When Customers Won’t Pay Their Bills

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So Why Don’t Customers Pay Their Bills final-notice

There has been a lot of discussion lately on one of the forums in the Appliance Service Industry on what to do about customers when they refuse to pay for services rendered, especially after you have made a service call and diagnosis and the customer does not want the product repaired. The comments received range from doing nothing at all due to the low dollar amount involved all the way to calling in “Cousin Quido” with a baseball bat!

It’s Just Part of Doing Business.

First off, you have to realize that if you are in business, you will have customers that won’t pay for your products or services. It is going to happen and you must be prepared for it and not get all bent out of shape when it does happen. That’s why you’ll see on all financial reports a category entitled “Bad Debt”, “Write Offs,” “Reserve For Bad Debt,” or something to that effect. It will happen. Your best defense is to just know that at various times during the year it will happen and you have to have some type of plan in place as to how you are going to handle it when it does happen.

So the question really becomes:

How Are “YOU” Going To Deal With Customers That Won’t Pay Their Bills?

I’ll state it again, as a small business owner, you have to realize that some customers won’t pay for your products or services rendered and that is just part of doing business and part of dealing with people. There are 3 key principles to understand when dealing with these customers:

  1. Don’t Take It Personally
  2. Assess Whether or Not Something Went Wrong on the Call
  3. Make a Decision As To What You Are Going To Do and Move On

Once that is done and by dealing with it right away and making a decision, frees you up to start running your business as usual. Don’t focus on the negatives, focus on what you can do and move on.

So, Why Don’t Some Customers Pay?

The fact of life is, there are people who will try to take advantage of you and beat you out of your products or services. You or your employees may have done nothing wrong and you just have to realize that there are those who will try to take advantage of you in life. Lesson learned! Put them on your “Preferred Customer” list. You prefer they call someone else for service! Mark them as no service in the future and move on.

As for other reasons, it could be that your call taker failed to explain the charges when the call was initially taken or maybe the technician failed to explain the charges prior to a repair. The customer could feel like they are being taken advantage of or feel they are being ripped off. Either way, some explaining needs to be done as to why the charge is what it is. Ask to the customer what they think is a fair charge is then accept it. They will probably offer more than you think they will so accept it and move on. Then tell them that this is a one time concession and any future services will be charged a full price. Maybe the customer is emotionally upset because they are having a bad day. They could have multiple issues piling up on them all at once or struggling financially and this was the straw that broke their back. There could be a ton of reasons and you may never know what is going on with someone unless you ask.

So Why Don’t You Ask?

Before you jump to conclusions, why don’t you ask the customer these three questions?

What happened or what went wrong?

What should have happened?

What can I do to make it right? Then, “DO IT” if at all possible.

It may mean writing off the diagnostic charge. You’ll probably end up writing it off anyway. If you let the customer become a part of the solution by getting their input, you will probably keep them as a customer. Why not ask them what the solution is? More often than not, their solution will cost you less than you would have given them anyway. If they are not part of the solution and you get angry, you will never keep them as a customer.

Then there are those times that you know you are dealing with a customer who will not pay no matter what you do and you will never win them over. You probably don’t want their business anyway and what they are requesting is way over and above what is reasonable or way more than you are willing to do. It is then time not only to write the charges off, but to write the customer off, as well.

Here’s what I mean by writing the customer off. You need to have a system in place whereby you make a record in your software, tracking system, or data base that identifies them as a “PREFERRED CUSTOMER.” Meaning, you would prefer them call someone else if they do call you back. I say “Preferred Customer” because you don’t want to create any negative energy around them calling back. “Preferred” doesn’t give that negative connotation. You just have to make sure those in the office knows what “Preferred Customer” means.

All the call taker has to say is:

Mr. XXXXX, I’m sorry we can’t handle your call today but let me refer you to XYZ Company.

When you do refer them, refer them to your competitor down the street or across town. By doing this, you’re referring the customers that won’t pay their bills to your competition. This frees up your time to service customers that will pay their bills & guess who wins?

So What’s Next?

In my next article I will talk about options that are available to you if you decide you do want to go after those customers that don’t pay their bills. There is a lot more to it than just a phone call and the internal effects can result in it costing you a lot more than you think! Chasing bad debt can sometimes be very costly. Check back for my next article for the follow up article on collecting from customers that won’t pay their bills.

Best Wishes
“DependableDon” Harris
Founder, Appliance Service Secrets

Don Harris owned and operated his own appliance services business in Atlanta, Ga for over 45 years. In 2014 he sold his business, Dependable Services, to his son Brannon. Dependable Services currently operates 18 service vehicles and has 38 employees, providing services for heating and air conditioning, residential appliances, restaurant equipment, commercial refrigeration and water heaters to the metro Atlanta area. Don acquired the nickname “DependableDon” because of his reputation of being there when he said he would be there and doing what he said he would do. Don now spends his time coaching and consulting other businesses in the Appliance and HVAC industry.

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