View Full Version : This is why I only do next day credit cards

DFW Area Landscaper
06-02-2005, 01:22 PM
Lady signed up for service my first year in the business. She was firing her last LCO over quality issues. I agree to bill her once a month after I've already done all the work. That's how I did it with all my customers in year one.

She was a chronic complainer. And a slow payer. She was one of the few I actually had to suspend service on last spring. We cut her lawn this spring a few times and I get an e-mail: I won't be needing your services anymore.

Fine, I take her off the schedule and stop service immediately. At the time she cancelled service, her payment was two months past due and the balance stood at $204.01. We were just on the verge of suspending service for payment anyway (and should have done it earlier but I always seem to screw that up).

I finally got her payment yesterday. She short paid the bill by the 2% late fee we charged in April ($1.24), the 2% late fee we charged in May ($2.56) and she didn't pay for the final application ($41.04) or the final cut ($32.40). All told, she still owes $77.24.

Included with the check is a little note that reads: I am only paying $126.77. You did not do my yard any after the e-mail I sent you. The chemical you put on my st augustine killed it.

The lady is a professional dead-beat. First, deny the service was performed and then manufacture a quality issue to avoid paying the bill.

Next day credit card for all new customers or NO SERVICE. This has been a very good policy. Since we started next day credit cards, we simply don't have to deal with schit like this anymore.

Actually, I thought she was gonna stiff the entire bill. At least I got something.

DFW Area Landscaper

06-02-2005, 01:28 PM
I understand that. The credit card idea is one of the best things that i have learned from this site billing them next day thanks to Justmowit. So how is your business going. Do you have alot more customers this year? Glad you stuck with the lco business keep up the good work.

DFW Area Landscaper
06-02-2005, 01:39 PM
216 customers as of right now. Things are going very well this year. Still have a substantial operating loss on the year, but that is because I had a ton of operating expenses this spring that I don't expect to encounter next year. You know, things like line trimmers, gas cans, trailer hitches, truck lettering, etc.

DFW Area Landscaper

06-02-2005, 01:39 PM
Yes, at least you got something. Here are my thoughts on late fees, after charging them to customers for the past 5 years:

If you charge a percentage, and that is 2% like you are charging, it is often an insignificant amount that does not get the attention of the customer... What does your personal credit card charge you for a late payment? $29? Or more?

Stiff them with a minimum late charge of no less than 10 bucks. The late fee policy should of course be detailed in your contract or whatever terms you send out annually, or to new customers.

You are in the lawn business, not the finance business, so NEVER call the late charge "interest" or "finance charge." It is a combination of penalty, interest, and cost of your time for the extra book-keeping associated with a payment that comes after the month should have been closed out. An attorney told me I could go as high as 8% monthly--after the minimum-- without having it denied in court here in Arkansas. Avoid breaking down the fee for a customer, it is none of their business how you arrive at the fee. Just stick with it. Here in Arkansas, late fees will be upheld as a legitimate part of your claim if you have to go to court, including small claims.

And yes, if you are in a market where customers will go along with giving you a credit card number, that avoids the whole hassle--usually. They can still cancel the account with their credit card company.

06-02-2005, 01:42 PM
BTW, if the chemical you put on her St. Augustine killed it, you probably better go back and be sure with a tank of Round-up. Wouldn't want the sweet lady to turn out to be a liar, would we? :p :p :p

06-02-2005, 01:53 PM
Are you still doing door hangers,and how many of those customers came this years? Are you keeping those crews busy?

DFW Area Landscaper
06-02-2005, 01:55 PM
Appreciate the advice with the late fees. I agree, a 2% late fee only lets them think in terms of prioritizing the lawn bill at the very bottom. A late fee of $1.24 is just plain silly as a catalyst for timely payments. But at least a $1.24 late fee will be paid.

Having said all that, a $29 late fee from Chase Bank is very different from the $29 late fee charged by the guy who is actually mowing the lawn.

As for the market being "accepting" of credit cards, it isn't. You have to present the right image in order to get credit cards. Projecting the self employed image does not work. Projecting the "big company" image works very well. When I was driving around doing in person estimates last year, I would push for credit cards, but more than half would not give me a credit card. It is a trust issue, I suppose. They see a guy who mows lawns for a living and they just won't do it. However, once they started calling this spring and I ended the on-sight estimates, the credit card is a non-issue...unless they call when my kids are screaming in the back ground. Or, if they call from one of the door hangers I distro'd in year one. Those were very cheap and when they call from one of those, I won't get the business because of the credit card.

I've also lost out on a lot of business because of the CC requirement. But the way I look at is this: If they would have been allowed to dictate the payment terms, the relationship probably wouldn't have been a good one anyway. Once they smell weakness, they will eat you alive. More importantly, I would have to a.) wait 50 days to get paid if they pay on time b.) manage accounts receiveable and c.) risk getting stiffed.

DFW Area Landscaper

DFW Area Landscaper
06-02-2005, 02:11 PM
This is what I am talking about with the "image".

Our advertisements convey a "large company" image.

DFW Area Landscaper

DFW Area Landscaper
06-02-2005, 02:13 PM
My competitors might have a harder time dictating credit cards with advertisements like this:

DFW Area Landscaper

Jay's Lawncare
06-02-2005, 03:45 PM
those are some nice door hangers dfw, if you don't mind me asking, where did you have them done and at what cost?

06-02-2005, 04:18 PM
Are you happy with your credit card service provider? If so, who are they? Do they have a website?

Tn Lawn Man
06-02-2005, 05:19 PM
I too accept CC.

However, with 216 accounts your fees must be outrageous.

I provide the service for my customers but prefer monthly invoicing.

