Dangers of acting on a referral too Quickly.

A business owner loves a referral from a customer. A dangerous situation can occur if the established business doesn’t follow their engagement processes.

What happened

The Complete Accounting team member (Customer) leaned over their fence and asked their neighbour;

“Please send your Treelopper (Subcontractor) over to quote our job.”

The treelopper said;

“I will contact the boss (Business owner A) and he will come over to quote the job.”

A quote was prepared by Business owner A, the quote was verbally agreed to by the Customer. The Customer noticed that Business Owner A was wearing a branded uniform and had arrived in a branded vehicle.

Business owner A said he would send his men around to do the job, the men arrived wearing a different uniform to Business owner A and started the work.

What were the risks?

The risks involved in this job were

• The dangers of working with chainsaws, mulchers and a truck on site.
• Trees falling and damaging buildings, people or other property.
• Tree branch removal damage.

A satisfactory completion of the job occurred and in good time, without incident. Upon completion; One of the men requested payment from the Customer. Customer A made a request for an emailed Tax invoice. Customer A received a Tax invoice from a completely different company to Business A. The completely different company were subcontractors, working on the job allocated by Business A.

Problems

The following problems were identified by the Customer during their service delivery.

Subcontractor arrangement were never discussed with, or agreed to by Customer.

A written quote wasn’t received before the job commenced.

And the Terms and conditions for the job were never signed.

Potential problems our lawyer identified

As a sole trader Business A are 100% liable when engaging the customer.

Business A may have received an illegal secret commission.

The assets of Business could be at risk if an unhappy customer sues for damages caused onsite.

Ways to fix the problems identified.

1. The business owner will prepare a policy that states that all customer must review and sign Terms and conditions before work commences.

2. Subcontractor arrangements are clearly defined and agreed to in the Terms and conditions before work commencement.

3. Arrange a meeting with your lawyer to review the business asset holding structure.

To ensure these problems don’t happen in your business, we suggest that you review your new referral process. If your business uses subcontractors, please review your engagement process. If your business doesn’t have a referral or subcontractor process, please Contact us to discuss how we can help you fix this problem.