How to deal with a customer who shorts you?

[GWhunter]

As some of may remember I started a small light excavating and mowing biz. I recently left my day job for sanity reasons (another story). So I figured that I could make a little extra with the biz. This year the northeast has had a ton of rain making it diffucult for me to take on much work. I felt it unfair to commit to jobs I couldn't find the time to do. So I was very selective on the work I picked up. I took on a large harley raking job of about 4+ acres. The homeowner is a friend and former co worker. I began the job several months back and with the weather wasn't able to get back to finish. I did complete one area and had advised bringing in some quality top soil before planting. He opted to just throw down some cheap seed mix. So I figured whatever it's his yard not mine. So I arrived today to finish the larger section. Now I explained that to get the area as flat as the first he'd need to bring at least 30 yds of fill. The soil in this area was a bit better but I also advised him to get his soil tested since this area gets a bit wet in the spring. He chose not to bring in any material and let this area just grow wild. So I had to run my rake over the area and ended up with tons of grass and weeds all over the place. I still was able to get the job done and he was happy with the results. I did a good job but if it were my yard I would have done it differently. So I told him $85 an hour complete. I arrived at 10am and left at 4, I did have a 30 min lunch which his wife made for me. And I lost a bolt for the rake and he took a ride to hd and picked one up for me. So I figured I'd discount him a hour for the lunch and repair. At the end he comes over with his wife and thanks me. Then he hands me $380 and ask if it's ok? So I'm like what time is it? And said I got here at 10am. They really don't say much, so I'm like ya I guess it's fine since I didn't know it was 4pm. Now keep in mind he is a friend but I had over an hour ride plus tolls. Now am I over re-acting or being taken advantage of? I didn't really think it was and issue until I found out what time it was. Should I have called him back and explained he shorted me.
Going forward should I be rigid on my prices and services? I'm looking to upgrade to a bigger tlb so I can be more productive with my limited time. I'll be going back to work in the power industry before the winter hits but I still would like to make this venture work. I'm sorry for the long windedness of this post. I also have insurance to pay for.

Thanks
Matt:confused:

[AWJ Services]

That is why I do not do jobs by the hour.
You need to agree on the price before you start and if you decide the hour route is the path you will take then at least keep up with your time.
He asked if 380 was okay?
You accepted it and did not say otherwise so you actually shorted yourself not the other way around.

Don't blame poor buisness practices by you on him.

Lesson learned.

[P.Services]

heck with the $380 lets hear the story on how mowing drove you insane!? that sounds way more interesting. i to am nearing that point. need a bam bam suit soon (few people will get that joke)

[YellowDogSVC]

I work a lot by the hour for existing customers. It's no sweat to discount them if I finish early and they appreciate it. I wouldn't fret. Live and learn and just keep track of your time better. I have been shorted a few times and a couple of those times it was my fault for not adding correctly and another was just a jerk.. I spent more time worrying about it. My time is worth something and fretting over it doesn't bring it back. If you did a good job and they were happy and it was an honest mistake, then you will get more work or referrals. I have had good customers who shorted me on sales tax and I had to go back and ask 3 or 4 times to get the money. They understand...most people just aren't in a hurry to pay and that's alright if you know it's going to be like that. I have also found that many people can't add... ;) so you may want to tell them to wait for you to figure the invoice before writing the check. Come to think of it, almost every time a check is "pre-made" either it is short or they overpaid...I'll accept a tip but I always make sure they meant to do that! :) It'll work out..

[J. Peterson Grading]

Thats why I don't go by the Hr. You need to tell them what its going to cost up-front. Friend or not.

J.

[93turbo]

I always go by the hour I find its easier then having to try and for see any problems. I tell them how much per hour and about how many hours I think it will take given no problems arise. When I'm done I figure up my bill and tell them how much don't let them figure it up for you that way if the figure is wrong you only got your self to blame and you can make it right if you over charged or live with it if you undercharged. I also ask when I'm done if the work suits them and if the price sounds fair that way if they have a problem or question we can go over it so everyones on the same page. I have never had anyone tell me it was too much. Most of the time they ask if thats enough or they just give me a tip. I tell them thats a fair price for me and thank them for the work. If anyone did complain about the price I would simply go over my costs and ask if they got any prices from anyone else which takes away from it being my "fault" they have to pay so much. Plus I know in the future I may want to stay away from these people or make double sure they understand how much its gonna run

