New customer Deposits

[Acute Cut]

Ok, perhaps this is an old idea, but it is new to me.
Last year i got stiffed a few times. I dont have time for courts and dont wanna deal with the hassle. Perhaps 1K in the last 3 years.

Anyways, this year i decided to try something new. One month deposit. Just like rent, last month payed ahead just in case.

Example: Joe jones startes on April 1st. He has a 25$ lawn. He pays 100$ before i ever cut one blade of grass. Then at the end of the month he gets a bill for 100$. This goes on all season. The last month he is with me then i put his deposit down as the payment. He will not need to pay ahead again once he has proved his credibility.

IF he does not pay the first months bill by the end of the second month then i quit. I am not out two months mowing money then. Only one. I am thinking this may discourage some dishonesty.

If joe is unsatisfied with our service at any time then we just put the deposit as payment for the last month that we mowed when he canceled. So far so good. No one has had any problems with it so far.

What do yall think? I am also posting this in case no one else has thought of it and might want to try it.

Acute Cut

[eslawns]

IMO, getting stiffed is part of doing business. It's only happened to me a few times. If you're that concerned about it, just have clients pay when the work is completed. You can have return address labels/envelopes and handwritten invoives in your vehicle, and give them to your clients when you do the work. If they aren't home, arrange for a place to leave the bill and or payment. This way, if you do get stiffed, it would only be for one billing. It will complicate things a little. The books will be harder to keep, you will have cash to worry about, and you'll lose some time chatting with them.

[Guardian]

I agree, I have been burned by big name customers - it hurts! Ramada Inn in Pensacola has figured out that they can sign a contract, get at least 45 days worth of work out of you, then just never pay. They call your bluff. You're a small company - they know you can't afford to come after them YET there are a hundred little companies lined up to say "I have the Ramada Contract". Brilliant! I think spraying "BEWARE!" on their lawn in ROUNDup might fix em.

[Roger]

I've never asked for advanced payment. When you do so, You are already making a statement of distrust. I beleive the best pattern is to create a relationship of mutual trust and respect. By asking for payment in advance, you are establishing a barrier which may never be broken. Customers (or contractors) that wish to be adversarial are not good candidates for me.

[cajuncutter]

The only time I request a retainer is with Churches..I have been stiffed too many times..well I should not say stiffed I eventually got my money but it took an average of 3 months to get it. If a church wants my service then they will pay up front from now on..the assumption of distrust can be taken for what it is worth..they all seem to think you are there working for the lord..they are sadly mistaken..just like the little old ladies driving the new caddys say they are on a budget i tell them I am on a budget to...as for all new residential customers and small commercial accounts I do not request a retainer unless I have heard really bad things about them from other LCO's..and in this case I usually turn the work down

[John from OH]

I'm going against the grain, I think its a great idea. We are one of the few businesses that provide service, bill 30 days later and hope to get paid 30 days after that. Imagine a grocery store letting you buy food and paying 30 days later, it doesn't happen. Cash flow is a big part of any service business. The sooner you get your cash, the easier it is to pay the bills. We bill our monthly customers 1 month in advance so we don't have a problem with late payments. We offer a prepay discount of 7% for the season and receive 20% of our mowing gross before we cut a single blade of grass. You can't get an equipment loan or a truck loan at 7%, our credit line is at 8.5%, so I am ahead of the game. I hesistated on trying the prepay, and I am glad I did. It really eases the cash crunch this time of year. Billing is also much easier as many accounts will only get billed for the occassional extra.

[lsylvain]

I just started telling my new customers that I require a deposit if they wish to be billed for more than 2 cuts at a time or $100. In this area it seems to be a skeem to get someone to do the work for a month and not pay then get a new guy and not pay him.

Most of them don't seem to have a problem with it. The ones that due just pay by the cut until I trust them.

[John Allin]

90% of our landscape maintenance is done on a fixed fee for the season. We bill the first of the month (before work is done) and have net 10 terms. No dough by the 10th, no service.

It works for us.

[bob]

I guess that I haven't gotten stung enough to require money up front. I've done $2200 landscape jobs with no money down. I've had some slow payer's, but I always get my money one way or the other. Even if its only $22. I took the time to do the work, now I expect to be payed.

[lawnboy82]

i get deposits only when i do tree work or other high cost work. i get 1/3 down just to cover some costs and that is about it.

[Lawn Dog2001]

Never take the opinion that getting stiffed is part of the business. I think taking money up front is a great idea. My policy is that I will do no more that two cuttings without being payed. My bills are all marked with DUE ON RECIEPT. If anyone only wants to pay monthly, I require at least money for three cuttings up front. Then I bill for the next three as that runs out.

Residental customers dont scare me. If they get too behind, a collection letter usually does the trick. But commercial accounts are different. You are not going to scare the Ramada Inn with a collection letter. My policy is if its commercial its pre pay. If they refuse to pre pay than dont take the job. There are plenty of other accounts out there.