What to do when customers can’t or won’t pay you

Stay in a service based industry long enough and you will eventually run into a situation where your customer can’t, or won’t, pay you. It’s an unfortunate reality and causes a lot of stress for you, your business and your client. 

As we head deeper in to uncertain times, it is becoming increasingly likely that you will run into a scenario where invoices are over due.

With managed services or IT consulting engagements, you should already have a contract with your customer. For the break/fix side of the house, you should have one along with a set of written policies prominently posted that clearly state what happens if your customer won’t or can’t pay. Regardless of your business model, it’s simply a reality that you’ll run into these situations.

What do you do?

First of all, understand that there are two different scenarios: First, where your customer refuses to pay, and second, where they can’t.  

Before we begin, there is one very important thing that needs to be stressed that no matter what, you need a contract.  This seems obvious but you would be surprised at how many people neglect to put some sort of contract in place. 

An easy way to get customers to sign off on your contract, especially for break/fix, is to add one into Instant Housecall. When you configure your Terms of Service, they’ll be shown to your customer before any remote support session starts.

Be clear about the scope of work

Ensure that you are clear about the scope of work you will be providing as well as the following key components:

  1. Compensation and payment terms:

Be clear about what your client will owe you for the work provided, how you will invoice them and when that invoice needs to be paid. For break/fix clients, this will typically be done at the time of sale. If you configure your online shopping cart in Instant Housecall, you’ll be able to accept payment immediately.

  1. Refund Policy:

Sometimes, clients will be unhappy with the work that you have done. Hopefully this doesn’t happen, but you should always be prepared in case it does. Be clear on what your refund procedure is, and how much of your service fee is refundable, if any.

  1. Failure to comply:

Clearly outline what happens if your customer doesn’t pay. This helps avoid the ‘well, I didn’t know’ argument and also gives you some support when and if you need to put these steps into motion.

When a customer misses a payment, it is first and foremost important to figure out where your client is coming from so that you can handle the situation appropriately. Are they unable to pay, unhappy with the service or simply won’t pay? The answer to that question determines how to handle the situation.

Clients who are unable to pay 

Let’s face it, this scenario is hard for everyone involved. In times like these, businesses have found themselves unexpectedly closed and without income, which for small businesses, can mean making the choice between making rent, or eating dinner. While this doesn’t make your situation any better, because hey, you rely on income as well – it does change how you handle the situation. It is important to not burn any bridges here.

First off, empathize. This can make the difference between a customer committing to paying you later and ghosting you completely. Especially now, we need to get a little creative in how we do business. If this is the first time that this customer has been unable to pay, sympathize and try to find a solution where they can pay you in the future. Ask if they can pay in installments. Come up with a system that works for both of you – consider pausing their service and working out a payment plan a few months from now. 

Handling this situation with grace will ensure that this client has only great things to say about you and may lead to more clients in the future.

Next up, the client who is ‘unhappy’ with your services

In this situation you need to do a little investigating. Are they actually unhappy, or are they simply trying to get out of paying you? Either way, it sucks, but something that you will have to deal with. 

First, find out what they are unhappy with. Begin with open and kind communication so that your client isn’t immediately on the defensive. Oftentimes, it is something minor that can easily be fixed or explained and you can both get on with your businesses. However, if your client is saying they are unhappy as a means to avoid paying you that is a different story. In these scenarios, it is best to discuss the refund policy that is clearly outlined in that contract you both signed (remember?).

If the problem persists or your client is constantly saying they are unhappy with your work, finish your contract and ‘fire’ them. Or, if they are really bad, provide the refund, cut your losses and move on. A client that is that much of a headache is not worth your time or effort trying to keep happy.  

Lastly, what happens if a customer flat out refuses to pay?

Begin by reminding them about the terms of your contract: the agreed up scope of work, the terms of payment and your refund policy (if applicable). It may also help to attach the contract to the email for reference. Oftentimes this is enough to nudge them into paying. However sometimes clients can double down on the refusal or even get outright hostile. These people suck.

While the situation is stressful, you will get through it. Start by deciding in advance on how many follow up emails you will send – I suggest no more than two after your initial reminder of the contract. Also, from this point on, only communicate via email, to ensure that there is a paper trail.

In each follow up email, outline the dates you previously spoke, and what was discussed e.g as per my email on March 11, 2020– as well as clearly outlining what the next steps are, we expect your full payment by June 1, 2020 or we will be terminating your services.

Collection agencies

Hopefully this is enough to get the payments rolling again but if all else fails, you can employ the help of a collections agency. While this may seem like a bit of overkill, at some point you may need to cut your losses and hand things off to the professionals. A word of caution on collection agencies: they may not succeed at collecting the debt, but they will most certainly succeed at upsetting your customer. Keep this in mind, especially if you travel in similar circles to your customers, or if they are apt to leave online reviews. 

Decide what your time is worth and do not spend a second more than you have to chasing down people who refuse to pay you for your time. Unfortunately, it is sometimes more cost effective to cut your losses than to continue dealing with these clients. 

I’ll sue!

Yes, of course you can sue your (former) client. But the small claims process is a long and painful process. Even getting a judgement doesn’t mean that you’ll ever see a penny from your customer. Unless it’s a very substantial sum of money, it’s probably not worth your time.

