of the major reasons I have gone from 60/40 fences and decks to 8 deck crews and one fence crew as I very rarely have a problem with decks.

Sometimes however, customers are just ornery.
Another guy made a contract with me for a deck for $7400. When we did the contract, he insisted on giving me $3700 as a downpayment, even thought I only asked for $20%.
We did the job, including $900 in agreed extras. He gave my installer a cash tip for $300, and a cheque for $3700
We put it in the bank, only to have payment stopped. When I called him, he told me he stopped payment because the $900, which you may notice he hadn't yet paid, "was too much". After a month or wrangling back and forth, during which he made all sorts of wild statements ("I don't have to pay because you didn't give me an insurance certificate")
(I don't have to pay because your installer is a subcontractor)
(I don't have to pay because the sky isn't blue)
I got fed up and threatened him with small claims. He laughed and mentioned a big name lawyer in Toronto who "was his cousin", and "not to mess with him"
Anyway, I took him to court but he didn't show. I got a default judgement. I called him to ... well, gloat a bit. He got mad and said he knew nothing about it. (I'd sent the claim by courier).
I went back to court to get a direction for a lein. He didn't show.
I placed a lein on the house. when I called, he threatened his big name lawyer.
Today I got a letter from that big name lawyer asking what the payout on the lein is, as the house has been sold and closes next week. Result, Friday I get a certified cheque for $6300.00 on an original claim for $3700!!!! HA!
I'm too old now to have patience. If the job is done and it's wrong, I'll fix it, promptly and properly. If it's fine, I'll take them to court.
So should you.

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Residential Deck Specialist: Vist our Website
www.fenceanddeck.ca

joasis

The bottom line is: My proposal/contract specifies payment upon completion...not 30 days, not when the cat gets pregnat, but right on the spot. I make it a point to be at the job when the guys are tooling up and cleaning up...and I don't even ask if they can give me a payment...i walk right up to them with the invoice made out..and ask if they are writing a check and let me put the check number on the paid in full line...if they don't pay, and this has happened only 2 times to me, I tell them I am on my way to the county clerl to file a lien, and I'll see them in court...with a smile and a wave. I have never had to execute a lien yet....I guess they know I am not kidding....and finally, NEVER argue....just smile and if you can't fix the problem, file the lien and let them know you will do that before small claims action. Nearly everyone has a mortgage, and I understand a lender will be on the spot about not having liens (which in Oklahoma) come in front of secured lenders and can force the sale of property.

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fox builders

20 yrs ago we would have broke their legs (just kidding)
When a client finds an excuse not to pay at end of job it's just an excuse if you did a good job and cleaned up they are just looking for reason not to pay you had contractor tell me once that he had customer not pay him so he put him on a gay mailing list I guess it took the guy years to stop getting stuff in the mail I would have paid to see this guy explain it to his wife. Guy still didn't get paid but sure did laugh

George Z

In May we made a deal with Wells Fargo to be able to offer people 0% financing with no payments for 12 months. When the job is done, they sign off, and as soon as that happens Wells Fargo deposits the money directly into our account.

Steve, I might have to call you about that. What does it cost you?
We have been getting paid by credit card 75% of the time but that sounds really good.

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Grumpy

It's alot easier for people to say no from a distance.

Ring a door bell. "Hi, I'm with Wendy's Drywall. I have your invoice. Would you like to make payment by credit card or check now?"

BTW I didn't see you say you have been phone calling. For me usually all I have to do is make a phone call to remind the customers. If they avoid me I ring their door bell. If theya ren't home I leave the invoice with a hand written note. If they still avoid me I try harder and harder, more phone calls and more letters. If it goes past 1 month, then you have exhausted all of your efforts and you can hire a lawyer. You could be doing alot more before you lawyer up, although that is the final solution.

I once used this, and elarned it from a buddy. Open your car door and put the key in the ignition so it makes that annoying ding ding dinig noise. Call the customer and when they answer "Hi Bob, Grumpy here. I've been trying to get paid from you for some time now and I am at the end of my rope. So I am out in my truck at the moment and I am either driving to your house to pick up the check, or to the court house to file a lien. Your choice."

Grumpy

I definetly need to learn more about that. I put over $20k on our merchant account last month. At roughly 2% you do the math.

Stone Mountain

Through Landscape Ontario, I have my merchant accounts at 2%. (It's less if you don't take telephone payments).
Wells Fargo charges 6% of the purchase price for a 12 month contract.
What I usually do is charge a $1% admin fee, and I mark up the price of the job a bit. That way, if they want to bargain or ask about cash deals (which I discourage), I have room to discount.
Goerge, if you want to know about it, call my office and speak to my wife Rhonda. she'll give you the contact numbers.
So far we've put through about 15 of these "don't pay for 12 months" deals, and they work fine.
It's just another edge for the sale.
Steve

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realpurty2

Like Pro Wall Guy said, these are issues that should be addressed and discussed as part of your contract BEFORE the job is ever started. Payment terms need to be clearly spelled out, along with any penalties that will be imposed for failure to pay. Late fees and monthly interest on unpaid accounts for example.

Also, make the last thing you do with every job is get a SIGNED Acceptance of Completion form. It states they are satisfied with the work and agree to the balance due. That way if they do not pay and you end up in a legal issue, you can show proof that they accepted the job as is. Send a Intent to Lien notice via registered mail which states if balance is not paid within 10 days, a lien will be filed. If not paid.. file the lien AND see a lawyer or small claims court.

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Double-A

If your clients are not happy with your work, you need to find out why. Did your guys fail to follow the terms set out before the job and do an improper clean up? Did the client expect more because of a verbal agreement that was not kept?

Getting paid is what this business is all about. How you structure your relationship with your client is going to determine in large part, how successful you're going to be at getting paid and on time. If you're not using contracts, why not? If you're not going over the contract with your client, why not?

Also understand that there will almost always be a certain amount of work you will never be able to collect for, for one reason or another. This is hard to predict, but you should be rolling those numbers into your cost of doing business.

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"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

Jon F

Wendy,

....Remember, if it goes to court, you'll both lose. You might win a verdict...but that doesn't mean you get any money...and they can always countersue.....and this goes on forever. I just went through this for the first time and learned some valuable lessons. I waited too long for a lien, and for $85 had my lawyer send them a letter stating our intent to sue, etc. He "claimed" (they always will at this point) there were problems with the work, so he hired an expert to come look at it. Unknown to him, a very good friend of mine. This third party called me and told me that if I continue with the lawsuit, he'll counter for something.....would I be willing to settle for ***?? He negotiated an amount that homeowner and I agreed to, and it ended right there.

Anyone have any "creative" stories of how they "got back" at an un-paying customer back in their less-professional days???