Question
I find myself sending invoice after invoice and getting excuse after excuse as to why I have not been paid yet on a particular job. I always go above and beyond to get a job done and meet schedules. I feel like my effort and good will are being abused.
Today I will not show up on an install because I have two invoices (one 4+ months and one 2+ months old ) out unpaid to the contractor.
Where I feel I may be in the wrong is that I said as late as last week that I will do the job, knowing full well that if I have not seen a check by then, I will not show up. I asked for payment several times last week and invoiced again as well as left a voicemail yesterday asking about the payments. I never specifically told the contractor that I would not show up if no check was produced.
I will be getting an irate phone call today as this is a commercial job and a pressure schedule. I would like to know the best way to handle the phone call as now I will finally have their undivided attention. I want to come off professionally but make them realize that they can not walk all over me forever.
Forum Responses
(Business and Management Forum)
From contributor J:
I would have shown up to the work site, called the guy and told him "I am at your site, ready to start working as soon as you bring me payment for the due invoices."
Now that you have decided to go the no show route, do not argue with the guy, let him rave and rant and keep your cool. When you get a chance to speak, tell him "I am more than happy to work for you. I thank you very much for the business you have given me, but it seems you are having a problem fulfilling your payment promises for past work. I would greatly appreciate it if you could make those payments so that we can continue working together."
Whatever you do, don't argue with the guy - it will make a bad situation worse. If he continues to rant and rave, just tell him "I think it is best if we can talk when you are less upset" and hang up.
So, why did you do this? Were you hoping to force him to pay by letting the scheduling pressure build up before you sprung this on him? I don't think that's likely to help anything. Why didn't you say something like, "I'd like to keep working with you, but I can't do any more until you pay me for what's already done."
I think you need to be careful not to focus on your interpretation of what's going on ("I feel like my effort and good will are being abused") and just focus on the facts - payments are past due, and you will not do any more until payment has been made. Facts are indisputable. Interpretations are just going to get egos involved and make it into a pissing match.
"Mr. Contractor, I have been trying to get your attention on invoices that date back as far as 4 months, with the latest efforts being invoices sent last week, phone calls made, and a voice mail yesterday that went unanswered. I honestly didn't know what else to do to get you to realize the severity of the situation. This needs to be resolved. I cannot continue work on the project until at a minimum the invoice that is 4 months old is paid in full, and a date is provided when I can expect the payment. While I have enjoyed our working relationship and appreciate the business, I have payroll and expenses just like everyone else and waiting 4 months to get paid does not work going forward. So, I will be there tomorrow morning, and if there is a check for the full amount for the 4 month old invoice and date when I can expect payment for the 2 month old payment, we'll put this behind us and get back to banging it out, because I know you are under time pressure. If not, I am left with no choice but to pull out, which I don't want to do. I can also stop by today and collect the check, so we can start first thing and make up some time lost from today. Which works best for you?"
If he balks at that, he either doesn't have the money (which means you shouldn't continue working without getting paid) or he doesn't give a rip (which means you shouldn't continue working without getting paid).
Whether it is commercial or residential, realize that you have payment terms for a reason. If what they agreed to is 30 days, it's 30 days... but once that time period has passed, then is the time to address it. If you are working with them, the grace period you provide must be met or you stop work until it is. Otherwise, you will continue to find yourself with 4 month old invoices.
Four months later you are upset because they blew you off? Sorry, but it is your fault for letting them get away with it. Then you do another job and now another? You know the saying - fool me once, shame on you, fool me twice, shame on me. Didn't you get the hint that when the first payment did not come through after two months, maybe you were going to have problems collecting? Yes, you were taken advantage of, but it is partly your fault.
It made matters worse that they didn't believe I would no-show and were there to calm a frantic homeowner and address her concerns. Made them look pretty bad when I didn't show, but they took it out on me (and would stare blankly when I asked "When can I expect payment?"). Back charged me for made up stuff and ended up stiffing me for $1200 (after we'd had a couple of meetings about my charges). I suspect they would have stiffed me for the whole lot if I didn't have some cabinet parts from another job that I "traded" for their agreed upon final payment.
