Steve Payne
Last week I was informed I was rude, because I asked if my cheque was coming soon.
Canadian Contractor BusinessM. Klamms asks us to think about the effect that deadbeat customers have on the larger economy. That's a noble and different take on bad customers.
Editor’s note: We don’t know who M. Klamms is, but he deserves credit for his post (edited version below) about asking to get paid. Rather than whine about the effect on his own bank balance when he gets ripped off by a client, he points out larger impact that deadbeats have on their entire communities.
We think you’re an asset to your community, M. Klamms.
“Last week I was informed I was rude, because I asked if my cheque was coming soon.
Over my last 15 years in business, I have done many jobs and never got paid for them.
And every time it makes my blood boil.
You can’t take everyone to court, or you would be waiting for years – in line.
But I wish there was something in place to make people who do not pay, more accountable. Every job, whether it be big or small, is a factor in our economic landscape. And quite simply, if we do not get paid, we cannot hire people, and so on, and so on.
Like dominoes, businesses start falling down, and pretty soon there are less and less jobs in your community.”
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I can totally relate to contractors that have a hard time getting paid. My company struggles with this every day. What helps me get through this stress is that I remember my late father’s wise words. He said to me once… “Never feel ashamed for asking for money that you have earned. The shame is their’s for not paying their bills”. His words don’t help me get paid – but they certainly help me be less angry about it and I never feel bad about asking for payment when payment is due.
Thanks for posting this, Brenda. Very cool that your Dad has, through you, helped someone out even today as contractors take note of his advice.
We have all sorts of apps for phones out there. To bad we didn’t have a list of those who don’t pay.
Yah I know, there is a liability issue, but it sure whould be nice for the next contractor to not get stuck again by a regular dead beat.
15 years ago we delivered windows & doors for 6500 sf house being built by a “contractor” in a remote area for his own family. He had taken delivery of 3 smaller orders prior of which one was paid & two were just over 30 days. I began checking with other suppliers and trades and found out the guy was a crook.
One day I dispatched 5 employees to the site to retrieve the product. Nobody was there, the house was under construction and all the doors were open. Our guys cut through the vinyl brickmould from inside with reciprocating saws and loaded the windows into the truck. Just before my men left the site with the second truckload one of the contractor’s men showed up on site. I got a call from the contractor. He said the police were on their way.
Our vehicle loaded with windows headed up the highway with the contractor following close behind in his truck. An OPP cruiser came down the highway and did a U turn and dropped in behind the caravan with his lights flashing. The contractor and the police cruiser pulled over and our guys kept on trucking.
Later that day the officer paid a visit to our warehouse and took photos of the repossessed goods. He said this guy wants us to lay charges. I showed him the order which states that “all goods remain the property of the supplier until they are paid for in full”.
A few days later the same OPP officer called and asked me to send the 5 men to a village north of our location which was 1/2 way between our location and the OPP dispatch location. I told him I could only send 3 because the others were at a remote job site. The three received trespassing charges. The officer communicated through the three that his supervisor wanted the other two to come to the OPP dispatch location to pick up their charges because he is not coming all the way to our location to serve my men.
A month or so passed and the three employees received subpoenas to appear in court. A week before the court date I told this story to an OPP officer that I know and he spoke to the Crown Attorney and the bogus trespassing charges against my men dropped.
The following year on the anniversary of the “repo” we were served with a law suit. I turned it over to my lawyer. A couple of weeks later my lawyer called and said the suit is dead because the plaintiff’s lawyer was unable to collect a retainer from the plaintiff. This law suit hoax was repeated for two more years on the anniversary with the same outcome.
Six months later a roofer that had done work for the con-artist-tractor was in our office on unrelated business and told me the con-artist-tractor has fled to the US and that he’s wanted by the police and biker gangs after him due to some drug dealings and I haven’t heard from the con artist since.
My men tell me the day they repossessed the windows was the most fun they had ever had at work.
I would not recommend this method of dealing with bad accounts. We now use a more civilized approach.
