What if “bad clients” had a language all their own? They do. When you’re in a service business detecting and avoiding bad clients is vital. Often in B2B services like website development, graphic design, there is a reality that many of the business owners that come to you for services are not going to make it. They are on-route to bancruptcy or some other form of demise, and they may try to take you with them if you don’t protect yourself. New freelancers or firm owners don’t usually understand this at first, and it takes many a hard lesson to get it. Even if you get it, will you overreact and hurt your chances of attracting good clients?
Bad clients come in a few different forms, but obviously the non-pay client is near or at the top of the list of those we want to avoid. One question that comes up here is “do I really need to detect non-pay clients, why not just enforce strict payment terms”? This is a matter of choice, because stricter payment terms may cost you sales in some cases and generally may hurt your business more than it helps. And even with strict payment terms, unless you are collecting 100% payment in advance you’re almost certain to bear some risk. After all from the buyers perspective, would you buy a B2B service like graphic design if the designer wants complete payment in advance? I wouldn’t unless it was from a very large company with a clear refund policy. Even in that scenario, it’s more a “deposit” than a payment if there is the potential to get the funds back when warranted.
What cannot be escaped it seems is that to make any business transaction happen both parties need to protect their interests. Most businesses are not looking to outright scam the other party but definitely many disputes occur over expectations, terms, payments etc. As a seller you have to strike a balance where your payment policies and other terms are still attractive and reasonable to the buyers you want, while dissuading the “bad clients” from buying at all. Or you have to learn the language bad clients use to make deals that ultimately are lose-lose. I recommend doing both!
Interestingly enough most bad deals are not where one party wins and the other loses. It’s often the case that a bad buyer will not get what they want, and will also harm you in the process. This goes back to my point earlier, some businesses are not going to make it, and the owners are suffering from some combination of bad planning, poor decision-making, unrealistic expectations. Within our business dealing mainly with website development or application programming, we find many prospective clients have a very poor understanding of what their buying. And it’s all too common to find potential buyers that have very foolish ideas about what they can achieve for a given budget or time frame. The problems aren’t always around money, it could start as an issue around schedule and then degrade into a dispute over money.
Here are some examples of what a client might say to help us identify them as a bad client:
- “this part of the site should be really easy.” How does a client know something is easy unless they are an expert in the field? And even if they were an expert in the field, never trust them to make a fair evaluation. Chances are if it was that easy, they would not need you to do it at all. This is a statement of “I don’t want to pay much and even if that part takes 10-hours, I want to try to pay only for 2-hours and I want you to be stuck with the bulk of the bill”. In other words, danger danger, we have a bad client approaching from the east – get out the guns! Good clients never presume something is easy/simple/basic/included. All that kind of language is a negotiation tactic around paying less and taking more. And it doesn’t come people who actually want to pay for what they receive. A good client would say a similar thing as a question “what steps are involved in doing this”? or “is that a simple thing to do, how much time might be involved”?
- “I have a budget but it’s top secret and only me and the CIA and a few carefully chosen corporate consultancy wizards know what it is. I definitely can’t even ballpark it with you other than to size it’s really sizable and don’t worry I have unlimited cash but cannot agree to any specific number”. I’ve never seen a prospective client say “I am nearly broke, my Visa is racked I’m not sure if I’ll make rent this month let alone be able to pay you for your work”. Instead non-pay candidates dodge questions around budget and in some cases act the way a drug addict acts when police ask him “do you have cocaine in your pocket”? If the question “what is your budget” results in a long story or other non-answer, beware. Especially if it’s a brush-off followed by a quick change in conversation. Bad clients will often try to get the topic back to “work you must do to please them” rather than discussing “the money we pay for the services”. Remember a deal is a trade, don’t be so eager to make the sale that you forget that work without pay is worse than just working on internal unpaid projects. People that don’t want to pay are thieves, don’t make it easy for them to target you. Politely but firmly press the issue, get a number from the prospect even if it take multiple discussions and some quoting from you.
