Small,Business,amp,#58,How,Han business, insurance Small Business Q&A: How To Handle Customer Billi

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Q: I just discovered that for the past six months I have been billing a client half of what I should have been. Should Ijust include the total of the past due balance on his next billor contact him first to let him know that it's coming? Thisclient has been difficult in the past, so I'd rather not dealwith him until I absolutely have to. My partner, on the otherhand, thinks we should call the client and let him know what'sgoing on before sending the bill. What do you think?-- Louis K.A: I think your partner is right. If you think this client hasbeen difficult to deal with in the past just wait until he opensyour bill with six months worth of arrears attached to it withoutprior 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 wouldend up landing squarely on your head. So the question then becomes, how do you collect money that isrightfully owed to you from a client who has a history of beingdifficult? 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 compromiseplan. 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 payingthe 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 andthat will be the end of that. If this client has been difficultto 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 writingyou a check.As mentioned earlier, you should have prepared for this possibilitybefore going in. If your business can survive without collectingthe unpaid balance and you really want to maintain a relationshipwith this client, you should be prepared to offer a compromisethat 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 [email protected] For information on starting your own online or eBay business,visit http://www.dropshipwholesale.net