December 2, 2019

Collecting debts:

Life is not always easy


Rod McDonaldIf this job were easy, then everyone would be doing it. We work hard, we struggle to find the right way to become successful, we sacrifice to build our companies, we try to be fair, we are passionate about our work — and yet there are times when we really wish we were doing something else.

There were two parts of managing a garden centre and landscaping business, that I detested. The first was having to collect overdue accounts and the second was having to terminate an employee. Both left me with much stress. This column is about collecting monies owed.

On the contracting end of things, I always screened my clients, checking out what others had to say about them. Were they easy to get along with? Did they pay their bills or were they overstretched? I listened to what a potential customer said in our initial meetings, and tried to get a feel for who they were. More importantly, would the two of us be a good fit as contractor and customer?

I was listening to a potential customer who had asked for a quote, as she ran her mouth, criticizing three other landscape contractors. I didn’t question why she was upset with each of the three, I just listened. I told her I would get back to her and made a quick exit. I called one of the contractors she was less than enamoured with, and I asked him to describe his experience.

He told me she took forever to make a decision and once she had made one and the task was completed, she had immediate regrets and wanted everything to be placed on hold until she reached a new solution. “Doing work for her was an incredibly slow process and she was rarely happy with the outcome. She easily cost me double my estimated time before I had to ask her to call someone else.”

The story confirmed what I had suspected, that I was better off not working for her. Life is just too short. I often tell this story to illustrate that we are better off to avoid customers where there is a good chance of trouble or where collecting the account could be difficult. Trouble can often be avoided by avoiding troublesome people.

I avoided having bad accounts by requiring a 25 per cent deposit before work even began, and payments again at the half-way mark and the 75 per cent completion stage. Of course for smaller jobs, I stayed with only the deposit. People reluctant to agree to a deposit or staged payments were usually people I did not want to work with anyway.

Yet, in spite of being careful, there would be someone every now and again who didn’t want to pay — or couldn’t. If it was a matter of a deficiency, the issue could usually be rectified, but a couple of people over the years used the deficiency excuse to deny payment. I only had to take three people to court for payment and I did get my money, but it was never fun. Having to do that was a task of last resort.

My friend, who has a maintenance business, had a slow payer. He told me he was dropping by the customer’s house that evening and practiced his speech with me. His demand for payment included all of his expenses that needed to be paid, including fuel, licensing, labour and materials. I stopped him and said, “You did the work, he owes you the money, he needs to pay you — end of story. You do not need to explain why you need the money. That is irrelevant. He needs to pay you, again, end of story.”

On the garden centre end, as we were 95 per cent retail; collecting bad debts was rarely a problem. Prior to debit cards, cheques were common, and every now and again there would be a bouncer. Most people were embarrassed and would come down to make things right. A few, not many, made a habit of writing bad cheques and would offer up many excuses for not making the bouncer right. That handful made life a bit more difficult.

We had a landscape contractor who had bounced a $400 cheque and had every excuse for not paying “just now.” My office manager phoned his bank every day, asking if the account had sufficient funds. It took close to three weeks, but one morning there were available funds and she hustled down to have the cheque certified. There was no sense in sending it out through regular channels, as the funds would have disappeared before we were paid.

That afternoon the contractor phoned me, quite upset we had scooped the funds. “That money was for someone else, not you,” he screamed. My response was quite simple, “Then you will have to tell that ‘someone else’ what you told me — that you will pay him really soon.” I don’t enjoy being a bill collector, but I hate being lied to and treated as a fool even more.

A call from a local garden centre operator started me writing about collecting outstanding accounts. He had sold $12,000 worth of artificial turf to a contractor in another city last May. The contractor agreed to pay him on a few occasions, but no money came forward. Then the contractor quit returning his messages. My friend asked, “What should be my next move?”

I quoted him an adage that is seldom heard any longer: “Some of us change because we see the light, but most of us change when we feel the heat.” I told my caller to increase the heat on the contractor by making contact with the end-use customer. Not my first choice or favourite tactic, but with few options left and no communication, the best given the circumstances.

The call was made to the customer, who was surprised as the contractor had been paid upon completion of the work. The customer called the contractor and told him to fix this issue immediately. That is bringing on the heat.

The contractor called that evening and apologized for not staying in touch. He had a story of woe as to why payment had not been made, and said he was trying to rectify a bad situation. My friend was willing to cut him some slack and asked for partial payments to begin. The contractor agreed to stay in touch and no longer duck calls. How this story finishes has yet to be determined.

Not staying in touch is perhaps the worst thing someone can do when they fall behind on debts. Avoiding contact made me nervous, and usually resulted in more aggressive tactics. One year, I had a reputable contractor come to me and explain he was short of money for the winter, and needed cash for gas and groceries. He offered to haul topsoil and manure for me the following spring until we were square, and I trusted him. He lived up to his word and he owes me nothing. A story with a nice ending, as he always stayed in touch.

Being tough when collecting your accounts is not an enjoyable experience, but it is a necessary part of staying on the road to success.
Rod McDonald owned and operated Lakeview Gardens, a successful garden centre/landscape firm in Regina, Sask., for 28 years. He now works full-time in the world of fine arts, writing, acting and producing in film, television and stage.