Trading on trust
The crash of the banks and financial sector of 2008/9 reinforced the old adage of the bigger the business, the harder they fall. However, as a sole trader or limited company, failing can cost you your house and have a detrimental impact upon your family life for a long time thereafter. Is trading on trust enough?
Being in business is a daily challenge to survive. Overheads, such as employee salaries, pensions and tax, vehicles, premises and paying the trade account each month means that you have recurring financial commitments over a relatively short period of time. So, here is some advice on how to stay on track.
Watch your bank balance
Small businesses often suffer hardest when a client doesn’t pay in a timely manner and it can have a severe impact on cashflow. However, if you don’t stipulate your terms and conditions for payment, then how is the client expected to know?
- Always include the commercial terms that you offer – products and services provided and a defined payment period
- Include a workmanship guarantee in your terms so your clients feel equally protected and assured that you will be available if something goes wrong after payment has been made
- Make sure you use plain English and that your terms and conditions are accessible. Using smallest font possible will not endear you to your customers
- And finally, picture the most difficult customer you can imagine and draw up a list of issues that they might raise and answers that you might require.
Thereafter, if materials are provided as part of the supply and installation, the layout of money and your business exposure has increased. There is an expectation that these materials carry warranties. Make it a part of the job to complete the necessary paperwork – ensuring your business and your customer are adequately protected should any problems arise.
Standards matter most
When trading and supplying services, competency is evidenced through qualifications and certificates. If you carry out work for which you are not qualified, then you might be deemed incompetent. Examples of this include gas installations, unvented hot water systems, any notifiable work or just carrying out work for which you cannot claim expertise. A combination of confidence in your own abilities and a desire to see a job through to a conclusion can be a temptation, but legal repercussions that put your business at risk can follow.
If a customer subsequently states they are not happy with the standard of the work you might face the prospect of a court case for monies owed. Evidence provided might typically include photos or video taken, or emails and any other correspondence.
Importance of evidence
A judge is not an expert in plumbing and heating, and potentially neither is the customer. They follow the recommendations from things like codes of practice, British Standards, regulations – such as Building Regulations or Water Regulations – or manufacturers’ instructions to identify and authenticate the evidence you both provide. A job might look good, but that doesn’t mean it’s compliant.
You are probably claiming that the work is to a professional standard and satisfactory. However, if you cannot evidence this by proving competency in the first place, you are most likely on the wrong side from the outset. It is to your own advantage that you can demonstrate your competence through membership of a recognised professional body such as the CIPHE.
Trust isn’t enough
The nature of plumbing and heating engineering call outs means that some are often at a time of emergency. This can be difficult to manage for you and your customer. However, an up-front professional approach can provide you both with the necessary reassurance and confidence from the outset.
Establish and agree if you have a call out and diagnosis fee before you do any work to remedy a problem.
Once you have identified the root cause, provide the customer with a further update and quote for any subsequent work required. It can be difficult because what the eye cannot see, it cannot understand but communication is key. Completing work because you trust or believe that you will be paid for it can lead to problems later on.
A professional plumbing and heating engineer will have very good communication skills. This includes verbal and non-verbal, written, listening, respect, friendliness and confidence. Any work you carry out should be put in writing or a simple contract. This can be in the form of a job record with job number.
If it’s not in writing, then you only have hearsay. Hearsay is not evidence or fact, it is open to question, debate and opinion.
The other most common problem in business is undertaking additional work on trust or verbal agreements.
Replacing a boiler on a very old system is one example. Older systems will definitely suffer from corrosion and subsequent sludge etc. You allow for power flushing as per the manufacturer’s warranty, but this can lead to all sorts of ensuing issues, blocked pipes, pumps, jammed motorised valves, leaking radiators, to name a few. Any of these have the potential to happen because once the muck has been disturbed or removed the system can be worse off than when you started.
You may fear that if you estimate to replace everything, you might not have got the work as a customer won’t see this as like for like! But explaining potential hazards that could cause additional work should this happen will cover you. For instance, don’t drain down straight away. Get the system switched on while the customer is there and walk round checking its functions.
A walk through the job with the customer and explaining your concerns is far better than disputing them after and then arguing to get paid. Customers want good honest advice as this is what is anticipated from a professional.
Plumbing and heating work has so many variations that adhering to a plan can often be a sticking point. No two buildings are the same, other trades can impact upon your work, and some customers change their mind because they can’t visualise your proposal.
Taking quick action
If you have to vary from what you intended or estimated, then you must inform the client either straight away
or the same day, and in writing, to get the work agreed. If the client isn’t around because they are at work, for instance, follow up with an email or text with full details. Do also ensure that you meet them.
Keeping the client informed is key. It’s no good doing extra work and just expecting the client to have the money because they live in a big house or are spending what appears to be large amounts of money.
Using digital software on a tablet showing your designs helps create and agree the vision. You can also use software to stay on top of your finances, by using an app for instant invoicing, payments and accounting. These methods are quick, professional and in writing, and have a better chance of getting payment via a card transaction on the day.
Using video or camera pictures of the area of work before, during and after will help provide evidence of your work that might be concealed by boxing in or buried.
Above all, being professional is paramount. Keeping your eye on the ball and reducing the risks is what gets you work and success.
Advice provided via Plumbing and Heating Promotions Limited (PHPL).
This article first appeared in the Nov/Dec 2019 issue of P&H Engineering, the magazine for members of the CIPHE. Find out how to join here.