You and your employees have done what so many of us would like to do, but for the warped legal system has resulted in the growing medical condition known as “cajones loss” by the majority of us in business.
Kudos to you and your crew, and hopefully the Real Sons of Anarchy caught up with that boy.
Cheers.
Your last post from John Cummings appears to be an isolated instance (I hope). But for the main story about the gentleman who says ‘Over my last 15 years in business, I have done many jobs and never got paid for them.’ How does he stay in business. Perhaps he should change his profession if he has such a re-occurring problem with collections. Knock on wood but I have not at all every missed a single payment in the last 8 years on my own and in the previous 20 working with other companies. He should seriously look at changing how he is doing things, because with such frequent collection problems, maybe it’s not the customers. Just saying.
Thanks Ben, someone had to say it.
In the 30 years I’ve been in this business, I’ve been fortunate to have been paid every time. Once it took 5 months to get the last payment. Another time the customer decided to take $475.00 from my fully documented $2800.00 invoice.
By the way, both customers were each a pair of teachers.
Just to clarify in case the readers don’t see my post in your other story. The way to protect yourself against collection problems is to not have terms that leave yourself vulnerable. As a contractor -YOU ARE NOT A BANK – So stop loaning people money. And the phrase should be “don’t feel ashamed for asking people for YOUR money” Once you’ve done the work, it’s not their money anymore. I think it is the norm in Calgary but regardless I have never had problems from customers paying a percentage at signing a contract ( 10 to 50% ), and another percentage on start date, another halfway through and the balance ( Usually 10%) on completion. Anytime I’ve had clients balk at these terms most often we adjust the percentage amounts but not that much. If you are doing renovations you are spending time ahead of starting the work. Designs Plans Meetings (if you don’t maybe you should, it will help you sell the job). Also you would need to order materials and products ahead of time so they are ready when you need them (if you let clients supply these, stop doing that it just causes aggravation and more time lost) besides you should make a mark up on the materials you supply. There are lots of cabinet companies, plumbing suppliers and plumbers, tile and flooring suppliers who will sell to contractors at a discount to get their business. You turn around and put a mark up on those materials (the amount of the discount the supplier gave you) and the customer doesn’t pay any more than if they had of bought it directly themselves. Regardless how you operate you shouldn’t have more than a small percentage left when your done the work, and with this system you’ve already conditioned the client to write you checks, so the last one is more routine. Create the ballpark you want people to play in, don’t play in their ballpark. You will weed out all the dead beats.
Well Ben and Jim, I congratulate both of you for being able to get paid every job. I as well have been stiffed by a few in my 20 years in business. A few were local businesses which, what it thought, were upstanding in my region. What has changed is the way accounts are handled when a new customer calls, large or small. COD. We always request a COD payment on first visit. If they refuse, then it’s a Red Flag or sometimes it’s just owner arrogance. After the first visit we limit the account so it doesn’t get out of control.. If it’s a large job, we require a deposit to cover the cost of equipment. Then we make an agreement on times of payment, especially if the job takes many weeks to complete. Keep your cash flow going and like one of your comments said, “Never be afraid to ask for payment”. If not, that’s where you may get taken advantage of when being a nice guy. You know they always get paid last.
We have only been stiffed twice in our 12 years in business in Arizona. Once, the client never mentioned she was a renter until the skylight replacement was in, then said to bill her landlord, who refused to pay. (Lesson learned!)
The second time, we did a conversion of a “stucco” entertainment wall to wood-wrapped, and replaced tile with a ceiling-to hearth ledge stone fireplace plus “fancy” wood mantel. The entire job was very custom, labor and materials, and took forever due to everything being odd-sized from the drywall being textured over. At one point, the husband complained about the time it was taking to “just cut wood”. This was five pieces for each “nook”, each cut had to be measured and then run outside to make, and ditto the facing pieces, which varied up to a half-inch. Husband complained about it taking too long to “just cut wood”. Customers were also out of town, so could not okay color selection on wood stain. Okayed it by pictures, then changed their minds. We had worked for this client before, and I take the blame for not specifying the exact per-hour labor costs.
