Bad Payers

Why Some People Don’t Pay Their Bills (According to Donald Trump)

Business Strategy  |  4 min read

Over the course of the Trump’s presidential campaigns and years in office, you may have been surprised to learn how often the former US President’s companies failed to pay their suppliers – even when the money was legitimately owed and proper contracts were in place.

What’s worse, Trump always felt completely justified in holding out.

And if you’ve been in business any length of time, you know this attitude is not unique to The Donald. Sometimes your hard-earned money doesn’t come in as agreed, or not at all. Here are four reasons why Donald Trump, and possibly some of your own customers, avoid paying their business debt.

  1. Your Quality is Sub-Par
    Most often when Donald Trump’s companies refuse to pay, he cites quality issues. “Let’s say they do a job that’s not good, or a job they didn’t finish, or a job was way late. I’ll deduct from their contract, absolutely,” Trump has said. Likewise, your customer may feel qualified to arbitrarily make such an assessment, and rule your work unsatisfactory. Be sure your contract is clear on the payment terms and what constitutes a complete deliverable. Any lack of clarity can be used against you, even if you have gone above and beyond in many unacknowledged ways. If your work could not be fully completed for any reason, negotiate a reasonable settlement or consider third-party mediation. Failing that, call in a good commercial collection agency. Reserve expensive and risky lawsuits as a last-resort alternative.
  2. Slow Payment is a Habit
    Some companies simply have a policy of paying slowly, or only after one or more demands are made. This goes against most entrepreneurs’ idea of good business, but it is a reality. Donald Trump is notorious for taking years to pay some suppliers, or for simply deciding he has “already paid enough.” Some business owners simply have no conscience about paying themselves long ahead of others, and it’s important to remember that being a CEO is the most popular career choice of psychopaths. Such people care nothing about you, and will often pay only when they have no other choice. Don’t count on empathy or common sense to get you paid. Send bills out on schedule, deliver as promised, follow up aggressively, and focus on being the first in line for payment. If you are a trade contractor, consider filing a lien on the owner – more than 200 have been filed against Donald Trump!
  3. There is a Cash Flow Problem
    Oftentimes, businesses mask their own receivables issues behind quality complaints. If you’ve delivered as promised and resolved any deficiencies, you deserve to be paid as per your contract. In the case of Donald Trump’s businesses, payment delays have often proven the result of his own cash flow troubles. If you suspect this may be the case (read my popular blog post to learn the warning signs), assign the account to your collection agency right away.
  4. They’re Outfoxing You
    Believe it or not, some business owners believe it’s smart to minimize what they have to pay, even when the money is completely deserved by another party. Whether it’s business debt or his personal income taxes, Trump is convinced that clever people (like him) leverage loopholes in the law to avoid paying what the rest of us do dutifully. Although it’s next to impossible to change such an unfair mindset, it’s important to recognize it exists in the wild. Don’t underestimate your customers’ ability and willingness to “outsmart” you.
  5. The Customer is Going Bankrupt
    At least four times, Donald Trump’s companies have left numerous hardworking suppliers in the lurch by declaring Chapter 11. When that happens, creditors are lucky to receive pennies on the dollar, and most never get paid at all. If you’ve filed a lien or are a secured creditor your chances are better, but there is no guarantee the debtor’s money will stretch far enough to cover your bills. The government and banks are always first in line, and even they sometimes lose out. Establishing your company as a top-priority payee is always worthwhile, because those who are first in line to be paid are least likely to be left dancing when the music stops.

With very large contracts, it may be worth hiring a company that provides deep credit research within your industry, including credit alerts to give an early warning if things are at risk of going south. MetCredit’s unique partnerships with national and regional credit bureaus can give you a head start on other creditors. 

It’s important to remember that although Donald Trump may be the poster child of business owners who don’t pay contractors, his attitude and practices are not terribly rare. Be smart, be aggressive, and be proactive, and you can avoid a lot of grief.

For more advice on getting paid quickly, shoot me an email, connect on Linkedin, or use the button below to download my 10 Debt Collection Pro Tips.

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Brian Summerflet Author: Brian Summerfelt

President and CEO of MetCredit, Canada's top-performing consumer and commercial collection agency

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