I'd already decided that I wasn't going to be working for them when I took this course of action. Pity we can't all get along.
As an alternative, they recommend the first conversation be about the immediate problem, e.g. "Payment on that job is due and I haven't received a check." If the problem persists or recurs, the next conversation is about the pattern you see developing, e.g. "I'm concerned there seems to be a pattern of significantly delayed payments." If the problem still persists, the third conversation is about the relationship, e.g. "I'm concerned that I can't trust you to pay me when you say you will, and that threatens our working relationship."
Later in the book, the authors specifically address the problems inherent in inflicting pain (e.g. putting the contractor in a difficult spot by not showing up when you say you will) in an attempt to force someone to behave the way you want them to. This sort of chest beating damages relationships (notice contributor G's story above), and tends to make the other party want to resist you instead of working with you to solve the problem. In your case, you've also damaged your own credibility, since that contractor can no longer believe that you will do what you say you will.
There's a lot more to it, and I'm only halfway through the book. But you might find it helpful.
If you are doing a big commercial job that takes 3 to 6 months to complete, you usually have 30 days to pay for materials. You have payroll to cover along with all your other business expenses. When you are finished, if you give them 30 days to pay, that is a huge gap between pay days. It often ends up that the little guys are financing the big guys and then are told they have to wait to get paid. I don't know what the answer is , but on a daily basis you see what hiccups in the system do to people.
If you buy a car, a house, or any other big ticket item, you have to pay first before you take delivery, or at least have the arrangements in place.
The main thing is - don't let it drag on for months. I am not a bank - I cannot finance someone else's business.
I had a conversation today with the shop crew and explained we are going to go after more residential and commercial work with the direct customer so that we can improve cash flow and take the "pay application time lag" out of equation of our cash flow needs.
When a banker looks at your books any given day and you show multiple clients out of their norm of 60 days or older, the majority will state "you aren't getting the money" and they don't look at it as viable accounts receivable. Right or wrong that's how they see it.
Apparently, you need the money. We all do. Somehow, some way you have to get off the merry-go-round of being the bank. Just say you can't carry them, period. You are not at fault - you just need to negotiate a viable solution.
I waited for the phone call and told the contractor this. "I have made every attempt to collect this money even as recently as yesterday and have seen no results. I do not have an unlimited amount of resources, so I have made the decision to preserve the resources that I have to service customers who are able to keep their accounts paid up. I will be happy to service you when your bill is paid up. I will then be able to treat you with my prior level of service. "
I was told to come by and pick up a check. I went to their bank and verified funds. Then drove to the job after lunch and got it done.
I have created a form letter laying out expected timeframe for payment (as stated on my invoices). As well as the levels of action versus time delinquent that I will be taking in the future. I have e-mailed, faxed, and mailed this letter to each of my contractors and now have put forth a written plan of action for any future late payments.
That should weed a few of them out, so I better get looking for some new customers! Thanks for all the responses. You guys are the best.
I have had great results with liens before. Was paid in two days on a 27,000.00 final payment that was 5 months late. I find that I have a level of comfort if the place where I am doing the work is a nationally known business, as they usually don't want the bad publicity from it.
Contractors are notorious for commingling funds from different projects and going broke gradually. You'd like to be in the office the day he gets his advance on the next job. I would meet with him before you sink anything more into a foundering ship. And I would be very cautious going forward.
"Oh I'm sorry Mr. Contractor. I didn't realize you were still in business. I thought maybe you were not because nobody has returned my calls, emails, faxes, etc. regarding payment on the work I completed for you. I would love to continue working with you. However, we have to get your account current before we can get you back on the schedule. Would you like to make that happen?"
The foregoing said, it's time to take steps to correct the situation and protect yourself, which includes stopping taking steps that make it worse. You haven't been paid yet - why would you be paid for future work?
If this guy is in a position where he can't pay, he may be headed toward bankruptcy. As a sub, this would, essentially, place you in the position of both loaning him money and settling for a payback of pennies on the dollar. At this point, I agree with the "show up, call up, and set the terms to start" approach.
