At Your Service: Predatory customers
Watch for signs your customer may not be worth serving.
In the last issue, I spoke about being a person of integrity and character. Below, I share the story of someone who devastated many lives with his greed and lack of compassion.
I’ve prided myself on never having a bad debt in the nine years I have been running Synergy Solutions (synergysolutions.ca). I’ve had some close calls but eventually the customers have paid. My nine-year run came to an end last month.
I have a national account with a very large restoration company. They come to the rescue when you have fires, floods and any other devastation to your property. Often, they have to wait to be paid by insurance companies so the trickle-down effect delays them paying all of their sub-contractors and suppliers. I knew going into this contract that I would sometimes have to wait longer than the normal 30 days and was fine doing it. Most of the branches pay in under 45 days and there have only been about 10 instances where I have been chasing a branch for more than 60 days. John (not his true name) was the owner of one of these branches. He always messed me around with paying and constantly complained about the pricing (even though I was more affordable than the one other option they could order from). My service was never in question. It was always faster than the other supplier.
John closed the branch down last month while owing a lot of money to suppliers. One large supplier was owed over $300,000. A small roofing company was owed over $60,000. There were many others that were owed somewhere between $1,000 and $20,000.
I had a friend who was promoted during the times of trouble to try to right the ship for John. This friend was in charge of the operational side and some of the financial aspects as well. About seven weeks ago, I got a call from him asking me to come in to the office to pick up product I had delivered for which I now would not be paid. We found a bit of brand new apparel and some pens and multi-tools that I could possibly resell at a later time. It wasn’t much but I appreciated the gesture.
While my friend had made great strides to set up terms to pay back some of the people the company owed money to, and they were ahead of the game each day that he was in charge, there was always an issue with cash flow. When the accountant quit, my friend brought in his own accounting person who quickly uncovered money being taken out in large amounts by the owner – $200,000 in one transaction, $70,000 in another.
This is where I have a huge issue. John was paying himself money and forgetting about everyone else he owed and who had supported him along the way. They didn’t even make payroll at one point. My friend was literally thrown up against the wall by two employees telling him to get them their paycheque, or else.
To make matters worse, John owned a small homebuilding company where he had just sold a $5 million home. He bragged to my friend how he had made over $1 million profit and just bought his wife a new Range Rover. Meanwhile, my friend had actually used his own personal credit card a few days earlier to pay one supplier off to the tune of $12,000 and now he isn’t sure he will be paid back either.
If you are working with customers like John, please consider if it is truly worth it. Are you always worried about being paid? Do they constantly complain? Will it put you in a compromising position with your cash flow? We all have “Johns” in our lives. Maybe it’s time to flush those that are always creating grief for us. Take care of yourselves, your employees, your suppliers…and those customers who deserve to have you as a supplier!
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