Dear Danielle: How Do I Handle Interruption of Retained Services?

Dear Danielle:

It came up that a client with whom I’m working on a retainer basis has just alerted me that in a month he will be taking 4 to 5 weeks vacation so he will interrupt the service for that period of time.ย  We started our relationship in March, so we have been working together for three months now. How do you handle this kind of situation? Is it acceptable that he interrupts the service agreement at no cost for him? One of the clauses in our Service Agreement states that if for any reason one of the parties decides to discontinue the agreement he/I should give notice to the other party at least 30 days in advance. He is almost complying with that. But this clause was meant for the finalization of the agreement, not a temporary interruption. Should I accept this? Or should I let him know that if he interrupts the service, I might not be available when he is back at work, hence I should charge at least a minimum amount to reserve his space in my roster? Thanks in advance! โ€”Mirna Bajraj, MB Asistencia Virtual

Hi, Mirna! Great question; I’ll do my best to help. ๐Ÿ™‚

This is another one of those situations where there is no right way or wrong way. It all depends on how you want to run your practice and what is acceptable (or not) for you.

Obviously, we never want to hold a client hostage if they can’t or don’t want to continue working together, whatever the reason. At the same time, and as you recognize, they need to be fair to us as well. This is the reason our contracts contain a termination clause that gives both parties simple, fair and equal recourse for ending the relationship: 30 days written notice.

But this situation differs because the client isn’t saying he wants to permanently end the relationship, he simply wants to interrupt the service. And here begins our thought process.

So, the client goes on vacation and now you have an open slot on your retained client roster. Obviously, you are not going to sit around and wait for him to return. That’s income you now need and want to replace.

This is where a conversation with the client would be in order.

By all means, be gracious about his wishes. However, it would be a service to him to clarify your policies. You may want to remind him of the termination clause of your agreement with each other (i.e., proper fair notice). You might want to let him know that you don’t offer “service interruptions” per se. If a client opts to terminate the contract (per the termination clause), then the contract is ended. You are then, obviously, going to fill that slot on your roster with another client because that’s income you need to replace.

Therefore, the client needs to understand that when they return, you may not have a spot any longer for them. And, if you did have a spot, the whole contract process, etc., would naturally need to start from scratch as if they were a new client. It may also mean that your rates and other particulars may be different when they return as well.

At this point, you may want to let the client know that to keep his spot on your roster, there would need to be a continuance of service and that means continuing to pay their monthly fee.

I like to use the analogy of insurance as an example, and this would be especially apt if you are using my Value-Based Pricing methodology.

When you pay for insurance, you aren’t paying for actual use. You are paying for the event of use. In other words, we may not need to use healthcare services every month, but that doesn’t mean we get to stop paying our insurance premiums for those months we don’t use any services. We don’t pay, our insurance is cancelled, we lose our spot (and possibly our grandfathered plan) and have to start all over again new.

Another thing comes to mind… and it’s hard to tell since this client is so new, but is a vacation really the reason they are wanting to interrupt service? Might there be some other issues going on, that with some conversation, could be solved to mutual benefit?

This is another reason it’s so worthwhile, especially in the beginning stages of our retained client relationships, that we have weekly telephone meetings. It really helps us keep our finger on the pulse of things with the client, their needs and concerns, and allows us to get to know and understand them better.

Hope this helps, Mirna ๐Ÿ™‚ย  If you have additional thoughts or questions or need further clarification, please feel free to post in the comments. This will help shed more light and help others at the same time as well.

10 Responses

  1. Danielle –

    Thank you for sharing this! I just experienced this a few weeks ago and did not know how to move forward. Luckily, I was able to come to an arrangement with my client. Moving forward though, I have added in a “service interruption” clause for my retainer contracts. I think it is important clients understand that, like you mentioned, whether services are preformed or not, you still requested a retainer – and life goes on with or without tasks to do.Thankfully when someone prepays for a service, it is not that big of a deal because they understand it is up to them to provide work for me to do.

  2. Dani says:

    I’ve wanted to ask this question. My thought was should I put a clause in my contract about temporary service interruptions? I really never thought about not holding their spot so this put it into perspective. The biggest thing for me is, I won’t have the income I was relying on that month. I have a client who is doing this recently for medical leave and we just adjusted her hours. She used a few more the month before she left, and less while she was gone.

    I normally don’t allow hours to move around like that but in this case, it was win win.

  3. Mirna Bajraj says:

    First of all, thank you so much Danielle for your prompt reply to my question and for taking the time to write down such a complete and thoughtful answer. I like the “healthcare services” idea…! I think it absolutely fits with our industry.
    I don’t think that there is a reason for the interruption of services other than the fact that it is summer in the part of the world where he lives and it is very usual there that people take their summer vacation by July / August. On the other hand he has mentioned in several conversations that he feels very comfortable with the quality of service he is receiving from me. Anyway I appreciate that you addressed this possibility too.
    Would you find it a possible solution that in order to save his space in my roster I suggest that he can pay a special minimum retainer fee? I mean less than the regular monthly fee we agreed. This would prevent me from getting nothing during his vacation and he won’t feel he is paying the regular fee even if I am not delivering any services…
    Maybe a this could be win win situation… what do you think?

