Create a Credit System
Kathleen Ostrom, president, C.N. Ostrom & Son, Inc., in Excelsior, MN, says on top of communicating with her clients on a regular basis, her company also “works” with the client. “I always try to give the client a ‘credit’ for something,” says Ostrom. “It may be as little as $6.30 from an allowance. If there is a larger amount still owing, I will make up a credit, even up to $150 against something that I thought would cost more but we were able to do the job for less. It helps your client think that you are really on their side and looking out for their money.”
Closing Pomp and Circumstance
Don Strong, president of Brothers Strong, Inc. in Houston, says he makes a big deal about turning over the project to the client. “When I call to make the appointment I explain that I will be collecting the final payment and is there anything I need to bring?” says Strong. “I make a big deal about turning over the project, including all paper work. I make it clear that anything else will be a warranty item and they can relax in terms of future issues as we give a two-year warranty.”
Collect It Upfront
Donna Shirey of Shirey Contracting in Issiquah, WA, said her company had a problem collecting the final payment and decided to do something about it. “We now take a percentage of the total estimate as a deposit,” says Shirey.
Shirey says, depending on the size of the job, she will hold a 20% deposit as a part of the final payment. “Our goal is to have a very small final payment amount so the client does not have us over a barrel. There is nothing worse than being held hostage because a client owes us a substantial amount of money when the project is complete.”
Avoid the ‘Toxic’ Client
Finally, learn how to fine-tune your ability to detect and avoid the “toxic” client. Thompson says to watch out for the picky customer. “I usually see this in the very beginning and walk away. Sometimes choosing your customer is important and something you learn to identify. A lot of times it's the picky customer that will stiff you, so if you suspect a picky customer watch out.”
Thompson advises remodelers to make sure the client has achievable expectations. “Make it clear what will be performed and the payment terms,” says Thompson. “If they start off with bad paying habits, beware. This is another sign of a customer that may want to stiff you. Again, if you get in this situation you need to communicate what the payment terms are and what is expected from them.”
‘Contracts and Liability, 5th edition’ available at BuilderBooks.com
Reduce or eliminate litigation costs by learning how to write better contracts from the start with "Contracts and Liability, 5th edition," available at BuilderBooks.com. "Contracts and Liability" provides builders and remodelers with concise, informative insights into creating effective contracts. Topics include warranties, environmental issues, inspections and contracts of all types. This latest edition also includes sections on mold, arsenic (in drinking water and pressure-treated lumber), notices and disclaimers. To view or order "Contracts and Liability, 5th edition," online, click here, or call 800-223-2665 to order.
Remodeling Publications and Resources Available Through BuilderBooks.com
BuilderBooks.com offers a variety of remodeling publications online. To view or purchase these publications, click here.
University of Housing Offers Courses and Designation Programs
The NAHB University of Housing offers a variety of business management courses and professional designation programs that set builders and remodelers apart from the competition. For a complete list of current offerings, click here.
[ Go to Top ]