How To Handle Customer Billing Snafus

Q: I just discovered that for the past six months I have been billing a client half of what I should have been. Should I just include the total of the past due balance on his next bill or contact him first to let him know that it's coming? This client has been difficult in the past, so I'd rather not deal with him until I absolutely have to. My partner, on the other hand, thinks we should call the client and let him know what's going on before sending the bill. What do you think? -- Louis K.

A: I think your partner is right. If you think this client has been difficult to deal with in the past just wait until he opens your bill with six months worth of arrears attached to it without prior notice or a full explanation of the amount owed.

Sending such a bill is like dropping a bomb on the client's desk, and I guarantee you the fallout from the resulting explosion would end up landing squarely on your head.

So the question then becomes, how do you collect money that is rightfully owed to you from a client who has a history of being difficult? That's easy, Louis. You make your partner call him.

Seriously, whether the client owes you the money or not is a moot point. Yes, you made an accounting mistake, but if the client agreed to pay you a certain amount each month in exchange for certain services rendered, and you have been under-billing that client for delivering those certain services, the client owes you the money, period.

I have found that in situations like this it is always best to be proactive and face the problem (or what you perceive as a potential problem) as quickly as possible. This will save you hours of needless worry since most of the time the problem is not as big a deal as you imagined it to be.

There can only be three outcomes in this situation.

(1) The client will understand and pay you without argument.

(2) He will argue the point, forcing you to offer a compromise plan.

Or (3) He will flatly refuse to pay, forcing you to decide how far you're willing to go to collect what is owed. You should be prepared for either occurrence before getting face-to-face with the client. Remember this: In a business negotiation, he who is prepared the least gives up the most.

With that in mind, here's how I would handle the situation.

Arrange to meet the client in person. This is much better than trying to explain the situation over the phone because most people (including myself) tend to only give half of their attention when on the phone. The other half is usually focused on things going on around them while they're on the phone.

Once you're in front of the client, downplay the fact that an error was made (since the error did not negatively affect the service the client received). You might even poke fun at yourself over the situation (if the client has a sense of humor, that is). You should then politely ask if he would prefer to have the unbilled balance included on his next invoice or submitted as a separate invoice.

Then close your mouth, smile, and wait for him to respond.

You'll notice that you did not give him the option of not paying the bill, nor did you give him a point of contention to argue over. He should get the message that it goes without saying that he owes the money and needs to pay the bill, but being the wonderful person that you are, you are willing to let him decide how you should be paid.

I'm willing to bet that the client will choose option A or B and that will be the end of that. If this client has been difficult to deal with in the past, he may argue that since the mistake was yours, he shouldn't have to pay the bill. This is, of course, a BS argument (and I don't mean Bachelor of Science), but one that some clients might make just to get out of writing you a check.

As mentioned earlier, you should have prepared for this possibility before going in. If your business can survive without collecting the unpaid balance and you really want to maintain a relationship with this client, you should be prepared to offer a compromise that lets the relationship continue.

Without appearing to be caving under the pressure (this is the hard part) look the client dead in the eye and say, "Mr. Client, since I value your business and the billing mistakes were indeed mine, I'm willing to forego collection on the unpaid balance and start billing the correct amount with your next invoice, which, by the way, I happen to have right here?"

Granted, in this situation you are not going to collect on the past balance, but you are establishing the rules of the game for the future and you might even improve your relationship with this client. The money you forfeit today could lead to an increase in referrals, testimonials, and repeat business tomorrow.

Here's to your success.

Tim Knox

Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim serves as the president and CEO of three successful technology companies and is the founder of DropshipWholesale.net, an online organization dedicated to the success of online and eBay entrepreneurs.

Related Links:
http://www.prosperityandprofits.com
http://www.smallbusinessqa.com
http://www.dropshipwholesale.net

---

Putting The Serve Back Into Customer Service

Good service is easy to spot and hard-to-find. Mediocre service occasionally stands out but only because it's the cream-of-the-crap.Last week I had the opportunity to speak at... Read More

Putting The Service Back In Customer Service

The future of customer service is here. Technology has made seeking out support faster and easier than ever. But, has your digital age company sacrificed true service... Read More

What Every Manager Should Know About How to Learn from the Complaints of Customers and Employees

