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View Full Version : How much of a restocking fee?



Chilling_Silence
14-12-2009, 03:31 PM
Long story short our work has done some work for a company, consultation, deploying hardware, installation, configuration, setup, training.

The company has since decided two months later that they cannot pay the bill and now want to return the goods. Needless to say we're not happy.

Anyways, we're looking to charge them a restocking fee, as we can naturally no on-sell this hardware as "New", but rather "Used / damaged seconds". We could try and argue the sale, but we've had more than enough of this customer and want to wash our hands and walk away from them.

Lets say the final invoice was $100 (It's not but anyways), $40 was labour, time, installation and training and $60 was the retail of hardware. We're looking at a 20% restocking fee, but is it standard practice to only charge the 20% on the $60 the hardware cost, or 20% on the bill as a whole?

Basically we're just looking to claim back some money, rather than nothing at all...

..and yes, the sum is much, much more than just $100, but for illustration sake it's a nice round figure ;)

Any thoughts on the matter would be much appreciated

Cheers


Chill.

CYaBro
14-12-2009, 03:38 PM
We don't call ours just a "restocking fee", it is an administration/restocking charge therefore can be 20% of the whole invoice.
We also get a deposit for any big jobs.
If you have spent the time installing and training etc then they can't really expect not to pay for that.
Legally you could probably credit them back for the total of all hardware, as long as you get it back, less any restocking fee and invoice them for the labour.
If they don't pay send it to Bay Corp.

johcar
14-12-2009, 03:40 PM
I would have thought the fair fee to charge would be the difference of the goods when new and the price you expect to sell them for (at some unknown future date) plus a 25% (re-)handling fee (25% of the returned goods' difference).

So if the goods were originally supplied at $60, and you could fairly be expected to resell at $40, then charge them $20 plus 25% of the $20: $25.00 (plus GST, of course).

The time and effort cost (labour, time, installation and training) you will have to write off to experience - especially if you want to have nothing more to do with the customer.

Or you could be a hardass and list the debt with Baycorp (after threatening them with that action of course - often the threat is enough, as many compnies don't want to jeopardise their credit-worthiness)...

(SNAP)

nofam
14-12-2009, 03:47 PM
Cannot pay or will not pay? I think there's probably quite a difference, as they entered into a contract with you, and can't just change their mind I would think. If they were insolvent, then it might be a different matter, but unless there's a specific 'cooling off' clause in your Terms Of Trade, I don't think they have a leg to stand on.

Binding agreements aside, it's probably a judgment call; I'd be inclined to bill them 100% (or damn close to it) for the intangible things like setup/training that are simple labour charges, and then go with the 20% restocking fee for the gear.

If you want/need to work with them again, helping them out might stand you in good stead in the future.

pctek
14-12-2009, 03:49 PM
Binding agreements aside, it's probably a judgment call; I'd be inclined to bill them 100% (or damn close to it) .

+1

Sweep
14-12-2009, 04:01 PM
I would be wanting the hardware back ASAP before possible other creditors come out of the woodwork.

Argue about what you are going to invoice later.

hueybot3000
14-12-2009, 04:09 PM
Im not sure about all work but for us the standard payment is a month from the bill date, with bigger jobs the client keeps 12.5% for a year as a "warranty"

I would assume there is a contract involved or at least a quote, and if there is then they have to pay as long as the work is acceptable.

Which makes it your decision really, you can go through the hassle of court and probaly win, or count your losses and be rid of the client. But if the client "cant" pay then going to court probaly wouldnt mean you'd get any money, youd just be spending more takin them there

Richard
14-12-2009, 04:13 PM
I hope you have a Registered Security over the goods supplied. (This replaced the old Romalpa Clause, which was pretty useless anyway.) Otherwise someone else may take the goods as payment of a debt, and you would find it hard to reclaim possession if the other party was a secured creditor, such as a bank.

beetle
14-12-2009, 05:00 PM
Is this not where the debt collection companys come in? and they charge an extra cost to the customer who needs to pay as far aas i know, not the company who has lost out on the money...... but i could be wrong...

and isnt there a thing called a tax right off on non payment of bills? im sure thats something your accountant could tell you about?

its a pain when people owe you money and have no intention of paying it.......:badpc:
beetle

robsonde
14-12-2009, 05:28 PM
Lets say the final invoice was $100 (It's not but anyways), $40 was labour, time, installation and training and $60 was the retail of hardware. We're looking at a 20% restocking fee, but is it standard practice to only charge the 20% on the $60 the hardware cost, or 20% on the bill as a whole?


I would give them 100% refund on the hardware, on 0% refund on labour/training (things they can't return)

if they get un-happy then just offer them bay-corp for total invoice.

Billy T
14-12-2009, 11:14 PM
Firstly, unless it was written into the contract, they are not entitled to back out of the deal in any way and they are simply relying on your goodwill to reduce their losses. There is no right or entitlement to transfer those losses to your company, and you have no obligation to accept any of them. The equation could be as complex as you want to make it, but it is a situation where simplicity and certainty of terms is essential.

As I see it the issue has two parts, the labour content, which in simple terms is any you can't take back and resell, and the hardware, which you can resell for a lower price.

I'd nail them for the "labour" content in full (i.e. no refund), including GST as there is no reason why your company should lose on that, and cut a deal on the hardware which at least recovers your capital outlay if possible (after on-selling).