My invoicing is different from any else's that I have seen. I bill in the middle of the month. It is a little more work on my part BUT I DON'T have deadbeats owing me for 8 to 10+ cuts. The most they will ever owe me is for 5 cuts (five week months ya know).

Plus, the midmonth billing really weeds out the PITAs. A PITA never ever wants to pay for something they haven't received yet. LOL So, I spot them a mile away.

DFW Area Landscaper
06-02-2005, 07:39 PM
++++those are some nice door hangers dfw, if you don't mind me asking, where did you have them done and at what cost?++++


DFW Area Landscaper

Howard Roark
06-02-2005, 09:27 PM
Quick question DFW,

When people call you for service, you then ask them for their credit card number over the phone correct? If they give it, you run it the next day after the mow. Do you get a signature of any kind or just explain to them that you'll take their number and charge them the next day?
I plan on starting this month with the same method, however if they balk at it I'm considering telling them the method we use now which is tape a check to the door and we send them a mowing schedule. I've never had a problem yet with people leaving checks.

06-02-2005, 09:59 PM
No one will EVER get behind more than one cut. NO CHECKIE, NO CUTTIE. :p Anyone who balks at the next day credit card just added $3 per cut to their price. That way, the weenies who don't want to use CC's pay for the fees of the ones who do.

Howard Roark
06-02-2005, 10:31 PM
No one will EVER get behind more than one cut. NO CHECKIE, NO CUTTIE. :p Anyone who balks at the next day credit card just added $3 per cut to their price. That way, the weenies who don't want to use CC's pay for the fees of the ones who do.

I'm actually a bit surprised how well people do leave a check. It's nice to come home with a bag full every night I must say. payup

As for the increase, I do like your thinking. And I also agree with the poster above about the darn fees. Justmowit has to be giving up in the thousands per week in CC fees alone. Mike Justice did mention an outfit that was similar the theirs that picked up checks each time, along with the downsides of such. But even at my measly 90 accounts it would be over 350 a month EASY in fees. I'm seriously condsidering the best of both worlds option.

06-02-2005, 10:57 PM
If you think about the CC fees, I think it all works out to be the same as doing regular invoicing. For invoicing, you have to pay for printer usage, envelope, stamp, time to print invoice & address on envelope, stuffing and sealing envelope, hassle of late payers, getting stiffed, etc.

With CC's, you know your getting paid and don't have to deal with the load of BS w/ invoicing. If someone ran the numbers, I think CC fees would be around the same cost as doing invoices & getting stiffed.

06-03-2005, 08:17 AM
Nice hanger . What percentage response from your April campain did they generate?

DFW Area Landscaper
06-03-2005, 09:00 AM
++++Are you happy with your credit card service provider? If so, who are they? Do they have a website?++++

I started last year with a firm I found via a Yahoo search. Payright.com. Using their service was hell. They were supposed to charge either the qualified rate or the non-qualified rate. But they would charge both rates if the card was non-qualified. ALL of my visa charges were non-qualified. The service was a scam from top to bottom. When I would call customer service, it was usually a 30 minute wait for an agent, sometimes more. All told, they kept about 6% of what I charged to credit cards last year. Not only that, but I also had to pay $180 for a copy of PC ChargePro software too.

I have since ditched payright.com and signed up with Quickbooks Merchant Services. They are phenominal. Their customer service answers the phone promptly. They aren't screwing me around with non-qualified transactions, either. All told, they are costing me about 3% of what I charge to credit cards. This includes the $19.95 monthly statement fee and everything. Even better, the service works right through Quickbooks, so there is no potential to mis-apply a payment to the wrong account. If I were still trying to process payments through PC ChargePro, I'm certain I would have lost some customers because we zapped their cards and there was no balance due. It's almost impossible to make that mistake with Quickbooks.

The best part of doing this is collecting money. I never have to go to the bank, I never have to endorse checks. I don't even have to open an envelope. I just point and click and the deposit is made. We grossed a little over $26K in April and just over $27K in May. If I were still doing things the old fashioned way, doing the work, sending a statement and waiting for my payment to arrive in the mail, I would need an additional $50K or so of working capital. With next day credit cards, we mow the lawn on Monday, charge the card on Tuesday and we have our money on Thursday.

DFW Area Landscaper

mountain man
06-03-2005, 09:50 AM
Credit cards are the way to go. The 2% that visa charges is still less when you factor in the time for invoiceing and chasing money. Where we used to be working on aging schedules and invoices, we can now be earning money or marketing for new customers.

One thing that we do that saves time with running the visa program. All our customers are billed monthly. Our contract states that services are billed on the first, due by the 15th, and deliquent on the 30th. For the people that use the credit card we run the program on the 10th and have the money 2 business days later. We have found the customers don't care since they only see 1 line item for us each month on their cc statement. However, we know on the 12th exactly how much money we have coming in for cash flow purposes. Basicly, we are getting prepaid for the second half of each months services.

For legal purposes we did put together a sign up form that protects us and it has a box to check if they want us to automaticly bill additional services to the card. We have also found if they are paying by credit card it is easier to upsell the enhancements and special projects.


DFW Area Landscaper
06-03-2005, 11:54 AM
++++However, with 216 accounts your fees must be outrageous.++++

Yes, the fees are not insignificant. Around $700 last month. That number is growing. All new customers are credit card only and over the course of time, the older customers who are still on credit slowly cancel service and get off the schedule.

The thing that really sucks is paying the 3% to collect the state's share. This quarter it looks like we will have significant sales tax obligations. I must pay the state their 8%, but I have to give up 3% to collect their money. For every $8,000 I collect for the state, I am paying $240 to collect it for them.

That sucks.

DFW Area Landscaper