Customer puts work on hold

[Sam I]

I had a new customer approach me for a fair chunk of work last year. I quoted the work and as they were a new customer requested payment up front which all went smoothly. Anyway, shortly after the PO has been placed I am told they are reworking some of parts and that the order is now on hold. I've got this work scheduled and I've turned other work away in anticipation of this work coming in. Anyway, the job is on hold for a few months and when I do get the go ahead it's in dribs and drabs with a few amendments along the way.

Now the job is live again but I'm having a hard time scheduling the work as I'm currently running other projects that are on credit terms (i.e. will be paying next months bills whereas this job paid the bills back last year when it was originally scheduled). I'm going to clear some time to get them done this week and next but I'm curious as to how others handle jobs like this. I don't think I handled this well and am thinking an update to my T&C's to cover this scenario would be a good idea.

It may be worth mentioning I've done a few jobs for this customer during all of this and the work is generally a good fit for my machines. There seems to be a fairly good ongoing relationship so this isn't really a question of what to do now but rather how to prevent this scenario from popping up again in the future.

 

[plastikdreams]

If it's paid for already it should have carte blanche for getting done. Unfortunately it's turned out to be not as expected but it's a live and learn exercise. Sure there are yeah buts...but evidently it wasn't in the original contract.

I suppose you could have a talk with the customer and say "hey I have some other projects that I'm in the middle of that need to get done, I can do your parts in a week or so, will that be ok?" He's either going to say yes or no. At that point you know what needs to get done. Be sure to mention the parts hold but don't hammer it home.

 

[Sam I]

That's where we're at just now. We've had the chat their job is the priority for the next week or two. They are a good customer and are still putting work my way so I don't think this has upset the relationship and going forwards they are on credit terms where, so long as I'm not out of pocket for materials, I'm not overly fussed how long it sits on hold and will treat it as a new job and schedule accordingly when the job goes live again.

That being said I can see how this could have gone another direction quite easily hence why I'm wondering what T&C's other shops may have in place to safeguard themselves from this situation.

 

[Freedommachine]

I hate getting paid for a job before I do the work. Idk why, but doing work that I owe feels totally different than being owed for the work that I do.

If this is the type of situation your customer needs, you might not be able to avoid it entirely. It sounds like they are designing a product while trying to manufacture it at the same time. On paper; they have a lot of good work to send your way. In reality, things are a bit chaotic and not quite ready for "full steam ahead" production. Does that sound about right?

If so, maybe the chaos will pay off in the end with regular production contracts. I agree with plastik, a conversation with the customer is in order.

Maybe let them know that this is not the best situation for you to serve their interests. Ask if you can be kept "in the loop" so you can better prepare and ensure they get the service they deserve.

If they see a silent modification to a T&S agreement and they realize it is directed toward them, it will likely have negative consequences; at least it would if I were the customer.

I would rather have a vendor call me and straight up say; "you're killin me man, I can do it for you this time but we're gonna have to make some changes to your ADHD style of scheduling."

I would probably laugh and say; "ok, fair enough. You tell me what you need and we'll figure out how to make it happen."

A T&S change feels more like the neighbor that puts up a hate fence and calls zoning on you rather than saying; "hey brother, can you clean up your yard? it looks like shit."

 

[marccongdon]

I worked in a shop that tried to run things around these lines. It was an all round job shop but had one large customer that accounted for a little over half their work.
They had an average 4-6 week lead time on standard priority parts.
Within that they tried to keep a hard schedule going about 2 weeks in advanced. Allowances were made for larger orders where the amount of material required would jam things up (it wasn't a huge shop).
When the job was scheduled on that 2 week window an email was sent out to the customer automatically advising them they had 24 hours to update the shop with any changes. This window was always discussed and explained when quoting the work and was very clear in the contract. I was there to modify the ERP system to make this process more automated.
After that window had been passed officially the customer was pretty much SOL. The job could be cancelled but the bill was still due/money would not be returned. I believe they tried to work out a "restocking" percentage for unused material in these cases but it was too cumbersome for the guy to quote on an individual basis and too varied to have a flat number. At that point if there were changes you went to the back of the line for scheduling, if you just wanted to reduce the quantity you were still paying for the original amount.
In practice it rarely worked like that, usually they'd try to work with a customer to accommodate them but it certainly cut down on instances of this happening and allowed them to negotiate from a more powerful position when they did.

 

[gustafson]

I don't think you did anything wrong
It is inconvenient that you spent the money, but random rescheduling is not a perk customers get
Do your best to accommodate, but do explain that you have promised others to get work done now, and you will do your best.
The 'having promised delivery to others like I had promised you' works better than 'I need the money'
The only change in your terms would be to add the standard lead time to any changes
Or lead time is after payment/po/etc and all final drawings/specs have been received

 

[Doug]

Sometimes you just muddle through these kind of situations as best you can.

One sure solution is not to take money up front. Check out the customer through current local references. If you need the money for materials, etc then maybe you shouldn't be doing the work. Having funds on hand is part of the admission price to be doing the work.

I never took or wanted up front money. It gives the customer too much leverage over you. Besides it always seemed like I'd be working for free since there wouldn't be a monetary reward after the job was completed.

Anyway you look at these situations it's hard to give advice because we're only hearing one side of the story. We don't know anything about you, much less about your customer.

 

[doug925]

We call jobs on hold 'Fluid' as we now have to fill the scheduled machine time with anything that will flow / fit the slot.