Allowing that accountants can do clever things with write offs and taxation, the company could come out even or maybe take a small loss. The accountants will factor in your GST recovery on the deal as well, which might also help improve the outcome.

Cheers

Billy 8-{)

robbyp
14-12-2009, 11:19 PM
Very tough situation, and without details it is pretty hard to mae a judgement. This is really what contracts are for. Basically you don't want to be out of pocket, so charge them enough so you won't be any worse off than you should be.

Chilling_Silence
15-12-2009, 06:02 AM
Thanks for the advice guys, much appreciated.
Lets just say that it's been a hard lesson learned for our company and we've already gone and upped the ante with respect to our documentation that must be signed prior to a job starting.

Guess we'll see what happens today :)

SolMiester
15-12-2009, 10:13 AM
Long story short our work has done some work for a company, consultation, deploying hardware, installation, configuration, setup, training.

The company has since decided two months later that they cannot pay the bill and now want to return the goods. Needless to say we're not happy.

Anyways, we're looking to charge them a restocking fee, as we can naturally no on-sell this hardware as "New", but rather "Used / damaged seconds". We could try and argue the sale, but we've had more than enough of this customer and want to wash our hands and walk away from them.

Lets say the final invoice was $100 (It's not but anyways), $40 was labour, time, installation and training and $60 was the retail of hardware. We're looking at a 20% restocking fee, but is it standard practice to only charge the 20% on the $60 the hardware cost, or 20% on the bill as a whole?

Basically we're just looking to claim back some money, rather than nothing at all...

..and yes, the sum is much, much more than just $100, but for illustration sake it's a nice round figure ;)

Any thoughts on the matter would be much appreciated

Cheers


Chill.

100% of your time and 20% of hardware!!....dont let them off chill....

xyz823
15-12-2009, 10:23 AM
Charge them for the whole lot. If you go down to a shop and purchase something and come back two months later and say "I don't want it anymore" I don't think you would be getting a refund.

Are they unable to pay or just don't want to pay?

B.M.
15-12-2009, 10:39 AM
Are they unable to pay or just don't want to pay?

That is the Crunch and everything else revolves around the answer. ;)

wainuitech
15-12-2009, 12:40 PM
Since they have said they want to return the Hardware - as its been mentioned get it back ASAP - that way at least you wont lose on that as well.

Its imperative you have contracts when dealing with Esp larger jobs stating all the non payments, refund, restocking etc -- small print that hardly anyone reads - but it's all legit .

I had a similar case a few years back - lot smaller than yours about 4K, but the contract was there - the company refused to pay for the goods - labor I lost on, in the end it went to baycorp,(after 5 months) and then small claims court -- I won simply because they signed the contract, I recovered all the hardware + they had to pay fees to baycorp, and I got 20% of the hardware price awarded (which is in the contract) - Their excuse was they signed the terms and conditions but didn't read them -- the adjudicator just laughed -She said "no excuse, you signed it, you agreed to the terms and conditions".

Chilling_Silence
15-12-2009, 01:11 PM
Yeah lets just say it's been a rough lesson learned and we've crossed our t's and dotted our i's now in the hope of avoiding it further in-future...

I'll post back with how we go :)

prefect
15-12-2009, 03:42 PM
Most of the parts places I use say parts must be returned within 7 days and a 10% restocking fee.
However they never actually charge it, because if they did we would buy from someone else and they know it.
A lot of the time they send out the wrong stuff like REPCO which stands for Return Every Part Couriered Out. Although its not always their fault because of the myriad of jap versions of each model of car and truck.
REPCO used to stand for Rip Every Poor C Off

wainuitech
15-12-2009, 03:45 PM
Most of the parts places I use say parts must be returned within 7 days and a 10% restocking fee.
However they never actually charge it, because if they did we would buy from someone else and they know it.
A lot of the time they send out the wrong stuff like REPCO which stands for Return Every Part Couriered Out. Although its not always their fault because of the myriad of jap versions of each model of car and truck.
REPCO used to stand for Rip Every Poor C Off Slight difference between car parts, which we all know can be murder sometimes, and working computer equipment that was ordered, installed, working, then not being paid for.

wratterus
15-12-2009, 03:46 PM
Agree Prefect, repco are the most useless twats when it comes to getting you the right part first (or third) time. BNT is much better, only they don't pop up like weeds on every other corner.

Not really related to the issue though, PC parts and car parts are a little different. They should get charged for 100% of the time spent, and at least a 10% restocking fee, more if you can get it out of them.

prefect
15-12-2009, 04:04 PM
Agree Prefect, repco are the most useless twats when it comes to getting you the right part first (or third) time. BNT is much better, only they don't pop up like weeds on every other corner.

Not really related to the issue though, PC parts and car parts are a little different. They should get charged for 100% of the time spent, and at least a 10% restocking fee, more if you can get it out of them.

Difference noted but how about a computer from a car lol.

wratterus
15-12-2009, 04:18 PM
Go and see link (http://www.linkecu.com/) about that. :lol:

prefect
15-12-2009, 05:12 PM
only they don't pop up like weeds on every other corner.
**** you are right there. In just West Auckland alone there is four New Lynn, Kelston, Henderson and Westgate.
And 2 supa cheap autos