While it’s not always easy, ending a relationship with a client is sometimes necessary to continue growing your business. Many managed IT providers delay firing customers to avoid uncomfortable conversations; however, the longer they wait to speak to clients about canceling agreements, the more difficult the discussion will be for both parties involved — so act sooner than later.
No matter what, every situation is going to be different, so there’s no right way to fire a client. There are, however, general guidelines to follow when dealing with problem clients.
When Should You Consider Firing a Client?
Firing a customer should be a rare occurrence for any business. Ending a long-standing relationship with a client shouldn’t be taken lightly. It’s a serious matter, and you should only consider this route in extreme circumstances.
For example, sometimes a client doesn't pay. When this happens, investigate what’s going on before beginning the process of terminating the relationship. Examining nonpayment on a case-by-case basis allows you to consider the circumstances at hand and act accordingly. Is your client undergoing some financial difficulties and can only make a partial payment? If so, are you okay with giving this client a pass due to the circumstances?
Now, while you may make exceptions for clients from time to time, don't turn these kind gestures into habits. After all, you’re running a business — not charity. When clients begin missing payments frequently, it’s probably time to drop them.
Another situation when you should consider firing a client is if there are apparent relationship issues between you and the client. Again, there are going to be ups and downs with any client, but there should be more highs than lows during the relationship.
Communication sometimes breaks down between you and a client. It’s unfortunate, but it happens from time to time, and sometimes, depending on the severity of the communication breakdown, it’s best to cut ties with the client in question, especially if the relationship takes a turn for the worse.
Be on the lookout for any inappropriate behavior by your clients. For example, you should never be subjected to abusive behavior, including harassment, bullying and aggressiveness. Your clients don’t get a pass on behaving inappropriately to you or your employees just because they’re paying your services.
How Do You Go About Firing a Client?
After deciding you’re ready to fire a client, the next step is to act, which tends to be the most difficult part of the process, but once you get through it, you and your employees will be better off.
First, review your SLAs to find out if each one of them contains a termination clause. If your SLAs don’t, you may want to discuss what your options are with your attorney. We’re not legal experts, but a termination clause can prevent — or at least clear up — confusion when firing a client, so it’s in your best interest to discuss with your attorney what termination clauses can do to protect you.
Here’s an example of how to terminate a relationship with a client. While there are many reasons why you may fire a client, nonpayment is probably at the top of the list. If your customer doesn’t pay, you typically must send them a 30-day notice to acknowledge the possibility of you terminating services, which basically reminds the customer you can cease services if you don’t receive payment by the end of 30 days. Your attorney will more than likely advise you to take all the proper measures before taking the expensive and oftentimes lengthy route taking legal action by going to court.
Now, if you do eventually receive payment (that’s great news), then discuss the situation at hand with your client. Determine if it’s worth continuing the relationship. If it is, ensure the customer understands what’s expected moving forward.
Firing a client is a tough decision for any business owner to make, but sometimes, it’s the right one. Before beginning the process of terminating a client relationship, review your reasoning and determine if it’s valid. If so, review your obligations and get the ball rolling sooner than later.