Some make excuses — “I need to transfer funds.” Occasionally some just disappear. They are the customers who haven't given you your final payment.
“In my first 15 years of business, I probably didn't have $100 go unpaid,” says Gerry Donaghue, owner of Donaghue Construction in Nasua, N.H. “But in the last 2 or 3 years, it's happened to us half-a-dozen times.”
Reasons and Rip-Offs Ken Moeslein, owner of Swing Line Windows in Pittsburgh, says that there are occasionally good reasons for customers to hold off the final payment. And then there are excuses, sometimes bordering on the absurd.
“A good reason is that there's a problem,” he says. “But the things they're coming up with are not because we didn't do what we should do.” He cites the case of a customer who decided not to finish paying for 10 windows simply because she “didn't like them.”
Sometimes holding back has nothing to do with money. “I had somebody who wanted to hold back final payment on a job while they sold the house, so they could put the warranty in the new owner's name,” Donaghue says. As home prices and construction costs have risen, “people's expectations have also gone up, but not necessarily in line with reality.”
Means of Persuasion Clay Franchville, of Aluma-Shield in Indianapolis, advocates using the lead installer as the ideal collector for that final payment. “He has an opportunity to build rapport and trust with [the customer]. They won't want to let him down, but they won't pay him until they're satisfied. It's a win-win.”
Trust and rapport are critical in getting all the money you're due. Which is why the personal touch is often successful. “I just call them,” Moeslein says. “Sometimes it's something they're embarrassed to tell us about — such as they've lost their job or lost their financing. We try to give them options. We can take credit card payments, or in some cases we'll just offer a payment plan, without interest. It's a new level of work that heretofore we didn't have to deal with.”
There are steps you can take to communicate better: tighten up your contracts, show good samples and color selectors, and get all questions answered up front. Donaghue agrees that trust is the key to solving these problems: “We have to have mutual trust. The better the relationship with the customer, the better everything will turn out” on the collections end.