Mostly the people we deal with in business are honest and of good intention. However not everyone is like that.
I’m not talking about the slow payers that are just struggling in their businesses, but those who don’t regard being cooperative as important or can’t see why they should pay anyone unless they absolutely have to.
These people can be good business partners, though if you swim with sharks accept that you need to respect the nature of the shark. You don’t manage a shark, you just avoid being eaten. Even in a smallish place like Bendigo sharks are about. However the worst I came across was in my international dealings, where looking back on it this person always intended to defraud us.
There are some common traits I’ve seen in deals that go sour. The good businesses you deal with also have these same issues from time to time, but not regularly. It’s a case of asking yourself- is there a pattern in this? Some of the traits to be wary of are:
- A business proposition that is so good you can’t pass it up.
- Accounts being paid progressively later and rarely paid without you calling first.
- Each time the account is not paid there is a plausible reason and someone to blame.
- When you push for payment you will get a cheque…- for half the amount owed.
- Every month there is generally a dispute over the amount actually owing.
- Orders are often placed at the last minute, then changed when you are almost finished the work.
- They will offer to “look after” something you know is your responsibility, in an apparent act of kindness. (They rarely come through with it).
- They want more: stock on consignment, delivery dates are changed, Specifications are “updated”, all at your expense of course.
- They place an order which puts them over their trading limit, if asked they promise to pay COD. Once the goods are on site there is no cheque, and they get angry when you insist on one.
- You are accused of being difficult to deal with.
- They regularly threaten to pull out of the deal.
- You will hear statements like: “Your prices are too expensive”, “your late delivery has cost us that order“ It’s costing us a fortune to fix your mistakes.”
The overall tactic is to have you financially over committed at all times, and keep you off balance. They want you to feel you are responsible for the mess and trapped in it.
Some tactics worth considering:
- Pull out early if the relationship is not working for you.
- Chase accounts firmly, but politely (be wary of being conned into a dispute).
- Insist on payment of outstanding accounts; When they want it “now”, consider making it COD as well, and then closing the account.
- Seek legal advice before it gets out of hand.
Think hard about what continuing will cost Vs the cost of pulling out. i.e. What’s it costing in worry and hassle.
Have a coach or adviser, who is not emotionally involved, that can support you.For many businesses every bad debt wipes out the profit for 10 jobs.
The catch for most small businesses is they “can’t afford to loose this customer”. This is where a small business needs someone on your side who can work through the situation with you, and protect that hard earned income.
An initial phone inquiry to a Coach, Accountant or solicitor costs nothing, but may protect $1000’s.