Advice Offered for Collecting the Final Check from the Customer

Advice Offered for Collecting the Final Check from the Customer

After spending 30 some-odd years in the kitchen and bath industry, I have found that collecting money is still one of the most difficult things to do especially when it comes to collecting the final balance from a customer. Over the years, we have found that many sales/designers, managers and even owners have a difficult time collecting the money that customers have agreed to pay for the work done or the products purchased.

While we believe that we do a pretty good job of collecting money, I know for a fact that many times what the customer owes and what he or she pays at the end of the job may be two different amounts. Sometimes we make the mistake of reducing the final amount that is due because of something the customer thinks
is wrong.

The reality is, if your company is going to be a good one, and the customer has any integrity at all, collecting the final payment should be of little concern. However, I believe that most designers who are asked or expected to do the final collection for their projects may have a problem if the customer complains about almost anything. The reason is that designers often don't view the money as being theirs. Even if the final commission is based on the collection of the balance, it usually is only a portion of the final balance. The other reason is that, many times, the designer agrees with the customer, and feels that if all things were reversed, the designer would want the concerns or problems resolved before payment of the final amount is made.

To eliminate these problems, we have initiated a number of policies that have proven very successful in collecting our final balances.

I have always said that, the larger the amount of money owed at the end, the more difficult it will be to collect. To that end, we have a deposit schedule that follows: On a material-only project, we collect 50% with the order and 50% or balance upon delivery. For an installed project, we collect 50% with the order, 40% due upon the start of the project and the final 10% due "upon usable condition." Note that this does not read "upon completion," because if a customer does not want the project complete in his or her eyes, you will never be able to make it complete to the client's satisfaction.

Now, keep in mind that a few customers do ask about the deposit schedule, but some of the things that we do as a company offset this concern. These include: Having all plans and promised appointments kept and on time; keeping the project on budget; and especially making sure that our communication skills are excellent throughout the project planning stage. If problems do arise, we try to address them quickly. I once heard the phrase, "A problem solved is a problem faced." As much as we would hope that problems would just go away, sadly they only grow bigger if not addressed.

If there are extras on any project, you know how that works: The customer decides to add the new floor, or he or she wants to change the cabinets from maple to cherry. Any extra request on a sold project is written up as an addendum and must be paid in full before the order will be placed.

Many times, we just take a credit card number and run it through. Remember, you want to keep the final balance as low as possible.

We also send an appreciation letter to the customer following a successful presentation. In the letter, I introduce myself as the president of the company, and I tell the customer that the only way I can help resolve a problem that may arise is to be notified that there is one. I give my home phone number out so if the client feels the need to call me, the person can. While I don't get very many calls, when I do, I can usually resolve any problem, or at least give the customer the assurance that I will take care of the problem the following day. Instead of the customer losing a night's sleep worrying about a concern, he or she can rest and be assured all is going to be fine. The result is less stress for the customer and certainly for our company's staff the next day.

While all of this is well and good, we still had problems with our sales force collecting jobs that we really thought were due. To counter this, we introduced something that has truly made a difference in our collections as well as customer satisfaction.

I, as the president of the company, go out to every project for what we call the final walk-through. The salesman has a packet with use and care information for the installed products, final lien waiver for the total amount of the project and a sticker with all of the information about the install including service phone numbers, names of all the tradesmen on the particular job and the completion date of the project.

We also have a sheet that we call the usable completion report. This sheet has the customer information and space to write what needs to be done by our service people, such as adjust doors or drawers, finish nicks in doors, install new bumper pads, replace light bulbs in the undercabinet lights anything that we see or the customer thinks should be addressed. After we have gone through that form, we review it with the homeowner and have the person sign off on it.

I also keep a toolbox with me with all sorts of parts, cleaning and touch up pencils, and tools that I might need to do minor repairs and adjustments. Any of the minor repairs that can be done on the job get done right then. The rest are scheduled for service. We then present the final balance.

After doing all of this, it is very difficult for a homeowner to not pay the final balance owed. While some people say that they do not want to pay until everything is completed to their satisfaction, we explain that we do not service work that is not paid for.

Generally, after some explaining, they are comfortable with this. In fact, customers often remark that they can't believe the president of the company came out and did some of these minor repairs. Because of that, they see no reason that they should not pay us at that time.

This service has been one of the most beneficial things that we have implemented in years. Because of this service, we are seeing an increase in referrals and customer satisfaction.

I should note, however, that while all of this sounds good, the reality is that, as a company, you must produce the results the customer is looking for. I personally follow through on every service call to be sure it is being done in a timely fashion. If the customer is calling and asking about what is going on pertaining to his or her project, we have failed that customer as a company. We should always be the ones who are calling the customer and letting the client know what is going on.

Also assisting us in our final collections is having a specific clause in our agreement that explains the usable condition and how our service works. The customer has to initial this on the agreement, and often times we need to bring it to the person's attention while trying to collect the final balance. Once we do that, the client usually remembers what was agreed to and, again, it makes collecting your money much easier.

The bottom line is that it's your money, and if you have done everything that you promised, and the project is completed as scheduled, then it is your job to collect your money. The profitability of every job depends greatly on not leaving your money on the table. I would rather spend $1,000 more on a project to make a customer happy than give the customer $1,000 off of the final amount. Remember, clients will never tell friends how happy they are that you gave them a discount for bad work, but they will always tell people how you went out of your way to redo something that was not done correctly in the first place.
Thompson Price, CKD, CBD
Callier and Thompson
Kitchens & Baths, Inc.
Manchester, MO

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