As a home service professional, your expertise lies in plumbing, electrical work, landscaping, or another skilled trade. Chasing down payments? Not so much. Unfortunately, late payments and non-payment are a reality for many businesses. Spotting the warning signs early can save you time, money, and frustration.
Here are five red flags that a customer might become a payment problem:

5 Warning Signs of Late-Paying Customers

1: Vague or Evasive Communication

Does the customer avoid specific questions about payment methods or due dates? Do they seem hesitant to provide contact information? This lack of transparency could indicate they’re not serious about fulfilling their financial obligations.

2: History of Payment Issues

Before starting any job, check the customer’s payment history if possible. Have they been late paying other contractors or service providers? While everyone deserves a second chance, a pattern of late payments is a strong indicator of potential problems.

3. Changing the Scope of Work Repeatedly

While minor adjustments are normal, a customer who constantly adds on tasks or changes their mind after work has begun might be trying to delay payment or create a dispute later.

4. Unrealistic Demands or Expectations

A customer who insists on services far outside your normal scope, demands unreasonable discounts, or has an overly aggressive demeanor could be setting the stage for a payment conflict.

5. Financial Red Flags

While not always easy to spot, keep an eye out for signs of financial strain. Is the customer’s property in disrepair? Do they seem overly concerned about the cost of everything? These could be subtle indicators of a cash flow problem.

Protecting Your Business

If you notice these warning signs, take proactive steps:

Get Everything in Writing: A detailed contract outlining the scope of work, payment terms, and late fees is essential.

Require a Deposit: A deposit upfront ensures the customer is committed and gives you some protection.
Set Clear Payment Milestones: For larger projects, break down payments into smaller milestones tied to the completion of specific tasks.

Don’t Be Afraid to Say No: If a customer’s behavior raises too many red flags, it’s okay to decline the job.

When Late Payments Occur…

If a customer does fall behind on payment, act quickly. Send polite reminders, escalate communication if needed, and consider offering a payment plan. If all else fails, a professional debt collection agency like Gilliam & Mikula can help you recover what’s owed.

Remember: Your skills and expertise are valuable. Don’t let payment problems overshadow the great work you do. By recognizing warning signs and taking proactive steps, you can protect your business and focus on what you do best.

Let Gilliam & Mikula Help

If you’re struggling with unpaid invoices or difficult customers, Gilliam & Mikula can help. Our experience in collecting debts for home service professionals gives us the knowledge and tools to recover what’s rightfully yours.

Contact us today at 804-743-0900 for a free consultation for your business.