Project Management

What to do when a client disputes service charges

When a client questions why their bill is so high, it can be a frustrating experience. IT consultant Erik Eckel offers guidance on how to handle this delicate situation.

You knock a tough project out, and then the client calls not to say thanks but to question why the bill is so high. These are delicate situations that, managed improperly, could cost your consultancy a client. Here's how to handle such an episode.

1. Check the facts

Don't assume the client is just complaining -- that's a rookie mistake. My office maintains excellent systems and processes for tracking time onsite and billing equipment and software purchases, and yet, we've still managed to bill a client improperly (once we billed a client twice for the same hardware components, albeit on two invoices). Any IT consultant who tells you they haven't done so is lying -- no one is perfect, and service-based billing has never been an exact science.

So begin by reviewing a copy of the actual invoice and verifying its accuracy. Double check to confirm the client hasn't received duplicate bills, which sometimes happens (especially when clients drag their feet paying outstanding balances. and they receive multiple requests for payment).

2. Review the time onsite

More than likely the client is questioning whether a project's time is being billed accurately. The client might believe one these scenarios:

  • Maybe the project was simple, and it shouldn't have taken the engineer so long to complete. Check to see whether this is the case (for instance, maybe the engineer had never programmed a WatchGuard firewall and was delayed trying to figure out its interface). If it is the case, discount the bill accordingly.
  • Maybe the engineer left (to track down a hardware component necessary to complete the repair) and returned to finish the job, but the client doesn't want to pay for the time the engineer wasn't actually onsite. If the client was insisting that the repair be completed immediately, and your office could not wait for a regular supplier to mail you a replacement component, explain that your firm must bill for the time on the road tracking down and obtaining the emergency replacement.
  • Maybe the onsite technician stopped work for 20 minutes to knock out an emergency remote session for a second client while on the first client's site. It's critical that you remove that time from the second client's invoice.

3. Stick to your guns

Sometimes, though, clients just want to complain that IT investments are expensive and they don't see the value. You need to extract yourself quickly from such inane conversations.

For example, a client might complain that $600 is way too much to charge for antivirus software for 20 desktops or that migrating 50 gigabytes worth of photos, email, music, and documents shouldn't have taken your engineer two hours. That's when it's time to explain that your firm makes very little margin on software and that those licensing fees are just a reality of the marketplace. Similarly, you can explain that 50 gigabytes of data is actually rather a lot for a desktop and that such transfers require considerable time to complete.

I don't recommend discounting such charges just because a client complains; it's likely the client is not a good fit for your organization anyway.

How do you handle client service charge disputes?

If a client has ever disputed your service charges, how did you resolve the situation? Share your experiences in the discussion.

More billing tips for IT consultants

About

Erik Eckel owns and operates two technology companies. As a managing partner with Louisville Geek, he works daily as an IT consultant to assist small businesses in overcoming technology challenges and maximizing IT investments. He is also president o...

12 comments
tom
tom

Best thing you can do when a client disputes the bill: Tell them that that is what the work is worth to you, but they can pay you what the work is worth to them (hardware excluded). If the work is worth a lot less to them than it is to you, then take what they WILL give and tell them that they are no longer a customer because they don't place the same value on your time and expertise that you do. Most clients, when faced with losing you as their consultant, will pay the bill unless they wanted rid of you anyway. I didn't originate this method, but have used it and it works GREAT.

dgennello
dgennello

I guess we've been lucky since this has only happened once in 10 years. Newer client, small business with 5 PC's. we spec'd out a new system for them and quoted it very reasonably. They went to Staples and bought a lessor system (I should have known then). Sent a tech to set up the new system and transfer all of the data. Took two hours. Billed it out at $127/hr our standard rate. Client called and said she wanted the contract rate $107/hr) shown on a sales brochure she saw at a trade show. Explained that she needed to be a contract client with a subscription for other services to qualify. Batted this back and forth for a month. Finally discounted the bill to $107 and essentially fired the client. She has called twice since for service but we will not go out.

reisen55
reisen55

I just completed an office upgrade for Windows XP to Service Pack 3, tested it and found it did not cause issues as it has done to other systems. The alternative was to upgrade to Windows 7. This is a medical office so HIPAA security rules apply. Obviously the Windows 7 would have taken FAR longer to do than Service Pack 3, which ran well and fast. Even so, indicate on a bill that you think the client may find questionable a FREEBIE or something done for no charge. I tested Windows 7 onsite, and their software did indeed work. But I did not do any Windows 7 install so this was also an experiment for my benefit. A learning experience. Write it down as a NO CHARGE item. The client will sometimes see that there is something done as such and that, alone, takes the rub off of the total bill itself.

Sterling chip Camden
Sterling chip Camden

If I've had a long relationship with the client and they have a history of reasonableness, then I'm much more likely to give them the benefit of the doubt.

Erik Eckel
Erik Eckel

This is a sound philosophy, certainly. My firm isn't opposed to structuring rates differently for a client, especially if the client wishes to have a long-term relationship. We'll even fold recurring hardware or software fees within a monthly retainer contract, if the client wants. But clients that don't feel they should pay for service will always prove a difficult fit.

reisen55
reisen55

And it would have devilishly fun to send a tech BACK to the client to remove all of the data from their systems, turn it back to as purchased from Staples and THEN suggest the client contact the $107 vendor to do the same job all over again. Only if you felt like eating the first two hours of course.

JohnMcGrew
JohnMcGrew

I've had this kind of nonsense happen a few times. You learn pretty quick that they're a client you don't want to keep around. But I certainly wouldn't have backed off on the rate if I was going to fire them anyway.

cavehomme1
cavehomme1

Clap, clap, clap.... I just despise people like that. Well done.

tr
tr

A consultant should always keep accurate records of arrival and departure times to a site and bill consistently for services provided. This will reduce confusion and cover your rear end if any issues occur. Line-item discounts are a great way to give the client a break, whether as a thank you for being a good customer or to absorb some of the learning time when new technologies are used. If a client requests a specific technology and wants you to support it, you may be able to negotiate a shared training cost. If you need to work on another client's issue, do whatever you can to leave the current client site to reduce your exposure or confusion about conflicts of interest.

reisen55
reisen55

I have found it wise, in this horrid economy, to let the rate and time find itself. The rate is the hard number, and I have basement minimums that I adjust on the financial ability of the client. But time is a variable that can be developed, literally, over time. For example, a new small dentist office about 30 feet from my major medical office in Orange County NY requires very very light service. I estimated 2 hours a month and he balked at that a bit. So I said let's balance it at one hour per month - offsite updates, he has only 2 systems anyway - and monitor that time usage. If it is effective, then there we go. It is no cost to me to cover this client as walking 30 feet is easy.

makkh
makkh

What is the purpose for you to stick to your initial stand if the client insists not to pay? Best last move before you drop off any unwanted client is collect whatever remaining payment. Period.

JohnMcGrew
JohnMcGrew

The only reason to compromise on the rate is to attempt to placate and keep the customer. If they are insisting on not paying the originally contracted rate, then the next step is a demand letter from you, then your lawyer.