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BUSINESS ADVICE
AVOID PAYMENT DISPUTES AND
SPARK YOUR CASH FLOW Roger Mendelson*
One of the most common issues affecting electricians is payment disputes with customers arguing over the cost of the work once the work has already been completed.
T
he problem with disputes, aside from being time-consuming and costly to a business, is that they are often a tactic used by bad payers to delay or completely avoid paying for the work. A large portion of Prushka’s more than 52,000 SME clients with outstanding debts are electricians, and they have cited this as a growing trend and concern. In some cases, the disputes are genuine; but in other cases, they aren’t — and that is when they negatively affect your bottom line. When a dispute is raised, it invariably means that your account is either not going to get paid at all or will only get paid after a fight, regardless of who is in the wrong. There are, however, simple steps you can take to significantly reduce the likelihood of a dispute, enabling you to recognise a genuine dispute from a dubious one.
Have a clear mandate for the work to be completed One of the most common reasons bills in the electrical industry are disputed is due to a problem arising during the job which needs additional work. In some cases, the customer is not made aware of the changes and is therefore surprised when the final bill arrives. The nature of the job means, despite quoting a price before commencing work, you never really know exactly what the job will entail until you get into it. You may uncover some unforeseen work that requires urgent attention. Unfortunately, this situation cannot be avoided; however, it is the worker’s or business owner’s responsibility to drive the communication. Firstly, obtain clear and concise information from your customer about the works which are required. This will give you an idea of
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what they expect to be done and what would be considered ‘out of scope’ and subject to a dispute. Furthermore, for immediate or emergency work, it’s important not to simply respond to a request for service without first examining the issue and providing a cost estimate. Be proactive in seeking a solution that the customer is happy with.
Provide a detailed quote Once you have reviewed the job, you’ll be able to provide a clear quote which outlines not only the work you will be undertaking but also what won’t be covered. If there are areas of uncertainty which will only be fully understood when the job commences, ensure that your quote fully covers for this eventuality. Incorporate your trading terms in your quote, clearly detailing the customer’s payment obligations. This will protect you from any legal challenges should your customer dispute the payments. An important clause to include in your trading terms is providing that, in the event of the customer falling into default, they will be liable for all collection costs incurred by you. This enables you to recover unpaid accounts without worrying about additional costs. The customer must sign your quote before you commence work. This provides you with a written guarantee that the customer agrees with your terms and will adhere to them. If not, they have accepted that they are liable to the consequences. Do not begin work until they have signed.
Know who your customer is It sounds strange, but it is critical to know who is ultimately responsible for the work being done, as they are the person responsible
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