How and When to Fire a Client
Attention small business owners: the old adage “the customer is always right” no longer applies. In this digital age of fast moving people and products, along with increasing globalization, your customers have a choice. They may choose you, or your competitor – but you have the same choice. You can choose your customers and if one presents a problem, it may be best to part ways.
Why Fire a Client?
Why would you want to part ways with a client, especially if your business is new and you need the contract? Sometimes you have to say “no” to save both sanity and money.
New startups are easy targets for unscrupulous business people that can present big projects knowing that the startup will be eager to grab it. Thankfully it is the exception and not the norm, but some people will try to take advantage of your company’s inexperience. If they present a contract, look it over carefully and make changes to ensure you can get out of the contract if required. Account for any changes to payments (timing, amount, penalties) or demands (changes in deadlines or increases in duties) to make sure the contact is fair for both parties. If you are not happy with the contract, don’t sign it. It may mean a financial loss now, but getting locked into a deal where you give up time, products and services without proper compensation will cost you far more in the long run.
Another reason you may have to say so long to a client is if they don’t pay you. Your services are not free and if you continue to provide services without payment, they will continue to happily accept your work and further their business while your bills fall behind. This is not respectful on their part. If they are truly having trouble making payments, they should be willing to approach you and work something out – something that they stick to and honour.
A lack of common respect and decency are also grounds for dismissing a client. Clients that cross the line and engage in intimidation, name calling, racist slurs and aggression have no place on your client list. Not only does this behaviour foster an environment of fear and mistrust, it can become very dangerous.
How to Fire a Client
When you find yourself in any of the situations above, it’s time to cut ties. Don’t meet the client alone. If you are a solo entrepreneur, arrange to meet them in a coffee shop. If you have your own office, ask them to come to your place for a meeting and have a few staff members in the meeting room. Be fair and firm. State the facts and be respectful. Don’t lay blame or point fingers, even if they are clearly in the wrong. Simply state that for X, Y and Z reasons, the contract will be terminated. If compensation is still owning, make it clear that you expect the outstanding bills to be paid. If they have prepaid, be sure to refund the balance or provide the products that have been paid for.
Watch their social media channels for a few months after, and keep an eye on popular review sites like Yelp and Houzz. If your fired client leaves a scathing, negative, false review, respond on the social media or review site and restate the facts; but be the bigger person. Don’t get into a throw down online!
Cash flow is always the biggest issue for new companies and when you have a client that is taking advantage, or one you must say goodbye to even though they are paying on time, it’s difficult and nerve wracking. Contact AF Accounting. We understand the needs of small businesses and can help you understand how to budget, manage cash flow, do your business taxes and more. Call today for affordable accounting assistance and keep an eye on our blog for small business advice.