Handling customers that won’t pay is an unfortunate part being in a service based business. Having clear guidelines set in place on how you will handle the situation as well as how you will escalate if necessary will set your future-self up for success so you can spend your valuable time on important things.

If you’re looking for remote support software that has features perfect for small businesses like Terms and Conditions your customers will sign off on before a session starts and the ability to accept online payment, give instant Housecall a try.

Live AMA: Marketing for small IT Business

Wednesday April 29 @ 7pm ET: Live Ask Me Anything with Liz Oke from Liz Oke Marketing

As a small business owner I want to reach out to the entrepreneurs we serve as we all look forward to our customers returning to work.

In the 2009 downturn, I saw a lot of small businesses fail. With COVID19 still escalating, I’d like to help businesses do well during these unusual times. That’s why I’m hosting a series of Ask Me Anythings for our community.

Our AMA guest will be Liz Oke, principal at Liz Oke Marketing.

Liz will field your questions. She will go through marketing plans that she’s done with a few small businesses and talk about approaches that IT Business owners can apply in their own businesses:

  • Working with Google Business, and how to encourage reviews and referrals from your existing clients
  • Defining your audience and persona development
  • Online advertising — what does and what does not work
  • SEO, including local SEO
  • Social Media Marketing

Beyond running a small business of her own, Liz also teaches Digital Marketing at University of Toronto.

Mark your calendar for Wednesday, April 29 @ 7pm ET.

Registration is quick and easy. All we need is the e-mail address you want us to send the Zoom link to and any questions you want answered.

Tools you and your customers can use while working from home

Since it’s all the rage to work from home these days, there’s no better time than now to share the tools that we use to get the job done.

Working from home comes with its own set of challenges, many of which can be managed by properly understanding how to manage a remote team.


Monitoring your staff

One of the biggest concerns people who are new to having remote workforce is knowing whether or not their staff are actually working when they say they are.

I have very mixed feelings on surveillance apps. I don’t personally use them. In particular, I woudn’t install them in a BYOD situation, first because it’s an invasion of privacy; and second, because you’ll discover things about your staff that you’d probably rather not know.

You can generally get a better sense for how busy your team is by seeing what they actually deliver rather than how many hours they spend on reddit.

With that said, and since a lot of people have asked, if you want to monitor what your team is up to, you can use a tool like Activtrak to keep tabs on what they’re doing.


G-Suite alternative

One of my favourite tools in my arsenal is Nextcloud. We use it for everything: file sharing, as a drop box for files from external customers, and to share files internally among ourselves. It also has a calendar, contacts, email, a Talk app that lets you host video conferences, and even a password manager. Here’s an example of a document share.

Nextcloud is an excellent replacement for G-Suite, but not quite as robust. If you’re looking for higher margins, it’s an alternative that you can sell. It’s also open source so you can host your own instance (or an instance for your customers) or you can order Nextcloud hosting from a variety of vendors.


Collaboration tools

If you need to get documents signed, you can use the canonical Docusign or the poor man’s alternative, PDFFiller.

We use Zoom for meetings and webinars (yes, they’ve taken a lot of heat lately). There is not shortage of alternatives, but one of the more compelling ones is Jitsi.

Slack is our IM client of choice. We use it in place of email for just about everything, and it integrates nicely with our ticketing system. MatterMost is an excellent alternative and it comes with a ton of integrations. You can either use their hosted service or, again, host your own or host it for your customers. Riot.im and Rocket.chat receive honourable mentions.

Instant Housecall is, of course, how we provide  remote tech support to each other and remotely accessing Windows servers. We also use it for collaborating remotely on documents, graphics, and just about anything. If you want to give your customers remote access to their own PCs, subaccounts are accounts you can sell or give your customers so they can control their own unattended PC.

As always, if you’re looking to provide remote tech support, give Instant Housecall a try.

Did I miss anything? Share your favourite work at home tools in the comments below.


Live Town Hall: What IT Pros can sell during and after COVID-19

Friday April 10 @ 2pm: Town Hall for Instant Housecall customers.

As a small business owner I want to reach out to the entrepreneurs we serve as we all look forward to our customers returning to work.

In the 2009 downturn, I saw a lot of small businesses fail. With COVID19 still escalating, I’d like to help businesses do well during these unusual times.

That’s why I’m starting a series of Town Halls for Instant Housecall customers to help you and your customers better navigate this and future crises.

When the pandemic hit, Instant Housecall offered free subaccounts to everyone so your customers can control their own unattended PCs. We wanted to help you help your customers. If your customers aren’t already using subaccounts, we’ll talk about how they can enhance disaster recovery plans.

Our Town Hall guest will be Scott Young, Principal Research Advisor at Infotech Research Group. He’ll talk about how you can

  • help your customers with repatriation planning (how to get them from work-at-home back to the office)
  • explain to customers how they can better plan for next time (business continuity and disaster recovery)
  • how to identify what and whether you should move to the cloud.

Scott is has worked for a successful MSP, and owns his own IT consulting business.

Not an Instant Housecall customer? Get an invite to this Town Hall by signing up for a free trial, or follow Instant Housecall on Facebook, LinkedIn, and the blog to get a summary afterward.

Mark your calendar for Friday, April 10 @ 2pm ET. Hope to see you there.