I cannot stand taking $ before the job is complete.
I don't even like partial PO, invoices.
I need the motivation / reward that comes AFTER the job is done, or I will procrastinate and push the job for a more favorable / easy / COD / 'fill in the blank' one.
Neither of the above is a good business practice. LOL

 

[doug925]

Oh yeah. I know my post didn't in any way answer your question. lol
But I do feel your pain. Most shop owners have dealt with that prior.

 

[CarbideBob]

I am not understanding.
You have been already paid (and I guess spent that money) . Oh my.
They put a hold on to makes some possible changes and now they want the stuff they paid for?
BUT, you are busy so that is now a problem?
I must have something wrong here.....

 

[gustafson]

I am not understanding.
You have been already paid (and I guess spent that money) . Oh my.
They put a hold on to makes some possible changes and now they want the stuff they paid for?
BUT, you are busy so that is now a problem?
I must have something wrong here.....

It is called scheduling
No customer can call up and demand a pile of parts on a random schedule of their choosing
I had a customer try to run a kanban system that they were not able to run.
They order 100 parts and I agree to keep 20 on the shelf at any time.
Ok, so they place the order, I run 20 parts, they place a delivery order for 20 parts, then 2 days later want 20 more.

Uhh, no.

 

[Sam I]

I agree, I don't like payment up front for general work. I do however insist on new customers paying up front. Sometimes I let it slide if the job is low risk to me (i.e. if they didn't pay I could afford to write it off). On this particular occasion the work in question not only required a significant amount of tooling and materials but also about 2 weeks of shop time which is where I'm suffering now as it's very difficult to schedule such a large chunk of work in a one man shop. This is more of a scheduling issue than a financial one although I must admit it stings knowing that the next week or two I won't be invoicing any significant work, especially when the job has already essentially consumed the original shop time - sure I filled some of the time but a few of my regular customers put work elsewhere which I know I would have otherwise been doing in that time.

As I mentioned before this particular situation has been taken care of - I've had a conversation with the customer and we've reached a new schedule that we're both happy with. I was just curious whether anyone had any specific T & C's that would cover cancellations and amendments. I mut admit my current T&C's are probably pretty flimsy and most of my customers attempt to override them with their own that come attached to the PO anyway. It's not relevant to this particular customer anyway as they are now on credit terms so would be unaffected to changes that are made.

 

[BT Fabrication]

Sometimes you just muddle through these kind of situations as best you can.

One sure solution is not to take money up front. Check out the customer through current local references. If you need the money for materials, etc then maybe you shouldn't be doing the work. Having funds on hand is part of the admission price to be doing the work.

I never took or wanted up front money. It gives the customer too much leverage over you. Besides it always seemed like I'd be working for free since there wouldn't be a monetary reward after the job was completed.

Anyway you look at these situations it's hard to give advice because we're only hearing one side of the story. We don't know anything about you, much less about your customer.

well when jobs are $80 grand+ im not taking any chances getting stiffed for materials after its cut and lasered. can't return cut parts to any supplier, and just ends up being 1/10Th the cost when you go to scrap it.

 

[604Pook]

I have done the deposit and get paid first for some work in the past. I dislike it too.

I almost think a separate account, is needed, where deposit and or full payment of jobs, goes into separate account from your day to day is needed. This way you have the money but don't pay yourself until the job is done. You can draw from it for the materials and tooling but keep it off limits for anything else.

I know bigger companies do it with their accounting etc, but for me as a one man show, just thinking it'd be easier to keep it separate.

The time thing always sucks. Been there many times. Its just a juggle and really messes with scheduling when things get delayed or moved around.

 

[Kingbob]

yeah that's a work the weekend type job now. I think COD for a new customer is great but prepay jobs just gives them power over your reputation instead of your wallet. Don't do it again and just get through it. I don't know what your schedule is like but it sounds like you've got a lot of commitments to power through, I keep a cot at the shop for these occasions. Better judgment has kept me off of it since oct 2018.

 

[Fish On]

We get threads here complaining about customers paying too late, and now we're complaining about them paying too soon. Goldilocks must have been reincarnated as head of accounts receivable....

 

[mhajicek]

"Oh, the revised prints are ready? Great, I'll get your job added to the end of the schedule! Here's what lead times are looking like right now."

 

[Pat (pti)]

When you get the phone call that a job is on hold, just give them a heads up. I quoted 4 weeks for Rev B and scheduled accordingly. I’m not sure what Rev C looks like, and depending how long it’s on hold what scheduling conflicts you may have. Tell them you will do your best.

Also depending on the changes to the part you could be looking at additional operations, tooling, and set up. The quote may no longer be valid.

 

[Garwood]

Not that it's necessarily applicable to the OP, but on the subject of deposits- I have a spare business bank account. I keep it primarily because way back when I had an illegitimate chargeback through Paypal that crippled my business. Having a second account for processing payments is a lifesaver while you sort out how much you're going to get fucked by "The safer, easier way to pay" lol.

One thing I use that extra account for is when I take a deposit for a big machining job or for some of the other specialized work I do. I put that deposit money in that account and generally don't touch it until the project is completed.

If something goes to total shit, a check can be cut and everyone is square.

Murphy has kicked my ass a few times so I try to think a step ahead of him.

 

[triumph406]

I'm going to clear some time to get them done this week and next but I'm curious as to how others handle jobs like this.

Maybe you'll have to work more hours in the day, or maybe work the weekend, like most of us have to do sometimes, whether we like it or not