They say you can see a swindler a mile away. I’m starting to believe it. Here’s how I tell if someone is planning to rip me off before I get ripped off. Caution: Take it with a grain of salt. We just had to hire a collections agent.
The five signs:
- The person will almost always gladly pay the first bill, or your deposit amount. It’s the second and third bills you need to look out for. The swindler will pay the first bill to convince you that they’re going to pay future bills. Don’t be fooled.
- The swindler almost always talks a lot. They will drop names to sound like they’re respected in the community. By talking a lot, they’ll control the conversation and put you at unease.
- Often will have very ambitious business goals along with high confidence. This is an opportune time to quiz them on their awareness of what their competitors are up to. Often they won’t know much and have very bad plans.
- Don’t assume your friend will pay you back. Your friends can go sour. I’ve had several friends who I worked with for years suddenly stop paying bills and leave me dry. Tell friends you won’t continue working until they pay you.
- If someone is planning to rip you off, they’ll ask very few questions about your pricing. They’ll barely look at your proposal/estimate and be more concerned with how quickly you can complete the project. Since they’re not planning to pay, they don’t ask the usual money questions other clients do. This is a key signal! I’ve seen it multiple times.
So what do you need to do?
Actively collect on all of your accounts. You’re in business to make money, don’t let customers go 45+ days without a phone call from you or your accounting department. Send invoices and statements regularly, you want to be invoicing customers weekly and keep your cash flow going.
For new customers, get payment up front. This will help weed out the swindlers. Just do it.
You are not a bank! If a customer asks about a payment plan, give them one with interest if you think that will encourage them to pay. Remind customers with late balances that you take credit cards (if you do).
I hope these tips will help you to never lose money from a bad customer.