  4. Hi Mirna ๐Ÿ™‚

    Just to clarify, I wasn’t implying that there was any quality of service issues. What I meant by “other things going on” is that sometimes when people run into money issues, they are embarrassed about that so they offer other reasons for needing to stop services. If you are using my value-based pricing methodology, you have a lot more options you can offer clients in those situations (parts of the loaf, instead of the full loaf) so that they can continue to get the most important admin support they need to succeed and then re-adding those other support areas back on later down the road.

    In answer to your question, what I would say is that it’s not important whether I think a partial fee is a solution or not. If you feel that’s fair to you and your business, that’s the important thing. You don’t need my permission or anyone else’s. ๐Ÿ˜‰

    If you are asking if I would do that in my practice, my answer would be no because when it gets down to it, that really stems from a form of fear-based thinking and a place of lack: fear that I wouldn’t be able to replace the client and a place of lack that tries to trick me into thinking that something is better than nothing. But just as I would never hold a client hostage, I refuse to allow myself to be held hostage in those ways as well.

    So what you may want to ask yourself is how a partial fee covers your lost income? Does that mean you will not take on a full paying client in order to hold the spot of the half paying client? How is that fair to your business? If you do take on a new client, how will that impact your workloads and everything else once the half paying client comes back on board (particularly if you are already full)?

    Also, what kind of precedents does this set for the future? How will it shape this client’s expectations moving forward? Are they going to now think they can interrupt service any old time they like and you will hold their spot for half price or less?

    And what if the half paying client doesn’t come back like they said they would or goes longer than they said they would? So you’ve lost a full month’s fee that you could have replaced with someone else, right? And if they want to extend it, do you continue to charge them a partial fee to hold the spot?

    Just some of the things you may want to think through. If you do decide to go with the partial fee, I would recommend making sure you set some clear parameters (e.g., such as setting a specific time frame that the partial fee covers), and perhaps let the client know that this is a special exception and that you may not offer it again in the future should this issue come up again.

  5. Carmen says:

    I’ve just went through the same issue where our client had to pay other “more important” things and so the service has been stopped. Thankfully we have an ongoing communication where things can be clear and understood.

  6. Hi Carmen ๐Ÿ™‚

    That brings up some food for thought (not for you in particular, but for everyone)… If you have clients who consider your support less important than other things, how can you flip that? How can you become so indispensible that they couldn’t imagine running their business without you? How can you SHOW them that you are?

    Hint: This doesn’t involve being a pushover, killing yourself to please, sacrificing or stepping over your standards and boundaries, or asking how high every time they say jump. ๐Ÿ˜‰

    This is what I teach about in my Value-Based Pricing class and DIY toolkit:

  7. Thank you everyone for this discussion. Being new to the virtual administrative consultant practice, it didn’t occur to me to include some of this important information in my retainer contract. I appreciate you all sharing.

  8. Mirna Bajraj says:

    Well, let me tell you what happened.
    I’ve told the client that I understood that he would not need my services for his 5 weeks vacation but that there is an income I will not be receiving unexpectedly which I cannot cover with a new client for just 5 weeks. Hence I said that I could not guarantee to have his present space available upon his return to full activities neither the same terms and conditions of the present Service Agreement. So I proposed to him -in order to save his space in my client roster- to pay 50% of the 5 weeks fee (I know Danielle that you would have charged the full amount… but I imagined what his reaction would be and finally was!). He said that under no circumstances he was ready to pay for services that will not be rendered. I said ok no problem, then please be kind enough to inform in writing the termination date.
    I am glad that this situation came up first because I will now include a clause in my Service Agreement model that contemplates this temporary interruption situations. Second, because it allowed me to see that maybe this is not the kind of client I want to provide my services to.
    Your clarity of concept Danielle helped me a lot to deal with this.
    I also appreciate the comments from your readers and our colleagues.

  9. Glad I could help, Mirna, and thank you again for the question. You always ask good ones! ๐Ÿ™‚

    Sorry it worked out this way, although it’s not surprising. This is one reason I’ve found it’s better to offer the clean break (contract termination) or continue paying the full fee option. The reduced fee option just creates a kind of fence-sitting/loose end that, even if you intend to fill the slot with another client, has a way of keeping you blocked.

    You are always one who makes good use of these learning experiences! Onward and upward, girlfriend!

  10. Judy Reyes says:

    Great thread and valuable info. Thanks.

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