10 Signs of a Problem Client

When you’re starting out in business your time is spread very thin. As a startup, you are managing and working in every department from marketing through to logistics and time is an extremely valuable asset. It’s important to have a solid understanding on how to identify a ‘problem’ client. Obviously problem clients are just part of business and you’re going to have a few in your business lifetime, but the way you identify and manage how you do business with them can save you a lot of time and money. Time that could be better spent on looking after your loyal clients or improving systems.

Identifying a Problem Client

It can be hard to identify who or what customers are going to be time wasters. Like any business, we have had our share of ‘difficult’ clients, and we have found that they generally share some common traits or display similar warning signs.
Her are our top 10 signs of a problem customer
  1. Have a large backlog of work not complete, incomplete and/or messy records
  2. Always have the excuse, “My old accountant was terrible!”
  3. Doesn’t take responsibility for the state of their accounts and finances
  4. Often have very negative or victim mindsets, blaming things happening in their personal lives for the state of their affairs
  5. Expect much more hands on involvement, with higher levels of facetime or phone calls but not willing to compensate for time spent
  6. Lack the ability to adapt to changes in or new processes
  7. Fail to listen to advice from professionals, or when given solutions they fail to act
  8. Don’t provide information when requested by agreed timelines
  9. Arrange to have multiple meetings in order to ‘sort stuff out’ but no action is taken after those meetings, and no forward progress
  10. Do not have decisive leaders in place to drive the success of the business

What Happens Next?

If you have coworkers or business partners, arrange a meeting to discuss the client. In the agenda, outline the main points that you’d like to discuss in an open-discussion format. This allows each team member to express their feeling on any correspondence they’ve had with the client, and concerning points they would like to raise.

After the discussion, consolidate all the information into a letter or email. You should then contact the client and provide the outlined concerns of continuing the business relationship. It is also a good idea to add terms to your letter EG. ‘We will require full payment of services before work is undertaken and any additional time spent will be billed in addition.’ If the client agrees to the terms, perhaps you can work toward a resolution.

If the client doesn’t accept or no longer responds to your correspondence, you would then need to make a business decision to off-board the client based on the listed items discussed in the meeting.

Prevention

A great way to screen a client before you ‘get in too deep’ is to create an internal document that is reviewed by the team when they are first onboarded and after 1 month. The document is a fillable form that asks questions that could trigger red flags or warning signs.