Keeping One Step Ahead of Bad Customers

I’m going to start this story with a typical small business scenario. The hero of our story is Gus the plumber who services your average metropolitan area and has been in business for five years.

Gus has five employees that include two master plumbers, two plumber’s helpers and one secretary. He is constantly upgrading certifications, equipment and tools so he can continue to offer the best service possible.Using the equity in his home, Gus was able to secure a line of credit through his bank to keep his business operating during lean times.

The bottom line: Gus is doing what he needs to do to have a thriving business.

This is a common story for small businesses. Unfortunately bad customers can threaten the very existence of Gus’s Plumbing and thousands of others. Having the “bad customer” as part of the equation means cash flow becomes a major issue causing grief and frustration.

I really have to ask why people enter into agreements with service providers knowing they either don’t have the money or refuse to uphold their obligations. The amount of time and money spent making phone calls, writing letters and liens can almost cost more than the amount owed. Service providers find themselves either passing the customer to a collections agency, an attorney or just writing it off and moving on. The only problem is that the employees still expect their paycheck and operation costs like rent, utilities and Uncle Sam don’t really care if you weren’t paid. How many times have people like Gus gone without a paycheck in order to stay in business and opening an entire new level of stress and frustration?

The good news is that service providers can do more to protect themselves against bad customers. The consumer can rely on vehicles like Angie’s List and The Better Business Bureau to check on service providers and make educated decision.Service providers have to be one step ahead of the bad customer by implementing a policy of proper documentation:

  • Spend the money to have an attorney write a Service Agreement to protect you from customers looking to exploit your vague and simplistic contracts.
  • Have payment schedules signed by all parties with agreed dates for draws.
  • Keep a daily log documenting conversations and important events and take advantage of change orders. Any customer having an issue signing these forms is a customer you want to avoid.

Now web sites like www.knowyourcustomers.com are giving service providers a chance to share information about bad customers. Hopefully service providers can begin to take the steps to protect themselves and their companies from bad customers.