Discussion on:

What to consider before charging clients for canceled appointments

Even in an extreme case, say the client canceled on an on-site where I had already booked flights, hotel, rental car, and told all my other clients I would be somewhat unavailable. Rather than charging them something for it, I'd let them know just what a huge allowance I'm making for them and strongly imply that they owe me one -- all in a friendly tone.

I would ONLY consider such a policy if I had a truly chronic case, a customer who just cancelled about three times or more. The idea is that our time is valuable and we shuffle our schedules around for other customers. Technically, a few cancellations can cost us a good client visit at another location. IE we have lost money. Do we take it on the chin all of the time? No. But this policy has to be carefully considered IF and only IF we have a truly BAD case of schedule maintainance by a client. The other alternative is just not to TRUST any appointment this kind of client makes.

I go with these if then's
If they are good customers - I let it slide
If they don't pay on time - more often than not - I bill something
If they cancel often (ie decided to go shopping for the Weekend they booked me, I'll charge them a portion.

I am lucky, I can pick and choose my clients and have to close my books to new business for about 8 months of the year. It might be different if I wasnt this fortunate.

Although I haven't ran a business, I have actually thought much about how a business could ensure that delinquent clients are punished without adversely affecting the clients who do the right thing.

I would most likely implement a '3 strikes' system. If the client is a "no show" or cancels at the very last moment (within 1-2 hours or less), they get 1 strike on their record. Each time the client receives these so-called 'strikes', I will remind them how many available strikes they currently have left and that I could charge them a cancellation penalty fee but I won't.

If, however, they have a legitimate excuse for their absence or late notice, e.g. they were involved in a car accident, a relative/friend had died etc. I would waive the fee.

Fortunately I don't live in a big city such as New York, Tokyo or London so, if I were in business, I can be more flexible with time constraints before I add the fee to the bill.

That sort of thinking will get you out of business quicker than you can say the word "punish." It's about making sure you get paid for the time and effort you spent on a client. There is a very natural tendency with people, and by extension, with businesses, to not value professional services. It's doubly true if you deal with I.T. and computers in any way.

If you're in business, you gotta run it like a business. Take it from someone who started out WAY too "The customer is always right." Whoever came up with that comment didn't have to deal with 21's century customers. You want to help people, go the extra mile, and make customers happy. But you have to be paid. And if you've agreed to meet a client, and you've made a trip, and they bug out, sorry, but you have to be compensated.

I put it like this...I can sit on my duff and do absolutely NOTHING and go broke a lot slower and with a lot less stress than I can running all over the place to solve people's problems, only to not get paid.

I didn't always do this, but I don't even start with a client now until they have some "skin in the game" and they've signed an agreement. No, that isn't always popular, and some people have moved on. Oddly enough, they were mostly the ones I had problems with in terms of being the cheapest, and hardest to satisfy.

I didn't mean to imply that I would 'punish' the client. I recognise that clients are human beings, however I've heard many business horror stories from others who bend over backwards for their customers and never get paid for the extra work they do.

As you have highlighted already, the customer is not always right. I've seen evidence of this in MMO circles, for example WoW or SWToR, were the game creators try to please all players, but it simply does not work.

I gave the example of using the '3-strike' system to lend some grace to clients. I realise that bad things happen to everyone. However, I'm would not be willing to travel and schedule appointments for clients who regularly abuse my energy, time and income when they're not prepared to pay for it.

I also forgot to mention that after a certain period of time, the client would be able to redeem their available 'strikes'. Perhaps I should call it the '3-lenience' system.

I've seen other businesses implement a similar policy and works quite well for them. However, since I haven't yet seen it applied to IT, I must admit I can't guarantee it would work in practice.

I had a mentor years ago that taught me a few things about dealing with difficult clients. Among them was to keep perspective about the way you bill them. Some consultants are too adamant about chasing every conceivable billable minute and in turn can create an aversarial tone. He told me, "You can shear a sheep many times, but skin it only once." Consider the possible future opportunities to serve the client before you jeopardize the relationship over a single encounter.