[AWJ Services]

I always go by the hour I find its easier then having to try and for see any problems. I tell them how much per hour and about how many hours I think it will take given no problems arise. When I'm done I figure up my bill and tell them how much don't let them figure it up for you that way if the figure is wrong you only got your self to blame and you can make it right if you over charged or live with it if you undercharged. I also ask when I'm done if the work suits them and if the price sounds fair that way if they have a problem or question we can go over it so everyones on the same page. I have never had anyone tell me it was too much. Most of the time they ask if thats enough or they just give me a tip. I tell them thats a fair price for me and thank them for the work. If anyone did complain about the price I would simply go over my costs and ask if they got any prices from anyone else which takes away from it being my "fault" they have to pay so much. Plus I know in the future I may want to stay away from these people or make double sure they understand how much its gonna run

Before the job I give my customer an "ESTIMATE" and then after the job I give them an "INVOICE".

If I run into unforseen working conditions the customer is notified and a "CHANGE OF WORK ORDER" is presented to them and the "ESTIMATE" is then adjusted.
After the work is completed an "INVOICE" is presented to them that reflects the work completed.

I always discuss the possibility of changes in the "ESTIMATE" before hand and usually cover all of my bases ahead of time so that I do not have to discuss with my customer what I will charge after the fact.

[GWhunter]

That is why I do not do jobs by the hour.
You need to agree on the price before you start and if you decide the hour route is the path you will take then at least keep up with your time.
He asked if 380 was okay?
You accepted it and did not say otherwise so you actually shorted yourself not the other way around.

Don't blame poor buisness practices by you on him.

Lesson learned.

Wow a bit harsh awj, We agreed on $85 an hr before I started. I clearly explained the details, when I finished the first section he insisted he pay me for the day. His math skills were exact then. Yesterday was 96 degrees an I'd been raking on an open station tractor for 5 hrs. So I was full of dirt and dust and didn't have my cell phone on me for the time that's why I asked them. I assumed it was an hour earlier since I clearly stated my price. I did ask several times if they were happy with the results and my pricing.

And for Picasso it wasn't mowing that drove me nuts it was my day job in the power industry. The mowing is actually stress relief for me.

Matt

[AWJ Services]

Wow a bit harsh awj, We agreed on $85 an hr before I started. I clearly explained the details, when I finished the first section he insisted he pay me for the day. His math skills were exact then. Yesterday was 96 degrees an I'd been raking on an open station tractor for 5 hrs. So I was full of dirt and dust and didn't have my cell phone on me for the time that's why I asked them. I assumed it was an hour earlier since I clearly stated my price. I did ask several times if they were happy with the results and my pricing.

And for Picasso it wasn't mowing that drove me nuts it was my day job in the power industry. The mowing is actually stress relief for me.

Matt

After you have been in buisness for several years let me know if you still think I was harsh?

[GWhunter]

After you have been in buisness for several years let me know if you still think I was harsh?

Look I did learn a lesson for sure. But I don't think in any way was I unclear on the cost. I explained that harley raking was generally an added cost on top of the tractor and that I was pricing it low due to our relationship. Don't take my reply the wrong way I appreciate your constructive critisizm.

Matt

[AWJ Services]

Look I did learn a lesson for sure. But I don't think in any way was I unclear on the cost. I explained that harley raking was generally an added cost on top of the tractor and that I was pricing it low due to our relationship. Don't take my reply the wrong way I appreciate your constructive critisizm.

Matt

We all have went through what you you are going through and most of us have made similar mistakes as well.
I have been self employed for over 13 years and know every trick in the book to screw myself out of money .LOL

Here are a few things I highly recommend to everyone.

1.Never price a job or total a job in front of the customer.

2.Never work by an hourly rate for a Homeowner.

3.Keep accurate records of time, mileage and expenses so that you can accurately bid a job.That includes time spent selling the job, collecting for the job and time on the phone.I talk to many business owners and they have no idea what they are actually making while working.

4.If you work for Homeowners present yourself professionally, estimates need to be very thorough and always be the first Contractor to bid if possible.

[Gravel Rat]

I guess with this one you are going to eat the loss.

What I usually did was when the homeowner would ask how much I would walk to the truck write up a bill.

