I’ve been in business for a while now and whether we hear people admit it or not, we have lost money on laser scanning projects where the customer refused to pay for the services rendered. While I don’t mind admitting it, I have no desire to tell anyone how much money companies I’ve been with in the past have lost due to the unethical behavior of clients.
Many other service industries have found ways of dealing with this problem by requiring up-front payments or credit applications/cards to be kept on file. Some industries have the ability to withhold the deliverable product until payment is received.
I do not see how we can take any of those paths. Credit cards typically won’t allow charges of the amount that we need to cover our projects. It’s standard to allow a client to review deliverables and 30 days net payment after delivery is expected by most. Of course, if the client is a company with a lot of resources then they expect 60-90 days after they get paid … but that is a gripe for another article.
Most of the time we end up with a simple calculation: Amount Owed ÷ (Some Idea of Future Work – Our Principles) – Cost of Legal Services = Course of Action.
As a result, we have chalked up more than one situation to “learning experiences.” The question I now have is whether or not you, my comrades (and competitors), should have to go through the same learning curve if I know you are dealing with an unscrupulous client.
The initial reaction of most capitalists is, “I paid to learn that lesson and giving that info to my competition just puts me further behind them.” I understand that sentiment, but I also watched it bite me, and several others, a few years ago.
I had a client lease a scanner from me and then send me the data for registration and modeling. After some time, his monthly rental payment started coming in later and later until it stopped all together. Finally, I stopped delivering the models in hopes of using it as leverage to obtain payment for the rental and other past due modeling work.
Four months later, I am at SPAR in the hotel bar and complaining about the lack of payment with a friend that had also performed services for this client. It only took a few minutes for others at the table to catch on to the conversation and, to my astonishment, several of them said they were in the same boat with the same client. By the end of the conversation, we determined that this client had received more than $100,000 in unpaid services just from those of us sitting at that one table!
These guys were/are my competition, but we are also friends, and seeing this scofflaw get the better of them did not make me feel any better about my experience. Worst of all, we discovered that he had really soured the pool of perspective clients in the city in which he lived.
Due to his actions, we all started withholding services (eventually). He began being late on delivery and delivered incomplete preliminary models and sold data that we had told him was unusable due to bad field methodology. He didn’t care. But, as a result, his clients decided that because he was a scam artist, laser scanning was a scam.
It’s been a few years since this happened, so why the blog post today? I received a message from a manufacturer (with whom I am a reseller) to contact someone about their interest in purchasing a laser scanning system.
When this “someone” saw his request for information was forwarded to me, he immediately requested to work directly with the manufacturer. You got it, the same client I was just describing. He’s got a new company name, (apparently) a new sucker as his backer, and is trying to do it all again. So, how do we stop people like this from ripping us off and giving our industry a bad name with potential clients?
My first thought was a “Wall of Shame” type of website. My attorney has advised me against hosting such a thing or even posting on it. Even if it is the truth, and not libel, I would still have to pay to defend myself and that would be throwing good money after bad.
While I’m happy to talk with anyone, it’s not exactly practical to call everyone in my contact list to say, “Hey, look out for this guy!” Per usual, I really don’t have an answer. I’d love to hear some ideas beyond a Google search to see how many complaints a firm has racked up.
In summation, if it seems too good to be true (and his plans often were) watch out. If you are worried about your client, ask around. While I don’t want to broadcast my concerns, I do have a few folks in the industry with which I enjoy trading honest information. Lastly, never underestimate the value of buying a few drinks at a conference; you never know what you might learn. I prefer bourbon, btw …