Episode 8: Three Ways to Deal With a Customer That Doesn't Want to Pay
Getting money from a customer that doesn’t want to pay is no piece of cake. In this episode of Machine Shop Talk, Ian Sandusky shares some valuable advice.
You’ve set up the machines, ran the parts, inspected them, delivered them and now you are waiting for a payment that it’s unlikely to arrive. This is, unfortunately, a situation that many small shops have to deal with at some point and if your shop gets in that situation, in a way you have already lost. Getting payments from a client is a complicated process that can sometimes be more costly than effective.
Luckily there are some ways to prevent this from happening the issue. First, always make sure you screen your customers properly before you take on any job. According to Ian “you want to screen your customers the same way you would screen your employees”. One of the best tools to use to screen customers is through a credit reference. A credit reference will allow you to learn more about the financial standings of your customer and provide information about other suppliers the customer has been working with. This information will allow you to understand what type of customer you are dealing with and if it’s a good idea to switch from COD (cash on delivery) to net 30 or other forms of trade credit.
Second, work only with POs and always leave a paper trail. Paper trails will allow you to win disputes with customers complaining about details of the job such as tolerances, delivery dates, and payment terms. If the first and second strategies didn’t work of you couldn’t apply them, the only option left is to try to recover at least your costs. The first thing you can do to get your money from the customer is to try to make the job worth for them and try to solve the problem. Getting your parts back is also a good solution. If none of these strategies work, the only option left is taking the customer to a court, a solution that most business owners will gladly avoid.
Have you ever had issues with non-paying customers? How did you deal with them? Share your experience in the comments. Make sure you LIKE and SUBSCRIBE to our YouTube Channel for more metalworking videos!