To bill or not to bill?

December 15, 2006 5:49 PM

RecurringBillingFilter: As a small-time hosting provider, we bill every month using ModernBill. MB Stopped working about 5 months ago, so about 12-15 clients went unbilled for that time... Where do we land re: back-billing?

The MB problem was only just recently repaired, and we're left with the question of if they're still on the hook for the past 5 months of service. I know it might piss off some people to just hit them with $50 all of a sudden, so we're not going to do that without communicating the situation, but the hosting service was interrupted the entire time as well.

Also, we have at least one reseller on our server who back-bills his own clients for their hosting at a dramatic markup. He typically owes $70+ a month, and hasn't been billed (and thus, hasn't paid) for the past 5 months.

Should we consider it lost? Communicate with the few clients affected and then charge them? Or just take last month's and December's?

I'm asking from a logistical/ethical/whatever standpoint. The money would be very nice, since we just made some major purchases and we're a small business. We're on good terms with our few hosting clients, but not good-as-in-free-as-in-beer good.

posted by disillusioned to work & money (14 comments total)

I'm a firm believer in doing everything possible to keep the customer happy.

This was your problem, not theirs. I would suggest doing a letter explaining the situation, let them know what they would have been billed for and tell them to feel free to send in whatever they felt was right and the matter would be settled.
posted by HuronBob at 5:54 PM on December 15, 2006

the hosting service was interrupted the entire time as well

Do you mean that the customers were not being delivered the service for which they weren't paying, or am I confused from your wording?

Assuming they were getting a service and not paying for it, I'd politely inform them of the billing situation and perhaps either spread out the money owned as increases over the months following or give a decent amount of notice that a bulk charge is coming. If you make paying optional, then your commercial clients may not pay when completely able -- if you present the charge and then strike a deal with the complainers, you guarantee some income while still allowing a concession for those that are upset.

I'm quite confused, however, as to how you could have let this go for five months -- surely there were other ways to collect the money during that time or at least communicate with your clients. When your revenue stream is based on credit card charges, isn't waiting this long the worst thing you could possibly do, given that cards have expired since that time?
posted by VulcanMike at 6:07 PM on December 15, 2006

If you were providing service you should be able to retroactively bill. Most will pay; offer discounts or upgrades to those who freak out.

If they had no service, then you can't invoice them.
posted by stefanie at 6:13 PM on December 15, 2006

Um, sorry.

The hosting services was UNINTERRUPTED the entire time. Christ. I can't type, it'd seem.
posted by disillusioned at 6:18 PM on December 15, 2006

Vulcan--

Hosting is a relatively small portion of our business. We use it to defray the costs of the server and to bring some extra income in, but it's not so critical that letting us be lazy for five whole months isn't out of the realm of possibility.

And, clearly I meant "the hosting services were not interrupted." I just can't win tonight with my keyboard.
posted by disillusioned at 6:20 PM on December 15, 2006

I would bill them for the back dated owings. If they pay, great. If they kick up a fuss speak to them, and possibly write it off. It's only 15 clients.
posted by Frasermoo at 6:21 PM on December 15, 2006

You explain and bill them but cut slack on how they pay it back. EG offer to amortize it over six months.
posted by unSane at 6:37 PM on December 15, 2006

As far as the law is concerned, it is pretty clear that they got service that they have not paid for, and thus they reasonably owe you. Now if your agreement with them indicates that you will bill them promptly, you might have an issue in court.

That said, I would explain the situation and take what they give you. Something like;

"Due to a variety of reasons, you have not been billed in the past six months. You owe $XX for these six months. Because we think it is unfair to ask for this entire amount at this point, we are asking for your kindness to pay the entire amount. We would understand if you think this unreasonable and simply ask that you include as a note with your next payment that that payment (whatever it be) brings your account balance back to $0".
posted by fief at 7:54 PM on December 15, 2006

Is my math right that we're talking about $750 total here? $50 each across 15 clients? I'd write it off, but send a note letting them know they got a deal. Offer a discount for paying a year in advance.

If the reseller got paid by his clients, I'd bill him, though. It's one thing to be graceful with retail customers, it's another to allow resellers to slide.
posted by maxwelton at 10:23 PM on December 15, 2006

I assume that the $50 figure for five months was a random example, giving there is at least one customer who pays ~$70/month.

fief, if I was a customer who received your note I would have no idea what you thought you were saying, but it sounds like 'it seems unfair to ask for the whole amount now, so please pay the whole amount with your next bill'. On rereading, do you mean 'pay however much you want'?

Personally, I agree with unSane: tell them how much it is, offer to let them pay it in six monthly payments if upfront is too much. Deal with complaints individually.
posted by jacalata at 12:43 AM on December 16, 2006

What about letting your customers choose what they'd like in exchange for you billing them late?
posted by stereo at 6:40 AM on December 16, 2006

After you politely explain the situation, offer a free month of service to those that pay the retroactive bill.

It's highly unlikely that the customers didn't realize that they weren't getting billed, and it's unreasonable for them to think that they were suddenly getting free hosting.
posted by drstein at 9:07 AM on December 16, 2006

I have my hosting setup to auto bill, and since its not very expensive, I would not notice if they forgot to bill be for a while. I would, however, be very upset to get 5 months of back bills that I had not expected, and would most likely start looking for a new host. Tell them what happened, and let them know that billing will start up again next month as normal. Happy customers will pay off much more in the long run.
posted by nalyd at 1:17 PM on December 16, 2006

They owe the money and you shouldn't feel at all shy about expecting to get paid. Since some people run real close to the bone you might offer them the option to double-up their regular bills until such a time as they're caught up, though, perhaps paradoxically, I think that's NOT an offer you should extend to the multiple-account people - that's too much money to have outstanding on more than a NET 60 kind of basis.

Definitely don't just charge it without communicating with them, though. If for no other reason than to avoid any NSF fees you yourself might get hit with.
posted by phearlez at 3:47 PM on December 18, 2006