The installation side of our industry is dominated by small businesses. There are a handful of large regional and national companies that make up a big chunk of the turnover in the industry. But in terms of numbers there are far more SMEs than large companies.
And being a small business in window and door installation, there are a number of pressures and risks that small businesses are vulnerable to, where larger businesses can weather them. One of those pressures is cash flow. And on the odd, extreme occasion, it is cash flow that can send a business under.
Installer vs unreasonable customer
For a small installation business, it is important that jobs get fitted and balances are paid pretty quickly. Big bills, like suppliers invoices, staff wages, tax etc are leaving the bank account all the time, and contract balances are the only things that can top that account back up.
So it becomes a very sticky situation when a home owner decides to withhold a balance. In some cases, there is a justified reason for not paying a balance. The installer may not have finished a significant amount of the work. There could be a number of problems with the product that need rectifying.
However, what I am hearing on an increasing basis is cases where home owners are holding back big final balances for very small reasons. A single scratched handle, a slightly dropped door, a wrong coloured letter box are all reasons I have been given for home owners holding back balances that reach well into five figures.
For a small installation business, balances of £10k and above are massive.
Cash flow vs time
The problems start to mount for small installers if balances are withheld at the same time as bills are due. Suppliers still need paying, staff still need paying, tax still needs to be paid. So if all the money is going out and there’s nothing coming back in to replace it, that installer can suddenly find themselves out of nowhere in a position of virtual bankruptcy. All because that home owner decided to hold on to a five figure balance over some which in reality is very petty.
And the fact of the matter is home owners are getting worse. The law, and there are many of them, has meant businesses have little to no protection from rogue home owners who look to take advantage. If you’re an installer and you’re reading this, how many times have you come to ask for a final balance to be paid by the home owner and then suddenly a list of teething problems appears so they can withhold paying? Bit convenient isn’t it. But, you can do anything about it. They have your money, so you have to comply. Where is the fairness for businesses in that?
No business protection
Whilst it is perfectly fair to say that there are rogue businesses in our industry, it is also fair to say that there are some home owners out there that are as rotten as they come, and look to take advantage of the businesses they deal with.
But, year after year new consumer protection laws are passed which hand over more and more power to home owners, leaving businesses wide open to abuse. There is now very little a business can do to protect themselves from a customer who is determined not to pay.
And it only takes one. A single home owner who owes a big balance has the power to bring down a good company for purely nasty reasons.
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