When customers don’t pay

WHEN CUSTOMERS DON’T PAY

If you end up with a debtor in the small claims court, having good systems in place can make all the difference to the outcome, says Andrea Lovell.

Debtors can be a problem for companies of every size. There are some customers who request your services with no intention of ever paying their bill. It’s almost as if they think they are entitled to your services free of charge, or at a rate they can decide on. Chasing debtors is more important than ever in these unprecedented times.

My office manager had been dealing with a customer for several months, trying with no luck to get her to pay her bill for just under $1,300. I stepped in and still no luck, so decided the best option was the small claims court.

I attended with this customer, who thought she could choose what she wanted to pay, and with her handyman partner, who thought he knew more than our plumber did.

My customer got to say her part as to why she thought she shouldn’t have to pay her bill. Then she brought her partner in as a witness so he could add his two cents’ worth. I always find it’s best to let people have their say before commenting and to note anything down if you disagree or want further information. After they had finished, it was my turn.

It was not my first rodeo. I have had to take other customers to small claims— some who turn up and some who don’t. On the occasions when the customer hasn’t turned up, I have had the opportunity to talk to the court-appointed referee about things that could help us in the future (not that we have ever lost a case). It is helpful information, ensuring that we have procedures in place for when we do need to do go to court.

I handed our customer and the courts additional proof of work, GPS to prove locations and times, digital purchase orders showing orders we had done at suppliers, work notes, photos, and copies of notes from our system with all correspondence we had from the customer, along with phone conversations noted on our system with dates and times.

The courts said it was a very open and shut case and were happy to make a ruling in favour of our company. At this point, our customer started saying she had no money. We have always been happy to do payment plans for customers, as long as they can agree on a weekly amount that suits both parties. It just frustrates me when some think they can get away without paying at all.

About the author: Andrea Lovell is Office Manager at Heron Plumbing in Auckland. She is Co-Director of the company with her husband Dale Lovell.

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