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Top tips to deal with payment issues in the Middle East

It can get to a point where you as an FM operator feel ‘enough is enough’

Alan K Millin says FMs shouldn't be afriad to fire the client.
Alan K Millin says FMs shouldn't be afriad to fire the client.

Facilities management people must be among the most pleasant service providers that clients can engage with.

Whereas construction contractors are strong in negotiation and can be even stronger during contract execution, many FM companies seem to be averse to any form of client/provider interaction that may show them as overtly contractual.

Utility and telecom companies are among service providers who operate their businesses from a position of strength, and all customers recognise and accept this situation. If we don’t pay the bills, these organisations have no problem suspending service. They may also charge a “reconnection” fee to restart service provision. Within the FM domain, this could be likened to a demobilisation/remobilisation fee. 

Many FM organisations faced collection issues last year, but how many of them withdrew service? Why are FM companies so reluctant to withdraw service when they don’t get paid on time, or even to fire their clients, when other service organisations cut late payers off in their prime, without losing a wink of sleep?

We are regularly told that we need stronger agreements. We do have international standards to guide us in creating such documents. Perhaps we are now so focused on the quality and structure of the agreement that we forget to act on its content. A well written contract still needs to be well managed.

The most direct way I heard a service provider explaining business to a client was: “look, we work, you pay, that’s how it’s done…” Sounds simple doesn’t it?

Clients often look for performance bonds from service providers. Is it about time that service providers demanded payment bonds from clients? You might think this could never work, but if it became the industry operating norm, then perhaps it could. 

Of course, advance payment is by far the best option for a service provider. Late payment stresses the supply chain and has knock-on effects, even to the extent of late payment of wages. When a service provider pays wages late, the municipality might take note and step in. The regulators are not too interested in tales of woe; they expect employers to pay their people on time. 

The late payer gets negative publicity, their brand is tarnished and, meanwhile, the client is often still consuming service that they are not paying for, while challenging the service provider, from a newly assumed position of moral superiority, to look after their staff responsibly.

What would be so wrong with implementing a utility-based operational model? We do the work and submit the invoice. When the agreed payment period has elapsed, we send a follow up demand. Note that it is now a demand, rather than a request for payment. If the client doesn’t pay within the next five or seven days, we withdraw service, charging for the forced demobilisation. We will happily return to site when all outstanding invoices are settled, and our remobilisation charges have been covered.

There is absolutely nothing wrong with demanding overdue payment. The less we ask, because we are nice people that don’t seek confrontation, the longer it takes to get paid. 

If we continue to give away our services for nothing, there will always be clients prepared to help us go bankrupt. There is nothing wrong with firing a client when needs must, it’s a straightforward business decision.

About the author: Alan K. Millin is noted FM consultant and thinkerbased in Dubai.

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