Client asking for Coronavirus invoice/fee reduction

marktea

marktea

New Member
Hi all

I'm looking for advice on how to handle a client and what to say to them as we have a phone call booked in for tomorrow.

My biggest client has yet to pay their February and March invoices and they are asking if I can discount the invoices due to Coronavirus. They have asked straight out for a 40-50% reduction, which I think is unreasonable.

I'm a sole director so will get no business assistance from the government and the bills I have to pay to accountants, HMRC etc certainly aren't going to be discounted. I have offered to defer some of the costs for a while but they have very abruptly asked for a discount, saying that other contractors they are working with are offering these kind of discounts and if I agree to it it will be "looked at favourably". To me this seems immediately toxic.

They are very likely to also ask for a discount on services going forwards. I could offer a small percentage but I'm unhappy about doing even that, never mind 50%. My overwhelming gut feeling is I'm being pressured into something that is unreasonable.

Any advice on how to handle this would be appreciated. Thanks in advance.
 
I'd be quite upfront and say something like the below, but there is a side of me (without knowing whole story, like the type of business etc) where I can see companies trying to get discounts even if they don't actually warrant one, they screw over others to increase their own profits basically.

Sorry but no I can't give you a reduction in price however I can offer you an extended payment plan where you pay over 3 months to ease your burden (Limited duration)
Then just explain that you have bills to pay and that you're not entitled to any business assistance (are you sure about this....), not to mention at the end of the day February (and to a point March) income wasn't really affected by Coronavirus....
Click to expand...

And the 'our other contractors have offered discounts' as a 'threat' essentially would have just had me saying 'and'... no 2 businesses are the same.

Be prepared for them to come back with 50% or nothing type 'response' though as I can already see what response they'll try due to the 'looked at favourably' comments. Remember coronavirus hasn't technically changed the law regarding contractual agreements, any changes by companies are being done out of goodwill (well banks just don't want to lose the money if a business goes bankrupt but still) etc.

In all honesty unless it's a long term client who I have a close working relationship with (ie the ones you'd actually reach out to to see if they're ok), if a client came to me with 'coronavirus, give me discount' I'd just be saying sorry but no I have bills to pay and if I give discounts to every client I won't be around to do any future work.

Also worth seeing this as a warning about 'relying' on just one business.

And just a side note:... I assume you've got contracts, you've had your 50% upfront etc too.... if not make sure any future work does because if you haven't I can see you getting screwed over with the current climate.
 
Apart from the fact that February should have been paid for before all this started, I think all I would be able to offer is a 20-25% reduction,
maybe with a view to clawing some of that back later in the year or something, as they're a regular client. The payment holiday you have offered them
is the norm, I think, in these circumstances from what I've seen elsewhere. I don't see how much more you could offer as a sole trader, we don't get any discounts!
 
Thank you very much for the advice. Your comments have been very helpful in working out how to break it down to the client so that my response seems reasonable and hopefully more palatable.

I'm the sole director of a limited company with no employees. I believe that under these circumstances I wouldn't get any direct government assistance, only possible emergency bank loans which would need to be paid back eventually.
 
Well it depends and why they want the discount I would say.

If you have done less work for them during this time then I think a lower fee would be fair enough, but negotiate this with them and don't accept their first offer. Maybe try get them at around 10%-20% less

Secondly are they struggling to afford the service? If not then there is no reason why you should discount, especially if they have not been financially affected then why should you. But if they are really struggling it could really help them get through the situation and help create a better long term relationship, you don't want to ruin any long term relationships in a short term downturn.

How did you get on with the call? Any update? :-D
 
Yes, this was sorted out in the end, thanks to everyone who gave advice.

They have seen a reduction in work, and since furloughed most staff and are down to a skeleton team of 5 who have all taken a cut in pay, including directors. But there is still work coming in as they are involved in lengthy construction projects.

It has ended up me taking a temporary 20% cut until restrictions are lifted and deferring a few of my smaller invoices for 3 months, which from my perspective obviously isn't ideal but it's manageable.
 
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