I’ve been reading your column for some time now and as the accountant at my company who is also managing some of the credit and collection functions, I finally decided to put pen to paper and seek your advice.
My company is in the service business, specifically we install, repair, and maintain elevators. Sometimes with a repair, we often have to go back two or three times because the malfunction is due to an intermittent problem. Although it gets fixed when we’re there, a couple of hours later or the next day it may reappear and we’re called back to fix it again.
The same intermittent malfunction could have all kinds of different origins, which are only apparent when we are back observing as many of the moving parts as possible. If the first repair takes two hours and the second repair takes another two hours, we invoice the customer for four hours, since the same malfunction resulted from two or more different sources.
The subsequent problem is twofold: First, when the customer complains they’ve been double charged for the same work, our owner doesn’t want to “rock the boat,” and discounts the invoice very quickly. I feel bad about this because I feel we should at least explain to the customer that it’s often a different issue resulting in the same problem. Second, once we give a discount to the customer without much of a fight, they know they can come back again and again and with just a little bit of complaining, we’ll give them a discount.
As these are really eating into our cash flow, how can I change this terrible corporate culture of giving away discounts so easily?
Signed: Our Company is Discount Central
Dear Discount Central,
You certainly have a situation here that needs some urgent turning around from a couple of angles.
One of the best ways to preempt the possibility of a customer complaint towards a double charge is to inform the customer at the time of the service that although the problem occurred again, it’s an intermittent problem that resulted from a different source. Training your service people to convey this at the time will at least put the customer on notice that the repair is not for the same problem. If your service person can’t do this, then your manager should inform the customer so that the subsequent billing for two or more repairs that look similar, but are different, will not be contested.
Instead of the owner, who apparently is not comfortable handling these kinds of tense situations, you might be a better fit for this problem, especially since you’re handling some of the credit and collection functions. I especially like your passion for wanting to get a handle on the discounts since you see how they’re directly impacting your company’s cash flow.
Your training could involve reviewing many of the past complaints and writing up small scripts on how you would respond to them, with the goal of understanding if the customer’s complaint is valid or not, and if it truly warrants a discount. With some good preparation and practice, I think you would be able to overcome those complaints that do not justify giving a discount and keep the company from being perceived as an easy discount give away organization.
Hope this helps. Please keep me informed.
Dear Crabby is a credit and collection advice column by Nancy Seiverd, President, CMI Credit Mediators Inc. Your thoughts (firstname.lastname@example.org) on what to advise are most welcome, and with your permission, we’ll reprint your comments in the next issue of our newsletter.