Listening to complaints, whether they're reasonable or not, is a part of every manager's job. Sometimes complaints can be overwhelming. However, when we take them in stride... Read More

Keeping Clients Happy Keeps them Coming Back

Whether you are a seasoned small business professional, or you have just opened your doors to new clients, your marketing strategy should not only involve bringing in... Read More

Astonish your Customers With These Customer Service Tips

Customer service today is getting worse. Win customers over and you build your business for life. Proven by the leader in the industry -- Nordstrom's. Nordstrom's customer... Read More

Customer Service Has Moved Toward Customer Care

As I waited for an answer to my VCR inquiry from a stereo company, the recording stated a "customer care" representative would be available shortly. At that... Read More

The Dissatisfied Customer

We, as small business people, naturally dislike complaints from our clients and customers. Because we're intimately involved with our home businesses, small businesses, or freelance careers, any... Read More

The Great American Customer Service Unawareness Campaign

Q: I'm so sick of you so-called business experts always saying the customer is always right. This is my business, not the customer's, so I'm the one... Read More

How CRM Software Works -- Creating Customer Satisfaction with a Click

When people ask, "What is CRM?" the literal answer is, "Customer Relationship Management," but that doesn't really convey much in terms of what all CRM does for... Read More

Adjustment DENIED

It's just a simple thing ? I bought a new set of shelves for my office. It wasn't a real problem, but when I got the shelves... Read More

Service Equals Performance Equals Service

Service can be described as a "performance" of some kind involving two parties whereby one party is the benefactor and the other party is the performing party... Read More

Customer Service and The Human Experience

Historically, customer service was delivered over the phone or in person. Customers didn't have many choices, and switching to competitors was cumbersome. Today, these methods are but... Read More

Listening: The Foundation of Communication

Listening is the #1 communication skill for leadership, selling, customer service, and even romance! The problem is, most of us don't listen very well. We're not trained... Read More

Over Delivering Provides Big Results

Over promising is a problem only when you under deliver. There are a number of ways that you can overdeliver to your customers or prospects, and as... Read More

Client Service as a Competitive Advantage

As someone who has been heavily involved facilitating strategic planning processes with organizations during the last 15+ years, I often find it somewhat amusing how people answer... Read More

In the Villa of the Sick Cat -- A Lesson in Customer Care

If you're a pet owner, you know the stress of having a sick pet and you know that having a great veterinarian is a wonderful thing. My... Read More

Oil Change Customer from Hell or Hoax; You Decide

Evacuation, "E-Vac" Oil System for Oil ChangingHow do most mobile oil change companies remove the used motor oil from the crank case? Well they "Evacuate it" or... Read More

Customer Service and Call Center Outsourcing, Whats The Buzz?

The buzz is all about customer service and call center outsourcing, also known as BPO (Business Process Outsourcing). According to Gartner, the outsourcing market in Europe has... Read More

Identify Your Silent Customer Service Message

With the growing number of people in every business sector, doing business requires creativity and ingenuity. The entrepreneur that understands the importance of thinking differently is the... Read More

Handling Customer Complaints

Even the best business will receive an occasional customer complaint. Knowing how to resolve these complaints will help you gain loyal customers who will then refer others... Read More

What Every Employee Should Know About How to Prevent Customer Service Conflicts

There are five techniques that have been proven to be effective in resolving, minimizing, and preventing conflicts. And by conflicts I am referring to any of the... Read More

Cultivating the Trust Factor

In today's highly competitive economy, it is difficult to maintain a significant market advantage based on your professional skills alone. Developing a trusting relationship with your clients... Read More

Invalid Excuses for Poor Business Results - The Weather

Note to Kmart: It wasn't about the weatherIn the 1970s Kmart was the retailer to beat. No matter what happened, they seemed to turn profit. Customers were... Read More

What Do Your Clients REALLY Think of You?

*********************************************Know Thyself - Socrates*********************************************I'd like to start this article with a test ?What do you get when you cross a Northern Canadian male, a 4x4 truck and... Read More

Tips for Curing Bad Customer Service

Bad customer service is everywhere these days - unmanned front desks, surly servers, clueless staff, employees talking on the phone, and managers who refuse to acknowledge a... Read More

Is Your Food Establishment Clean?

Is your restaurant, bar or hotel clean? I mean really clean. I don't mean "do you stick to all the rules and regulations?". I mean, do you... Read More