I agree with what's above, for the most part. For me, it comes down to respect for me and my time. If it's an honest cancellation, I'll typically let it slide unless extensive travel or related expenses were involved. On the other hand, I've had clients who were repeat offenders and didn't seem to care. In those cases, I don't hesitate to charge for every minute I am diverted from other revenue generating activities. Especially annoying are those times when I've traveled across the continent only to end up parked in someone's driveway waiting. It cost me a lot of time and money to get there. I'd much rather be doing something productive, but if they're going to pay to sit and wait, so be it.

bending over backwards because your customers bend over backwards is a great way to go out of business. Not only does it chop away at the bottom line, but if you have staffers who have to bend over, pretty soon you will be cooled by the stiff breeze of a revolving door and they come and go.

You said, "It wouldn???t make as much sense for someone like me who works from home and keeps appointments by phone and online meetings. If someone cancels, it takes me precisely two blinks to turn my attention to some other billable activity, and costs me nothing extra."

If you're like me, I rarely conduct a phone or online meeting with out extensive preparation. So, there is a cost. But, I like your rules tempering how to deal with it.

The only time I had an issue with this type of behavior was when working for doctors and lawyers and they would be charged for my time and travel for late cancellations. Never had to do anything of the sort with anyone else.

First off, I'm not working as a contractor now, so this doesn't really affect me, but I'm wondering if it would make sense to have such a policy outlined in your contracts, but be generous and specific in enforcing it. For example, mark clearly on the invoice those times where you choose to waive it: family emergency, not wanting to upset a really good client, etc., but if you have a client with a history of late payments, or repeated late cancellations, you are within your rights to enforce your policy. Most of the time, you come off looking like the 'good guy,' or 'hero,' or whatever, but your butt remains covered when you need it. Thoughts?

I want to add - I am now the contractor - and have been the IT Manager contracting out. # I see respect as a two way street and did when i contracted work out to others.
# If I had to cancel in less than 24hrs, I'd offer to pay a fee to cover the contractors costs such as late cancellation fees for equipment etc.
# I also showed my respect by processing their bills as soon as they arrived on my desk.
# I also made sure that when a department wanted work done,(ie cable a new office layout) that the scope of work was finalised before the contractor came on site.
# I genuinely put thought into the Contractors situation and our business relationship, I wanted it to prosper to both our advantage.

I have had clients who dont care about how they treat contractors to their firm. I am happy to give that work to my competitors. I just think we shouldnt do everything at all costs for a customer. My contractors looked after me nicely due to the way I treated them - and I'd like it that way now that I have moved to the other side of the fence. I know you may loose a client who wants to spend big bucks - but me personally - I am happy to take a smaller chunk with someone who respects the quality of service I provide.,

Instituting a cancellation policy seems like a good idea, but why? I've been a consultant for over 10 years and have only ocasionally had a sudden cancellation where was notified about in advance.

I tend to have the opposite problem, me cancelling scheduled appointments with clients because a emergency popped up. When this happens I immediately call my client and apologize and re-schedule as soon as possible.

Since I generally use public transport, even my travel time can go to other business projects. It simply becomes a home billable while in motion.

That said, there were a few times when I did incur some extrordinary travel costs, and they were becoming frequent. So, we simply agreed a 'liquidation fee' for the missed appointment that came to about a quarter day. It meant they could still count on me dropping everything and coming out to their site.

My wife works in healthcare and the "no show" rate runs 25% to 30% depending on the office. In theory they could charge but insurance won't cover it and no one will pay it, so in reality it just makes a bunch of extra paperwork. For some reason though, in healthcare no one "fires" a patient, but they'll sometimes overbook like the airlines, something that easily angers timely clients if they have to wait. My barber has, by his estimate, maybe a half dozen "no shows" a year. With him, 24 hours notice is fine, 2 instances less than that and he won't book you again. His business is fully booked.

This is a very dangeorus practice to use and, again, I would have be very very pressed to employ it. The primary of them are (a) repeat offense beyond a count of 3 and/or (b) long travel time from door to door. If it was a client just around the corner, NEVER would I do this. But by the time, for example, I am out a 40 minute drive or so, then this is a consideration. Rather one of those situation I can recognize when I see it. But, RARELY to be used. I am rather sorry now I raised this issue at all.