Something feels off.
You are on track to spot a bad debtor when you have that niggling feeling that something isn’t right. You know your business better than we could ever hope to. Only you know what usual business looks like and how customers respond.
Our experience shows a few general rules as to why a job might not sit right with you.
Change of plans.
Have you ever done a job where the scope of work changed drastically at the last minute? These debtors may have issues that prevent them from sticking to the original plan.
Financial changes.
I have seen countless subbies promised payment for their completed work only to wait months for a reply. The builder doesn’t have the funds to pay and is relying on the final instalment of the build to pay out the contractors. Were you asked to do less or change of materials? Maybe this is your sign that things are starting to go south.
A more specific case I had was last minute changes for a bulk order of sanitiser and facemasks. Miscalculations to the debtor’s profit margin resulted in non-payment of the order.
Top tip for debtors: Don’t order something without having the funds to pay for it.
Contract changes.
In a rare scenario, we have seen debtors deliberately make a last-minute change to a contract or scope of works. Their intention in this change is to void their liability to pay the completed work. Using the previous example, an order of 23k units of sanitiser was changed to 19k and then was disputed 3 months later as the debtor believed it was supposed to be 6k units.
If you are unfamiliar with the heart of our business, we believe most people intend to do the right thing. Most debtors have un-willingly gotten themselves into the current situation. On the other hand, we see roughly 1in25 debtors maliciously making a situation worse for their own benefit.
Trade changes.
Sporadic choices, all over the shop, or communication is disjointed. Disorganisation of the job details may mean disorganization with accounts.
Step carefully, listen intently and stay clear of confusion.
Lack of personal details
More for online services, we spot a bad debtor when they give sparse or incorrect information. Intentional or not, lack of personal info is a way that payment may be hard to obtain. If you do not have the correct contact details or address, there can be little you can do to recover your money.
Bond cleaners, storage facilities and repair shops also find the same issue. Thankfully, many businesses can withhold items prior to payment, however, cleaners can’t exactly get their time back for a bond clean of a tenant who has now moved on.
Not the first choice.
Not all businesses will continue a half-completed job. Someone like myself would not spot a bad debtor as they want to do whatever they could to help another business in need. The question we need to ask ourselves is, “Why did the last trade leave before completion? Is there more to it than what the builder is saying? Is the builder going to hold me accountable for the previous trade’s mistakes?”
If you are not the first on site, start on a half finished job or see a large turnover in other subbies, maybe further questions should be asked as to why you were not the first choice for the job.
How to respond.
Something feels off.
Don’t wait, act now, ask the questions. Please trust yourself and your gut or you may not spot a bad debtor. I agree that some of these cases you will find no issues and the off feeling won’t affect you.
Be careful to put your business in jeapody to make a dream job work. Keep your contracts tight and more importantly, be strict.
Change of plans.
Variation forms are a winner. If that is not your business’s cup of tea – any written confirmation is key. For the sanitiser example earlier, we won that case against their legal team in court because of clear and concise record keeping.
Lack of personal details.
Change your signup requirements and add in more info required to engage your services. Bond cleaners, get a next best contact for your clients. Maybe even get their real-estate details so you may have them on your side.
Anything extra you can get may help in tracking down your debtor. When we conduct missing person searches (skip trace), any information can assist in finding your debtor.
Not the first choice.
Lastly, take pictures of the current state of the job. Have clear, written instruction for the completion requirements. You can give your client the benefit of the doubt, however, be mindful that there are two sides to the story why you are now completing the job in someone else’s stead.
If all else fails, we are here to give you a details plan as to how best to recover your funds. It may involve a skip trace, it may involve credit file implications. If you are unable to spot a bad debtor before the worst happens, lodge your debt here and we will resolve the matter for you.