We discounted the cost by over $1800 for the time spent staining the “wrong” color, (though not our fault, technically,) and threw in a lot of freebies, including running-around time to pick stone for hearth, finding grout, etc. Funny part was, they had sent us to look at a friend’s place, which they wanted to more-or-less copy. It was a full wall, all custom cabinets, probably came in at $40K. Ours came out beautiful! Nevertheless, they ignored our final invoice – twice. Guess they decided they had paid enough already. I never pushed it, but maybe I should.
As for how to handle non-payers, we did have one who kept putting us off. It was a skylight installation, and I finally called her and said if it wasn’t paid by the end of the week, we would come and remover the skylight domes and put in plywood. Had the check two days later! So, if anything is removable, threaten to repo it!
I would highly encourage each and every contractor to do these 3 things to almost eliminate bad debt.
1. Charge for the estimate (only serious customers will contact you)
2. Have a basic contract signed, even an e-mail that clearly indicated start date, balance, payment terms, and etc… Have it signed, not only confirmed.
3. Ask for an deposit. Material plus 20 ~ 30% which translate in my business for 60%
Another thing is, for larger projects, offer your bottom prices possible and ask for full [payment prior to start. I can say it works all the time but as least you don’t have nightmares….
Wow! My heart goes out to the company not getting paid for work completed.Someone said “there are only a few rotters in the world but they do move around a lot”.
I started my company in 1976 and am currently what I call semi retired spending my winters in warmer climates.
I have some thoughts that might be helpful from my experience. In our last years in business most of our work all came from referrals and repeat clients.
But I developed a system early on for new clients using a tastefully compiled referral book with an eye catching cover. That book contained pictures of some of our typical completed projects. At the bottom of each job I pasted in the actual appreciation card or hand written note from that appreciative customer.
At my first in home appointment I inconspicuously placed that book on the table above my clip board, brochures or whatever. Following a bit of chit chat we went into their anticipated dream project. Invariably someone picked up that book and paged through it often carefully reading the personal appreciation notes. Our city with surrounding communities is around 200,000+ population so some names were recognizable. That book sold many jobs and seemed to make people feel obligated too also submit their appreciative expression upon completion of their project.
Once we covered what they wanted done and I had indicated my willingness to start the preliminaries, I then pulled out my policy sheet. On that sheet was a preamble of who we were, what our responsibility was to the client and what we expected of the client. There was a section on the break down of payment structure (a 10% deposit was minimum upon signing, it went up to 25% depending on various factors).
A statement was then made something to the effect, “how privileged we have been to have so many happy satisfied customers in this community. As you can see our slogan is ‘Pleasing you pleases us’ . We work hard to keep it that way by carefully following this policy sheet. Are you comfortable with what is written here(we perused it together”). Their reply had a lot to do with how I treated going forward with the next steps of the procedure.
At the bottom of the sheet there were 5 names and phone numbers for them to contact for referrals.
When signing the contract I carefully went over that policy sheet again. On one occasion I folded my books and left due to a testy attitude at signing time. Once we packed up and left after putting in the first day when the home owner came home with a domineering attitude with my head employee. There may have been many wasted hours down the drain but we may have not gotten paid in the long run either.
After all these years no one owes me money. Of course there were times when we had to make adjustments and had to wait for money due to extenuating circumstances. Early on a couple “rooters” were responsible my devising this system in the first place.
As a contractor I feel I owe my client professional workmanship, no fussy agreements and a work environment that is pleasant. That environment is created by hiring the right employes and sub trades and treating them fair. After all my team is a guest in the clients home. It takes a few years to assemble personal of that caliber. It’s worth the effort because that too cuts down on conflict which can also set a client off thus souring relationships.
possible to get a copy of policy sheet–sounds very useful
we do a lot of service work
I do all the invoicing, as the mechanic job is to fix the leak not make out bills and collect money
you never know who is going to try to take you for a few dollars
BUT in a small town people normally paid up
I have as much trouble collecting from small contractors as I have from home owners
so I guess there are dead beats in every walk of life