When pricing a job I would let the home owner show me what they wanted done again if they ask what it will cost I would say I would get back to them.

In the disposal business if you don't get the price high enough your going to loose money. I don't loose money in hauling price but if I don't estimate the landfill fees high enough I will loose 100-200 dollars.

The problem I have is a homeowner squeeling about prices before you even start. Once they start that crap I give them a price take it or leave it. I'am not friendly about it either I can't stand people that bicker over prices asking for discounts.

I work by the hour always have and most contractors here work by the hour unless its a job that is common. Homeowners usually pay for a 8 hours of machine time even if its only worked 6 hours. Trucking is all paid by the hour the homeowner gets the bill for that. Some jobs they can have 1000 dollars in trucking costs not including the cost of material being hauled.

[NEUSWEDE]

Never accept payment upon completion without invoice. Always wait till you can have your head straight very hard to tell a person more in person when they are giving you money. That is why I always refuse and tell them Ill send them an invoice for my records, because you'll always short yourself.

As far as hourly it is all about preference, I don't simply because there is be profit to be made when you don't let them know your pricing and if you give a friend a deal hourly they will tell people they refer to you and then starts a long line of trouble of being shorted.

If you do hourly still give a written estimate that they sign with an estimate of how long it will take with an estimate of the grand total because then you give them an idea of the total because some people think things don't take as long as they actually do.

Just my $0.02 from my experience over the years of living and learning the business.

[RockSet N' Grade]

Welcome to the wonderful world of equipment!! This is just a gentle taste of things to come! Equipment is expensive and expensive to run. Especially with friends - write it down and get it signed. I don't think AWJ is being harsh at all.......that is all real. Wait till you get a few pieces running out there and find that this "shorting" is the rule rather than the exception or that once you are gone from the site and leave an invoice it gets paid 90-150 days later, if at all. This is a tough business, especially with "happy home owners". After doing this for a while you will see the paradox and humor in my term of "happy home owners". Write it down, get it signed, get a deposit.

[GWhunter]

Thanks guys for all your replies. I'm glad to see I'm not the only one. It will serve a valuable lesson on future endevors. I'm going to be uprading soon and realize I can't aford to take less than fair market valvue for my work. I totally see the logic in the invoicing after method I just like to have the money when I'm done so I actually get paid. This 30-90 days stuff is just nuts. Were not running multi billion dollar corporations here. Small business need cash flow to survive. I was talking to a local guy who's got a similar operation and he was saying the same with homeowners. We got talking about harley raking and the great results. But the reason no one else runs them is because the homeowners don't want to pay for the service. So the contractors don't want the 9k overhead of the rake. I fully understand it now.
I just don't get the mentality behind it. I'm a homeowner and would never dream of pulling that stuff.

Matt:dizzy:

[ron mexico75]

How to deal with a customer who shorts you?

You ever watch The Soprano's? Watch and you can give that customer of yours several options.

[Gravel Rat]

Wait till you get a homeowner that is on the never never plan ie they don't plan on paying you. We have lots of those they are usually new comers to the area think they can hide. Once they have a reputation to be a no payer or a tough customer they are screwed.

Usually what contractors do is see the person in the grocery store and ask for the money. Make a scene and embarass the homeowner. Or you make visits to their house early in the morning demanding money.

You get a feeling from the homeowner before you are going to get screwed. If things start going funny right from the beginning stop the job. What my brother does is ask for the money for the materials so if they do stiff you your not taking a loss out of your pocket. You are for your time but atleast your not getting stiffed for the material.

I have done that too if they say no I say well find somebody else. If they are not willing to pay you know they are going to be paying their bill.

Some companies and munis pay every 90 days that hurts for small companies that need the money.

I may have turned away quite a few jobs but I didn't get screwed while the person they hired did.

One thing about the disposal business like I do if they refuse to pay I dump the load in their driveway. I demand payment from people that are new to the area.

I like to work through the general contractor if its a construction site clean up they pay me I don't deal with the homeowner. I deal with alot of senior citizens so I adjust my rates etc.

What many building contractors do now is have the homeowner set up a account at the buidling supply and the homeowner buys the material for the house.

You get a dead beat payer make their life miserable. Phone them once a week, make a visit to their house, slap a lien against the property.

Many excavation contractors here say the worst part of the business is getting paid. It is a 24 hour job fighting homeowners to get paid.

