This month, rather than featuring a single ASCII Group member writing at length, CI presents comments from four leading members, all addressing the same topic: what to do when client relationships get difficult. These problems can manifest in several ways, whether it’s nonpayment or late payment, continual cybersecurity lapses that expose IT providers to unnecessary risk, or disagreements about service levels or support hours. The old adage that “the customer is always right” might be a good rule of thumb, but MSPs must also consider the welfare of their businesses when faced with disputes.
CI received such a flood of response to the questions posed below that we’ll continue the conversation next month, drawing on another set of ASCII Group member responses to create our next month’s column. We hope you enjoy this multi-month presentation!
Commercial Integrator: When you run into billing/payment issues with clients, what are your go-to solutions to avoid or mitigate negative outcomes?
Marc Bodner (Cohere Cyber Secure):
It starts with the relationship and the systems we have in place to make sure that the relationship with our client is prioritized, even if we have a disagreement. That means having a solid master service agreement (MSA) in place, a strong client manager and an open channel for communication. Our solutions are to be clear, transparent, professional and understanding, even when there is a dispute. That helps ensure it doesn’t escalate into a conflict.
Every situation is different. If both parties have a reasonable foundation for the disagreement, it’s good practice to work to find a compromise that everyone can feel good about. At the same time, as much as the “client is always right,” that shouldn’t be a basis for being taken advantage of.
Bottom line: Communication, transparency and professionalism win the day. And a fair resolution is a win for everyone.
Zina L. Hassel (ZLH Enterprises):
Spelling out expected terms at the beginning of the relationship is the key. We do not allow clients to be “ahead of us” in terms of outstanding payments. Worst case is service curtailment.
Raffi Jamgotchian (Triada Networks):
Most of the time, we let our systems do the work, automatically sending out reminder notices. Most of the time, that is enough. But sometimes you need to pick up the phone or send a personal text, asking if everything is OK. Sometimes, it’s a simple “I forgot,” “I didn’t get your email” or “We’ve hit a rough patch and need to float a bit.” These are times to have a conversation with your customer at a business level, beyond technology. Take them.
Tony Tsao (Purplo Consulting Inc.):
Prepayment or pre-authorized payment plan, we’ve found, is the best way to prevent this problem in the first place. Since we moved clients to prepaid terms in our MSP agreements and billing operations about two years ago, we’ve eliminated 90% of this issue. For the rest (e.g., odd break-fix projects, final payment missed), our approach is not to wait. We recommend establishing a standard follow-up/escalation process such as this:
- On the seventh and 14th days overdue, automated email reminder and “friendly reminder” phone calls from our frontline worker.
- After 21 days overdue, a phone call from our admin team and an official notice with payment deadline by 30th day.
- After the 30th day, send final notice with five-days-until-service-suspension notice.
- After the 35th day, suspend (but don’t delete) services.
- After the 40th day, send to the outsourced collection agency.
- After the 60th day, turn to small claims court. Where we operate in Vancouver, Canada, there is a simple, expedited online system called Civil Resolution Tribunal for anything less than $3,000.
CI: If your client doesn’t take cybersecurity seriously and/or introduces unnecessary vulnerabilities, what are best practices for helping them make change?
Bodner: Of course, it is situational and very much dependent on the services that a client is buying and their expectations of you as the IT service provider. But there is no doubt that having a good “CYA” letter signed by the client is a good practice. And I think that getting people to become more aware of the increasing importance of cybersecurity is an educational process. We should take it upon ourselves to find ways to teach our clients.
Hassel: We use our best efforts to educate the clients about security vulnerabilities. We underscore the seriousness of breaches and the costs to mitigate them. The old adage “An ounce of prevention…” is what we try to instill. At the end of the day, however, it is the customer’s decision to protect themselves or not. If the latter is the course, then a self-serving disclaimer is used.
Jamgotchian: We put them on notice. We lay out the risks associated with their decision and risky behavior. Most of the time, this is verbal, but, if it’s needed, we will provide a written notice. It states very simply that you have chosen not to take our recommended path and, as a result, these are the risks associated with it. And, as outlined in our MSA, you are responsible for outcomes associated with it. It very rarely gets to that.
Tsao: Communication, disclaimer document and possibly resignation. We schedule a meeting with the client to explain why we believe certain cybersecurity practices and safeguards are necessary as part of its company risk-management strategy. Lay out the must-haves and the nice-to-haves, according to the risk-tolerance level. Compromises may be made, depending on the compliance and regulatory level required. For any major compromise that deviates from best practices, prepare a disclaimer document for the client to sign. If a client does not sign and insists on skipping on critical safeguards — especially if already breached previously — be prepared to walk away from the client since it may attract heavy liability for the IT service provider.
CI: How do you deescalate the situation when your client and your business encounter a dispute about either service levels or support hours?
Bodner: The first step is to have a good MSA, service-level agreement (SLA) and other legal documents in place. These documents are meant to protect both parties and bring clarity to the relationship. Once the relationship is in place and the “prospect” becomes a “client,” it’s critical to do a proper job at record-keeping and documenting issues, trouble tickets, communication exchanges, etc. When a dispute does arise, stay level-headed. Be solution oriented. And be empathetic to the client. Opening with “It must have been very frustrating to not be able to access your email” is much better than opening with “Well, you didn’t download the update like you were supposed to, so it’s not our responsibility!”
Don’t be penny wise and pound foolish. But, at the same time, don’t be taken advantage of. Communicate effectively, and most of your problems will find a way to get resolved.
Hassel: We try to be very clear to the client about expectations. Although an inquiry or ticket may be responded to outside of standard hours, that is for our convenience. If a client wishes for “platinum” service, there is an associated cost. We have found that setting proper expectations at the outset serves to minimize conflict.
Jamgotchian: I can’t recall something like this having happened, but it’s a phone call or a face to face. Sometimes, you need to let the frustrations get out before you can have a frank discussion. Worse case, you point them to your contract/agreement. If you don’t have those spelled out there, that’s a problem. But I don’t like doing that because, if you have to point to the contract, there may be a bigger problem afoot.
Tsao: There should be documented SLA/hours and a dispute-resolution process in each agreement signed. If a conflict still arises despite that, the first step is typically an open discussion on the differing views. Issues can often be reconciled through mutual understanding, negotiation and concession exchanges. If the parties cannot resolve conflict this way, it’s important to have an impartial third party to mediate or arbitrate without resorting to court. Ultimately, a clear and well-written agreement that facilitates two-way communication and understanding on both sides would likely be the ideal way to handle disputes.
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