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Sun Volt Solar

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Clean Energy, Clean Environment

We are at a cross roads in human history, we can choose to continue on as we have been, or we can make a change to improve our future and quite possibly the future for several generations to come. We are here to promote energy independence, a better environment, a secure future and a higher return on investment for your hard earned dollar. It is what I believe in, it is why I am in the solar business.

Delinquent Clients

20 May 09 | General Business

This happens to every business. You provide a service and the customer decides not to pay. There are several reasons for this, some of which are predictable and thus can be avoided.  They include:

  1. Sudden loss of income.  During the installation the customer looses his or her job.  This happens and there is almost nothing that can be done about it.  My business model has always relied on down payments, e.g. 1/3 on order, 1/3 on delivery and 1/3 on completion of a job.  Therefore, at any point in a project I am not that far behind.
  2. Inability to pay.  This is completely preventable and can be determined during the early stages of a project.  It is the reason why a contractor should always completely explain the costs and get a signed contract with the customer.  If there are any doubts, as for a different payment plan, e.g. 1/2 on order, 1/4 on delivery and 1/4 with completion of the project.
  3. The customer is an asshole.  This one should be apparent during the sales presentation.  Things to look out for; customer has a past history if stiffing contractors,  suing contractors, seems dishonest, etc.  Sometimes it is nothing more than a bad feeling.  Often times when this happens my schedule suddenly becomes booked solid for the next 6 – 12 months.

It is important to follow up on things.  This means sending out an invoice promptly when payment is expected.  After 30 days, a statement of monies due and a follow up phone call.  Often times, simply asking if they received the invoice and statement, then asking when you could expect a check will suffice.  Sometimes not, however.

In many cases, things can be worked out.  In case number one, often times a payment plan can be put into place.  Generally, these people want to do the right thing, but due to circumstance beyond anyone’s control, they cannot.

In the case where the customer never had the ability to pay, this is the fault of both parties.  The customer is at fault for lying and the contractor is at fault for not checking out his potential customer before starting work.  Chances are that this customer will never have the wherewithal to pay, nor would any legal proceedings be fruitful.  This may end up being a business loss that is written off at the end of the year.  It does happen occasionally, but a credit check can almost eliminate these situations.

If you are dealing with a customer that can clearly pay but for some reason has decided not to, then there is something called a Mechanic’s Lien.  This is a last resort measure and requires a solid paperwork trail.  The requirements vary from state to state, however, in New York, a Mechanic’s Lien must be filed within four months of the completion of work.  What then happens is the property cannot be sold, transferred or refinanced without the lien being satisfied.  Often times, on a new construction, the bank will not release the next draw until the lien is satisfied.  It becomes public record.  I would not go to this well very often, but if you are out a lot of money, it is a way to get payment.

In short, if you want to stay in business, then you need to get paid.

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20 May 09 | General Business
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Reader's Comments

  1. Reeves | May 20th, 2009 at 10:21 am

    This is all doubly true when doing work for other contractors as a sub. Check their professional and customer references. Talk to their employees and get a personal guarantee on your contract. It can be a real hassle to ask a contractor to sign this if you’re hungry for work, but it can save you thousands in legal fees down the road.

  2. Todd | May 21st, 2009 at 4:49 pm

    Ah the joys of business! Liens are certainly a powerful tool, however, as you say they are a last resort. They are time consuming and a real pain to deal with!



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