Like I said its the new people especially the ones from a city that think they can get away with not paying their bills. They soon find out they get black balled everywhere even the grocery stores. Personal checks are not allowed for these people it is cash,credit card or debit card.

Lots of fun :laugh:

[RockSet N' Grade]

I like that Rat........."the never never plan".........

[Scag48]

That sucks man. Let me assure you, this will not be the last of your problems in the business. There will be plenty more to come and they will be much more serious in nature. The point is, you learn from these mistakes, hopefully future mistakes won't put you out of business,

By my count, you worked for 6 hours, decided to discount the guy for 1 hour between lunch and his parts run. So at $85/hr. for 5 hours is $425. Sounds like he only screwed you by $45, if that chaps your hide, I'd get out of this biz right now.

Rule #1 - Agree on a price before you start. Working by the hour is pointless. Give an estimate before you start, that doesn't bind anyone to any price, it's simply an estimate.

Rule #2 - Don't work for friends. Unless you're donating your time, it's just never a good idea.

[GWhunter]

That sucks man. Let me assure you, this will not be the last of your problems in the business. There will be plenty more to come and they will be much more serious in nature. The point is, you learn from these mistakes, hopefully future mistakes won't put you out of business,

By my count, you worked for 6 hours, decided to discount the guy for 1 hour between lunch and his parts run. So at $85/hr. for 5 hours is $425. Sounds like he only screwed you by $45, if that chaps your hide, I'd get out of this biz right now.

Rule #1 - Agree on a price before you start. Working by the hour is pointless. Give an estimate before you start, that doesn't bind anyone to any price, it's simply an estimate.

Rule #2 - Don't work for friends. Unless you're donating your time, it's just never a good idea.

I don't care if it was $45 OR $4 I already explained the deal he was getting. I normally charge $50/hr for transportation to and from. And I charge more for raking so it was made clear what a deal I was giving him. In the past when in this situation they were so appreciative of the price and quality of the work they paid me extra. So I really don't see why I'm need to go over the details of the job and cost.

Matt

[SpecOne]

I don't care if it was $45 OR $4 I already explained the deal he was getting. I normally charge $50/hr for transportation to and from. And I charge more for raking so it was made clear what a deal I was giving him. In the past when in this situation they were so appreciative of the price and quality of the work they paid me extra. So I really don't see why I'm need to go over the details of the job and cost.

Matt

Not trying to be rude Matt, but you did start this thread with the question "How to deal with a customer who shorts you?" and I'm assuming you did that to get others advise. That involves going over the details of the job and cost.

Just my two cents.

[GWhunter]

I did start the tread for those exact reasons but that does it matter that it's only $45? I was already offering a super deal. I clearly explained the price before I even looked at the job. He knew what the time and cost was the first day I worked for him. So how does he convienently forget the rate and time? I did ask both of them what time it was and mentioned what time I arrived. I realize that I should have told him I'd send the invoice later and head home. But hind sight is 20/20 as they say. I do appreciate all the replies but I don't think trivializing the dollar amount makes sense either. Even though I quoted him a low hourly rate I still should have charged the transportation fees. I had over an hour drive plus tolls.

Matt

[ksss]

Lot of good advice. Many of these lessons I have learned and relearned several times over.

AWJ's points are valid. Any time I give a bid off handed while the customer is standing there without walking to my pickup and writing it out, more times than not I underbid it. I get email addresses, I go home and write the bid in comfort of my own home if at all possible.

As far as working by the hour. I think it is situational. I always prefer to bid, but with a lot of contractors you are hired hourly, not always, but enough that you need to get used to it. There are times when bidding simply is not an option. Some water, sewer and septic repairs are like that. If you cant see the problem it is hard to bid.

As far as working with homeowners. I don't think you can get around the fact that some are simply ignorant beyond belief. You can write a bullet proof bid, and I do, I have been told by some that they read like a legal document. I have been jammed in so many ways I know how to protect myself. Few read it. What is the cost? Beyond that nobody cares.

I had a home owner screw me out of 10 dollars the other day. I told him over the phone of the cost. Sent a guy over there and he deducted 10 an hour on a one hour job. My guy said it was 85 an hour, the homeowner said that I told him 75, which I did not. I am still pissed. I can relate to your 45 dollars. Even worse that its a friend.