Terminating a Customer

Director Mitch has an especially timely entry this week, because I, too, have to “terminate” one of my customers. It’s not something I relish, because I really wanted to work with them, but I cannot afford their business. Literally.

The project with Customer X (a non-profit) came up in late September through an intermediary, Company Y. The job was much smaller than I’d normally undertake, but I had additional capacity at the time and saw some potential for this leading to broader engagements. Good karma points were also an influence.

I invested a lot of effort up front to ferret out the customer’s requirements, getting as much on paper or in mock-up as I could. (I’m a big advocate of mock-ups.) My contacts at Customer X werent’ the decision makers, and there was some additional input from committee. This caused us to blow through the time alotted for “requirements gathering” and “design.” In the interest of fostering the long-term relationship and delivering a quality offering that everyone would be happy with, I absorbed most the overruns.

Meanwhile, my other business picked up substantially. During most of December and January, I was over-extended. (You’ll notice a corresponding decline in blogging activity. 🙂 I plugged through it, making up the difference by not sleeping. That’s obviously not a sustainable thing. The project with Customer X was orignially planned to wind down now anyway.

Company Y, who gets a take on what I bill, has been very slow in remuneration. My inquiries to accounting have been mostly ignored. When they hit 60 days after invoice, I contacted the head honcho directly.
He apologized, and cut me a check the next day, but it only covered the work done through October. Sensing there might be some underlying cash flow issue, I asked about their situation, even offering to work out alternate arrangements. He assured me all was fine, said they appreciated the extra hours I had put in and would comp me for the great effort.

A couple of weeks ago, they again hit the 60-days mark without payment or any communication why. I let them know of my concerns, asking them what they’d do in my situation. I don’t want to burn bridges, and got the project to a stopping point where the underlying specification is signed off and the remaining work is straightforward. I need to recoup some sleep and focus on my other customers.

There are certainly a lot of lessons. Some of the less obvious:

  • Invoice early, invoice often. — The slow invoicing is my fault, and may have been a contributing factor. I invoiced my (early) November work on December 6th. Add to that the 60 days the invoice has festered, and it’s been a been over a quarter.
  • Specify a value for your services, then credit the invoice back if necessary — I’ve observed that many of the non-profits I’ve worked with are unable to use their resources efficiently. By assigning a “value” for my time — crediting back when it’s pro bono work (which I do a log) — I hope to convey what businesses innately grok: time == important. When they understand that, they’re less likely to waffle on specifications and apply some more thoughtfulness into their decisions.
  • Charge for status meetings, even cancelled ones – on several occasions, especially recently, Customer X has cancelled phone conferences at the last minute because a key person was sick, traveling, busy, in a staff meeting, abducted by aliens, or whatever. I’m not a big meeting person, and I can forgive a genuine emergency, but repeated last-minute stuff is highly disruptive. I typically slot out time and often do prep work beforehand.
  • Fess up – I really did want to work with them. Since they’ve not been forthcoming in whatever underlying issue is present, I can’t help them. It’s unfortunate that we have reached the threshold at which it is bad business to continue working with them.

2 thoughts on “Terminating a Customer”

  1. We always seem to be on the same blogging topic.

    This seems like one of those customers where you DON’T want to keep the lines of communication open, so firing in a nasty manner won’t matter in this case.

Leave a Comment

Your email address will not be published. Required fields are marked *