moeve

Folks what does your company do if a client cancels an appointment at last minute and your company incurs additional costs for cancelling flights and hotels?

Client wants to reshedual but cannot give us a timeframe for that yet so basically we have to cancel all arrangements. We sort of debating sending him a bill for it since he requested the appointment and then changed his mind about it.

nux

Always book and charge for flexible tickets. Charge for any costs actually incurred.

CodeAdam10

Should be part of your contract that client will incur all change / cancellation costs. OTOH, if your company doesn't normally make your clients pay for trip related costs, then I guess move on.

dj506

Changes happen all the time and who pays depends on the circumstances. How far in advance did the customer cancel? How many people did the client request be at the meeting? How much revenue is the customer worth? What were the reasons for the cancellation.

I would say the client would not pay if you expect to have a continuing relationship with him unless there were very specific reasons - e.g., multiple people traveling to an international location.

You really should only be out the change fees on the airline tickets since the residual value will be there to use on future trips. For the hotels, you seem to indicate that you did an advance payment method. Not really sure why a business person would do this since meetings change all the time. If you did a normal booking, you shouldn't be out any money if you cancel those before the hotel's deadline. Seems sort of tacky to me to bill a client for a few hundred dollars (the change fees) if only a couple of people were going to the meeting.

travelinmanS

Bill the client and get the money. Eat the costs and keep the client. You choose!

moeve

In the US that probably wouldn't be such a big deal but hotels in foreign countries often don't offer sans cancellation fees and flights had to be cheap.

It is not going to be the end of the world. I think we are simply debating this option since the client contacted us, dictating the venue and the time frame and knew we would have to fly at fairly short notice and after two of changing other plans including vacation plans for one of us and confirming our travel plans with them they changed their minds and are not even willy to reset in an appropriate time frame so that we could simply rebook.

No he is not paying for any travel expenses either.

RRDD

There is a famous baseball story about two players that missed a late night curfew and were caught by their coach when they returned to the hotel. The first player was heavily fined by the coach. The second player was told to have a good night. The first player complained of the unequal treatment. The coach replied; "You're not leading the league in RBIs."

moeve

In this case we still don't know if we are even going to get the contract that is why I am shying away from the billing

Often1

1. OP chose to work without a contract, booked penalty fares and the like and now has to eat them.

2. This is why contracts are important. They actually preserve goodwill. Unless it's with someone you've dealt with for 25 years and the terms are understood, don't presume that anything is understood.

3. If there's no contract specifying what happens, it's inappropriate to bill for costs not incurred. At a minimum, call and discuss with the prospective client. If there's a contract, follow the contract.

4. It's all a matter of scale. On a Eur 1 Mill. contract, don't worry about eating Eur 50.

JMN57

Is this a client (do you currently do business with them)? Or a prospect?

If you're not doing business with them, they are a prospect and this is a selling expense. Factor cost recovery into your price if you get the business if it matters to you.

If you are doing business with them already (you have an on-going business relationship) and this is an extension of that, then, possibly, you might consider tacking this expense onto the next bill but it had better be within the same budget line/person.

Is there an understanding on travel expenses between you and them? If so, then it might be possible.

Frankly, I'd be more concerned that they cancelled the meeting and aren't interested in setting a time for it.

gobluetwo

If it's a sales/business development meeting, then you eat all the costs associated with it. The expectation should be that you recover the up-front investment through the course of your work with them.

If they are an existing client and the intent of the meeting was to expand work or add new services/products, then I would consider that sales/business development, also, and treat expenses the same way as above.

If you have a good relationship with the client and you have started work in good faith while the legal folks hammer out the details of the contract (and yes, I understand how that is and how it can be a pain), then I'd have whoever manages the relationship talk to the client about it. But only if you incurred significant costs associated with the cancellation. Are we talking one person having to cancel a flight and a 1 night hotel reservation? Or several people cancelling flights and multiple night hotel reservations less than 24 hours out (meaning you incur flight cancellation costs and potentially hotel costs)? If the former, eat it. If the latter, a conversation may be warranted, depending on the size of the contract.

Speaking of which, I do agree with Often1's last point. If it's a $1M contract, a couple thousand dollars is not a big deal. If it's a $25k contract, then yes, it could significantly affect your bottom line.

DL Platinum

Then this is a sales activity. We would never bill for this. Now, our language in statements of work for current customers includes language about billing for canceled trips w/o advanced notice (at least two weeks). We can (though haven't) bill for the lost time of the consultant. To date we have only billed for flight change fees. As stated by others, we don't book pre pay hotels as plans often change.

gobluetwo

On hotels, though, they do generally charge you at least for one night if you cancel less than 24 hours out.

moeve

Without going into to too much detail we have a contract with the parent company which however does not include us travelling around the world. This is a new venture or a further development with a subsidary which now does require a trip abroad every now and then. however we are still bound by the contract with the parent so just factoring in higher pricing will probably not go down well that is why we had to keep the costs down to a bear minimum.

I guess we will just grin and bear it and pass it off as a learing experience and the next time they tell us to appear we will make sure they understand that calling off this sort of meeting will have finacial consequenes - will be deduced from any discounting on the project.

I appreciate all the input here since sometimes other companies just have better ways of dealing with such unexpected incidents.

gobluetwo

It may be worth having the lawyers revisit your master contract and negotiating some changes with the client to cover working with subsidiaries or other entities owned wholly or in part by the parent, travel policies, etc. This would also give you a stronger position when suggesting financial implications.

I (er, my company's general counsel) recently went through a similar exercise with a change in our master contract, although it was initiated by the client.