Cutting off someone’s service due to non-payment is one of those rarely needed, but often necessary business tasks and I really don’t enjoy it. This is not a skill they teach you in business school, nor is it something that I can easily delegate to someone else as the CEO of a small business. Frankly, it’s a means of last resort to get the customer’s attention and/or cut our business losses on services already rendered. I’m by no means perfect, but I do trust people. When someone signs a contract with our company, I assume they are going to fulfill their part which entails an exchange of consideration (something of value) – money. Although I’ve had formal training in business law, I’m not a lawyer so we won’t explore the legal issues of contracts in this article.
Recently I had to turn off the website of a local construction company. Despite a written contract, a paper trail of written correspondence, and phone notes with their office manager – nothing got their attention. Even though I wasn’t legally obligated to do so, as a means of last resort I sent a formal letter in the US Mail at the end of last year. I got no response. Not wanting to start the year off on a bad footing, I decided to take no action in January. We turned off the website in mid-February. It took the client about a week to figure out their site had been turned off.
The office manager reached out to us via phone thinking it was a technical issue. I handled the issue personally to let her know it was a disconnection due to non-payment. I politely reminded her of our past discussions and emails, which she acknowledged and said, “I’ll speak to the owners.” I told her that I’d send another email with specific terms for turning back on the website. What happened next caught me off guard.
When I eventually spoke with the owner on the phone, he completely transferred the blame to me. I won’t go over the entire 30-minute phone conversation, but the essence of it was that it was my fault. He admitted not reading the contract and even forgot he had a copy of it (despite me sending him one before the call). With a straight face, he pretty much told me that he didn’t have time for emails or to talk on the phone (he was the one who called me) – he just needed his website up. I told him we could have his site back up in 10 minutes if he agreed to the terms of restoration – which was paying for the services we had already provided. He balked at that saying it was my fault that I didn’t try to invoice him and collect earlier. Huh? We had invoiced him several times via email and through the mail. The call quickly devolved from there as he began to use foul language. I did raise my voice a little when that happened, although neither party yelled. So let me get this straight – he forgets about his contract, ignores all forms of communication from us, we turn off his website, and now it’s my fault. Yeah, right.
Last year, a similar thing happened with a prominent local attorney. When the attorney alleged that he had not been properly notified about his past-due invoices, I sent him a screenshot of a text message he sent me indicating that he was aware of the situation. The truth hurts. The attorney did not like the screenshot and the dialog quickly ended. Over the years I’ve learned to keep good records and notes.
One of my most interesting disconnections was for a long-standing client of mine who was engaged in engineering consulting. When economic times were good, he was one of my best clients. Due to some misfortunes in his business (we all have them), he lost some key employees and fell upon hard times. Thinking that our services were non-essential, he stopped paying us. I reached out to him offering to delay invoicing or renegotiate terms – he ignored those offers. Eventually, we disconnected his website – which caused further harm to his business. Folks, if you don’t have a website you’re invisible. I know that and it’s why I don’t like turning off websites. Every business needs a website. Eventually, my client came clean, apologized, and we negotiated mutually acceptable terms for reconnection.
Same client and it happened again this past fall. He called me on the phone requesting emergency support (while I was on vacation). I told him we could help, but that he needed to pay his past-due invoice. At this point, he was only one invoice past due. The client told me he had to get a new credit card, but that he should have it within a week and asked if I would go ahead and help him, knowing that he would pay soon. I trusted him and helped him (while on vacation – did I say that already?) We never got paid. All calls, text messages, and emails were ignored. After three months, I sent a notice of service cancellation and we disconnected his site. I still haven’t heard from him. Yes, I know the old adage, “Fool me once, shame on you. Fool me twice and shame on me.” Well folks, shame on me.
Don’t get the wrong impression about the frequency of service disconnections, because this doesn’t happen often. In over 20 years of business, I’ve probably had to disconnect less than 10 customers. That’s not bad, but even one disconnection is too many. No one likes a service disconnection – whether you’re the one being disconnected or you’re the one performing the disconnection. This is especially true of essential services like utilities. I maintain that a website is an essential “utility” for a business. So what can be done about situations like this? Here are some tips learned the hard way.
- If you are the person behind in your bills, don’t ignore them. Attempt to renegotiate new payment terms. As someone who both pays out money and receives money for services, the attempt is appreciated. During the last recession, I had to swallow my pride and ask for grace on some of my financial obligations. In almost every case the other party was willing to work with me because I was willing to reach out and ask.
- If you are the person trying to collect, make sure your notes are in order. Memories get very selective when it comes to money. The other party may try to get you to prove they owe you money. This becomes even more challenging when there’s a leadership change at your client’s company and they have no idea who you are.
- Both parties should be polite. There’s no reason to utter profanities and pitch a fit. I’m shocked at how many so-called business leaders think they can act that way. It’s okay to disagree but do so professionally.
- One of the trickiest things to handle is what I call “contract drift”. This is like scope creep on a project, but related to a business relationship that has drifted away from the original terms of a contract. Drift typically happens during long-standing business relationships in which neither party feels like a new contract or contract amendment is needed to document changes. Problems normally don’t happen until bills aren’t paid or there’s a leadership change. When in doubt, at least document changes in an email for future reference.
- Keep your legal options open. If the size of the dispute is big enough, you may want legal advice. Good lawyers will advise you on when it’s right to take legal action and when you should just write off a bad deal. Not all disputes are worth fighting. I recently had to write off a large debt from a client at a national company that went out of business. I decided it wasn’t worth my time to wait in line with all of the other creditors as the courts decided how to dispose of my former client’s assets.
- Most service disconnections do not end well for either party. If it gets to that point, both parties may feel trapped and like there are no options. If you’re the one trying to collect debts, expect the client to be defensive and in denial. They may try to transfer blame to you, as my clients did above in this article.
- Some people are not rational. They do not care what’s in writing, they feel a certain way and expect you to feel that way too. “You should have known.” “That’s not fair.” “That’s not how I remembered it.” “I feel that I should have gotten such and such regardless of the contract.” You can try to sympathize without agreeing with what’s being said. Some people just want to be heard. After hearing them out, you may be surprised that they feel heard and then agree to whatever you’re proposing as a resolution.
About all else, don’t lose faith in humanity. Regardless of whether you’re the one who owes money or the one trying to collect, understand that some people are not going to work with you to resolve disputes. Let go of it. Yes, you’re feeling aggrieved, but realize not everyone is evil. Most people are good and trustworthy. Keep the moral high ground and move on. There’s a right way to end business relationships – always try to do the right thing.
[Joe Domaleski, a Fayette County resident for 25 years, is the owner of Country Fried Creative – an award-winning digital marketing agency located in Peachtree City. His company was the Fayette Chamber’s 2021 Small Business of the Year. Joe is a husband, father of three grown children, and proud Army veteran. He has an MBA from Georgia State University and enjoys sharing his perspectives drawing from thirty years of business leadership experience. ]