- “we can do that part later”. This one isn’t always a sign of a bad client because it could just be a decision to delay certain parts of a project. But in some cases what is cleverly done here by non-committal, non-payers is they are trying to avoid bearing costs by delaying work and what they’re thinking is maybe later I can sneak this item back into the project. Or they may trying to buy time to afford the item in the case of the secretly broke client who plans to non-pay.
- Using confusion to avoid a project scope. There is no specific quote I can offer for this but to relate the recent project that motivated this post I was working with a designer who was vastly disorganized. He wanted to build a site, had a partial design, no written plan, and was unable to make decisions on features to include in the site. By making much of the discussions verbal he cleverly managed to drain my time while at the same time making the project requirements so confusing that nobody could ever prove exactly what was approved, or what payment was due for which items. Some people don’t do this intentionally, they just are confused and therefore they do business in a confusing way. This might be tolerable if they don’t mind paying for the time they waste by being disorganized. Watch out for the circle talker, somebody who will continually raise the same topic but when a decision is required they just loop write back to talking about the subject. In this particular project this designer would draw out a feature on paper, then talk about, then redraw it. Along the way, he couldn’t agree on exactly what to approve or talk about costs because his mind just doesn’t have the focus required to make progress forward.
- I could do this myself. I’ve never ever had a good client say this. Think about if you’re buying something like writing articles, would you tell the writer “I also know how to write English, so I could do this myself so don’t go thinking your services have value or that you might be more capable in this area than me”. Even if you were an award-winning writer, would you say that to somebody you hire? Not if you have any respect for them, or the professional they work with. Personally I have 12-years programming experience and in most projects I could do 99% of the coding work myself. But when I hire other developers, I respect their skills and I need them because I cannot work 200-hours per week. So I would never degrade the situation by claiming that I can do the job, therefore they are unimportant. This is a warning sign that the prospective client doesn’t have respect for you or what you do, and generally they don’t value your time. In their mind, they could have gotten the work done for $0 by doing it themselves, so any invoice from you is too high. It gives them a feeling of justification later if they non-pay. They might even non-pay, do the work themselves then say to you “look after I ripped you off I did the work myself, proof that I didn’t need you!”.
- I talked to another guy who said that part is easy. I think I already wrote about the people who claim work is small or easy as a way to avoid paying for it. People who claim they got a qualified opinion from someone else are almost certainly lying. Personally I don’t have time in most cases to get competing quotes for specific work. Because the time involved in getting the quote is more than the benefit. It might be different in design and other creative work. But in development it can take hours to communicate a project and get a quote. So chances are I’ll only go for more quotes if I can’t make a deal. So would it be honest to say “I already have a quote for 35-hours on this piece of work, but you’re quote is 55 so you must be mistaken”. No, and anyway the way to handle this is the same. Unless you have a reason to reconsider your quote like the client has clarified their requirements, you should stand your ground and also call their bluff. Say okay, if you send me this quotation I will evaluate the firm/contractor that provided it and see if their services and caliber of work is similar to ours, then I will consider matching the quote if that’s the case. Expect dead silence or a quick retraction from the prospect this is nothing more than ploy 95% of the time. In a situation where the prospect actually has multiple quotes, the language will be different. For example they may say honestly that “I found another guy willing to do this at $35/hour, that’s less than your rate is there any room to negotiate your rate”? Or in a fixed-rate project, they’ll talk more about what’s included and not included in the competing quote. Because fair and reasonable clients know that it’s not really an apples-to-apples comparison anyway, they can’t possibly predict if the other vendor will even do the project at all, let alone what the quality or completion would be or what other costs might occur.
I hope this post helps those of you starting out as developers, designers or in any B2B service business. If you know of other language that prospective “bad clients” or non-pays use I’d love to hear it from you. After all it’s better I hear it from you and watch for it than to hear it from the next bad client.
And I’ll leave on a philosophical note here, that ultimately protecting your business against bad clients isn’t just for your benefit. It’s actually an integral part of taking care of your good clients. Because if you have to write off a thousands of dollars a year in unpaid invoices, you’ll have no choice but to pass that business cost on to the good clients that are paying your bills and are treating you fairly.