customer relations
Tom Hallissey No Comments

Payment collection is a part of the job many contractors dread. Clients can be difficult, slow and evasive regardless of the speed or quality of the finished product. Contractors who have consistent success with collecting payments follow a five-point customer relations strategy, which anyone can learn.

How to use Customer Relations to Collect Payments

1)      Research Potential Clients

As a contractor, you usually have the option to say yes or no to a client. Smart contractors vet their clients before signing any contracts.

You can start by checking their credit. If you want to go more in depth, you can look at who they have done business with in the past, or even check their references.

2)      Establish Firm Policies

In order to get paid on-time and in-full, contractors, such as carpenters and painters, need to establish their own set of policies. A lack of firm guidelines often leads to payment disputes.

  • Set a billing schedule
  • Develop invoicing procedures
  • Create a late-payment policy
  • Define substantial completion
  • Specify how disputes will be handled
  • Set a payment due date
  • Establish an interest rate on past due balances

3)      Sign Written Contracts

A signed, written contract is your best protection in the event of a dispute. It is what establishes the terms and conditions of a work agreement, such as payment terms and due dates. These legally enforceable documents are very effective in the collection process.

You will also need to do the following in case a payment dispute arises:

  • Take before and after photos
  • Collect receipts for expenditures

customer relations

4)      Send Invoices

Communication is crucial in customer relations.

When creating invoices, it’s also smart to itemize all of your work. Whether its parts, labor or another category, write a clear description for each charge.

You should also instruct clients on who to pay and how to pay, such as check, credit card or cash.

After you have sent out invoices, keep track of your payment deadlines. You are entitled to charge late fees and interest on any invoices submitted after the deadline.

5)      Remind Clients to Pay

Unfortunately, not every client will make their payment deadline. You can follow this general four-step process to collect payments:

  • Send a reminder letter
  • Give the person a call
  • Send a demand letter
  • Call a collections agency

Whether you live in California, New York or another state, becoming educated about applicable laws will also help you better avoid payment disputes.

customer relations