Why Does Your Plumbing Company Have Non Paying Customers
March 17, 2020 - Customer Experience - 8 minutes
One of the hardest things plumbing managers and technicians alike have to deal with are non paying customers. It’s an ugly business any way you look at it, from the hit your cash flow takes when people miss out on payments, to the stress of waiting to see if they even intend to pay, and down to the hassle that is debt chasing.
You’re not the kind of person who dodges bills so it’s difficult to understand why some do so this is what we’re focusing on in this article: why does your company have to deal with non paying customers? More often than not, the answer isn’t “that’s just how some people are” and you’ll find that there are plenty you can do before it comes to hiring a debts chaser.
It’s especially important to highlight that most debts customers default on are not the complex, expensive plumbing works or the commercial contracts, but rather those which don’t seem like much. You know, the $100 boiler recurring service calls or the $50 check-up. But $100 here, $50 there and, before you know it, it all comes out of your profit margin.
Hiring a debt chaser for each would be a lot more expensive than the actual worth of said debts so you’re left having to write them off. The first logical step is to understand why non paying customers resort to this. These are the reasons why your plumbing company has non paying customers:
The no. 1 reason why your customers refuse to pay couldn’t be simpler: they can’t. Or, more accurately, they can’t do it the way they want to and the way they’ve been accustomed to for years now. Many plumbing businesses try to cut costs by avoiding card payments (the old “card machine is broken” excuse) or downright refusing to take cards (which the customer hears as “free job”).
It’s true that whenever you take a card payment, you have to pay a certain percentage of the transaction value back to the card operator (1% or less, most often), but that’s simply a cost of doing business, like fuel for trucks and office supplies, and you should include it in your service charge.
The issue here is that it’s your job, not the customer’s, to make it as easy to pay as possible. As far as they’re concerned, their leaky pipe is fixed so there’s no need to rush things. If you only accept checks or cash and they have neither on hand to give to your technician, they will delay the payment, even if they don’t have any bad intentions.
2. Disputing payments is a past time for some customers.
Every manager knows that moment when their plumbing tech calls and says something along the lines “The customer thinks it’s too expensive”. It always happens after the job is done, of course. Some customers will complain about any price, no matter how long it takes and there’s not much you can do about them, but what about those that are “sort of” right? The ones where your ballpark figure wasn’t even in the same neighbourhood as the final price?
At the start of each plumbing job, you should make sure the customer is on the same page as you regarding the price. It makes things easier for everyone which is why formal estimates are common in successful plumbing businesses. There’s almost always a couple of different ways to get a job done, whether it be with different parts or with different methods.
Many customers like to hear what their options are so it’s best for technicians to create multiple estimate options and send them all at once for approval or rejection. For example, you could send 3 differently priced quotes, offering a budget, standard, and high end service. This way, the customer feels informed and in control of the final price.
3. It only takes one wrong invoice to delay payment… indefinitely.
Sending the wrong invoice can happen to anyone and, in a perfect world, that wouldn’t mean that non paying customers can have their way. But more often than not, delaying an invoice can be synonymous with delaying payment… indefinitely. Even if the customer does end up paying, after all, your cash flow is most likely already under pressure and you can find yourself unable to pay vendors or employees, for example.
It’s especially easy when plumbing businesses prefer to mail or manually email customers, with an admin person responsible for sending out payment details and a breakdown of costs. If you’re going through a busy time, it’s all the easier to forget to send an invoice or to send the wrong one.
If the customer receives a bill that’s cheaper than the work they’ve had done, they will try to pay that and then argue that it’s the bill they received. All this adds up to the stress of being a plumbing manager so the best thing to do is to ensure you invoice customers the right way, every time.
4. Are you 100% sure you sent the invoice?
It’s never pleasant to consider whether non paying customers are your fault or your team’s. Things can get very busy in a plumbing company, as you very well know, and sometimes invoices can slip through and customers don’t get charged, leading to issues down the line when it comes to reconciling costs and profits.
Reacting negatively and sanctioning employees for what was probably an honest mistake is never a good strategy.
Instead, if your answer to whether your customers get invoiced every time is only 95% sure, then you need to ask yourself, as the plumbing manager or owner, what is the value of 5% of your jobs?
If you’re doing 100 jobs per month, each worth $100 (this is just for the sake of the argument, of course, you know how much you should charge for your services and it’s a lot more than $100) and you’re losing 5% of that, you’re missing out on $500 each month, adding up to $6 000 each year.
Not to mention spare parts that don’t get invoiced and you have to pay out of your own pocket for, fuel costs, and other overheads.
So you need to take that 5% very seriously and break down your invoicing process to see where the leaks are. More often than not, it’s the database or CRM system you’re using, where customers and work orders are not tracked accurately. Pen and paper plumbing businesses suffer from this most, as paper is easy to lose track of or destroy, meaning that thousands of dollars in profit could be slipping through your fingers.
5. Some people simply don’t want to pay (because you’re letting them).
There comes a time in a plumbing manager’s life when they have to deal with customers that downright refuse to pay. Whether it’s commercial clients claiming bankruptcy or residential jobs where the owner won’t answer your phone calls anymore, it’s bound to happen from time to time. As a manager or a technician, you don’t have any control over them. How you deal with this situation, however, is up to you.
Sometimes the reason why customers don’t want to pay is because you make it easy not to. When you send out your techs to do a job that involves expensive parts or takes a lot of skill, do you record the customer’s financial details? Do you take a deposit for the work or defer part of the total sum from their account?
If you’ve answered no across the board and said you trust your customers, they’re basically your neighbours, then you’ve got your answer right there on why your plumbing business deals with non paying customers.
Many debts and non paying customers come from the fact that plumbing companies don’t establish the correct processes to prevent these issues or are simply overwhelmed by the sheer volume of work they have to do.
A plumbing business software can turn payment into a smooth customer experience that makes you stand out from the competition, whether it’s through an online payment portal, an integration with a card reading service, or a user-friendly invoicing portal. If you’re looking for more ways to improve the customer experience, download your free infographic now!
Hi! I'm Cristina Maria
And I want to bring next-level strategies to the field service industry. When I'm not working on the best tips to grow your business, I'm on the lookout for a sci-fi novel to beat The Foundation.