Construction dispute over payment.
Firstly (this is one of 3 reports on this subject),
what causes a payment dispute with a domestic customer?
Things start out so well.
Everybody likes each other. Mrs Smith even makes you cups of coffee and doesn't mind if you have to start early to avoid the heat of the day. She even shares a joke with you most days.
Now, you haven't been paid anything other than your deposit and 1 progress payment; you've outlaid for materials and labour; Her lawyer daughter-in-law is threatening to sue you for $140,000.
Everything's gone wrong!
You and your client relationship.
As strange as it seems, this could possibly be the foundation of your problems. You have allowed the connection to get too close.
Mrs Smith is your customer, not your friend.
You have been engaged to carry out a defined scope of work for a defined price or rate - this is not a 'love job'
"Don't I have to get along well with my customers Paul?"
I hear you; and yes, you do.
But by letting the relationship cross the line into friendship you invite poor business practices into your work that will cause a payment dispute.
Keep the relationship friendly, but business-like at all times.
Have you ever been told they can’t pay you because the couple are now getting divorced? Has a client ever cried her heart out to you, you feel sorry for them, and then back away from expecting payment?
This happens because the tradie has allowed the relationship to become personal.
You must insist on payment, no matter what. After all, if it was you getting a divorce it wouldn't release you from your responsibilities under their contract would it?
Too close client relationships can affect a trade or construction dispute over payment.
What about variations?
Now, because Mrs Smith is such a nice person, you have most likely done additional work for her at little or no cost.
Maybe you have bought her some materials at trade prices to be nice (no profit in that for you),
or completed additional work but not bothered to get it signed off as an 'extra' because it seemed too formal for someone so nice.
These are key errors
The biggest cause of payment disputes in domestic work is variations.
It is very common for clients to get carried away with extra work orders, only to have everything come crashing to earth, when you invoice them.
It's at this point they will pick a fight with you and try to find some reason not to pay.
Alleging problems with your workmanship
is a common way
to avoid payment.
To keep this under control, do the following:
Always quote additional work and get it signed off by the client.
I really mean, at every point of variance from your original quote.
Never go ahead with the extra work, without her signature.
Avoid 'do and charge’ methods for domestic variations.
Your client will always underestimate what it costs, so get it on paper beforehand (or at least an agreement to an approximate maximum cost)
If it's a longer job, everytime you give her an invoice specify clearly the original job quoted price + the value of the extras and what the total job value will be.
That will be a key defence of yours, were the Department of Fair Trading get involved.
Variations will either make you more money, or lose you everything. So keep them under control, and keep the relationship ‘business-like’.
Till next time,
© Paul Johnson 2013
Missing Piece Marketing