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tiedeman
02-04-2006, 03:31 AM
I feel that I have finally reached that boiling point of sticking it to customers. In the last two months this is what has happened, what I did, and what i am thinking about doing.

Problem: Snow removal customer changed snow removal height up 3".
Solution: I dropped the customer. This is the second time that I have had to deal with the customer because of price

Problem: Late payment from customers. Normally in the past I would look the other way if they were a week behind on payment.
Soon to be Solution: One of two things; either the customers will be billed by credit card from now on, or services will just stop all together without notice (that is what is actually stated in the contract but I really have never followed this with strict rules)

I just have come to the point where I want to get paid, I want to pay my bills, and I am going to start to be really super picky about what customes I accept and keep

J Hisch
02-04-2006, 09:19 AM
90% of our customers pay and pay well, most residental we try to collect check at time of service. Just like anyone else in service industry. However we do have some who pay monthly off a statement, like i said most pay well. I would just tell you non payers that if they dont pay on time you will bill their credit card and have them sign acknowledging and authorizing the card transaction. Good luck. I tought I read a while back you were leaving the business, did I miss a thread?

kc2006
02-04-2006, 11:55 AM
Thats not really sticking it to the customer. Thats what should be done. You have to pay your bills on time right? Well they should too. Good job, keep them in check!

naturescape
02-04-2006, 12:36 PM
It seems like a week behind on payment is not very late. I'd say after 2 weeks or so, impose a late fee (make sure the fee is described in the contract or the law won't allow for a large fee on a small balance -- my late fee is $15 regardless of the balance). Then pile on the late fees, it's up to you when to drop the customer, but I'd give them at least a couple weeks grace period past the due date.

rodfather
02-04-2006, 03:31 PM
LOL...you're getting mean in your old age Troy:p

JimLewis
02-04-2006, 03:43 PM
I feel you, tiedeman. I reached that point about 6 years ago. That's why most of my customers are now on AutoPay. Now I always get paid on time.

Honestly, I don't see how the rest do it. I couldn't have survived in business or with my own personal finances had I not done something about our accounts receivables problem.

olderthandirt
02-04-2006, 04:15 PM
I believe the mafia has a system of collecting late payments that works really well. You should look into there payment collection techniques and there interest rates for late payers. Email me and I'll fill you in on how to find your local collection agency :eek:

tiedeman
02-04-2006, 05:11 PM
I feel you, tiedeman. I reached that point about 6 years ago. That's why most of my customers are now on AutoPay. Now I always get paid on time.

Honestly, I don't see how the rest do it. I couldn't have survived in business or with my own personal finances had I not done something about our accounts receivables problem.

my biggest fear is that I would lose a lot of larger account customers because I am demanding payment sooner than before and I am not be as leniant. I mean, sure they eventually pay, anywhere from 1 to 3 weeks later. But that is cr@p that I have to wait that long. I give them 21 days to pay their bills. That is pretty good I feel.

Perhaps this hard line approach will lose some customers, but maybe it will weed out the bad ones as well

CHRIS MELROSE
02-04-2006, 05:41 PM
Clients that do not pay are considered "bad business". My grandfather always told me...."No business is better than bad business".

amar
02-04-2006, 06:33 PM
21 days thats it? You must not cut for any government agencies, commercial properties (larger ones) Definitely no fast food chains.

Your located on Earth? If your in SE MI Ill take them off your hands.

wriken
02-04-2006, 06:41 PM
My residential clients pay pretty fast, now the goverment clients and bank clients pay slow, but they do pay.

JimLewis
02-04-2006, 06:49 PM
my biggest fear is that I would lose a lot of larger account customers because I am demanding payment sooner than before and I am not be as leniant. I mean, sure they eventually pay, anywhere from 1 to 3 weeks later. But that is cr@p that I have to wait that long. I give them 21 days to pay their bills. That is pretty good I feel.

Perhaps this hard line approach will lose some customers, but maybe it will weed out the bad ones as well

Who cares? That was my attitude. I finally got to the point where I decided that if they were going to pay me late, no matter how good of a client they were otherwise, I didn't want them! A client may be a wonderful person, located in the perfect area, etc. But if they are paying me late on a regular basis and making me pay my bills late then they aren't worth it!!!

At the time, I had developed around 120 regular, monthly, year-round accounts. I figured worse case scenario, even if I lost 20 or 40 of them (which is a huge number!) I'd still be better off. So I may have to lay off an employee or something but it wasn't going to effect my personal income in a negative way. At least the clients I'd be left with would all be good paying customers. And I'd rather have a business with 80 clients who ALWAYS pay me on time than have 120 clients and a lot of them don't pay me on time.

Turns out when I took the hard line and started making late payers switch over to autopay I really didn't lose very many of them. And the few I did lose, I was better off without them.

But the real difference came over time - with new customers. You gotta make sure to get your new customers on some sort of payment method that guarantees you will be paid on time. I made sure that I set up almost all of new customers on AutoPay. So all of the customers who have signed up for service since the year 2000 are all on-time payers because we've made almost all of them sign up for AutoPay. And now, with attrition and everything, clients who signed up after 2000 are the majority of my client base at this point. And the ones who are left from before 2000 are good payers. So now I always get paid on time.

HOOLIE
02-04-2006, 07:03 PM
I just mailed letters to 6 customers, letting them know I will continue to mow for them only if they agree to having their balance charged to a credit card monthly. If I lose them all I would be just as happy as if they agree to this plan. No longer worth the hassle for these folks...

tiedeman
02-04-2006, 07:22 PM
21 days thats it? You must not cut for any government agencies, commercial properties (larger ones) Definitely no fast food chains.

Your located on Earth? If your in SE MI Ill take them off your hands.

Think about it though, when I mail out the bills, it basically has a months worth of service already on it (4 cuts), then by the time the due date for the bill is due I would have done 3 more cuts. That is basically 7 cuts on credit. Crazy I feel!

Now if someone is 1 to 2 weeks behind, that is 8 to 9 cuts on credit. 2 months of service.

amar
02-04-2006, 07:44 PM
Think about it though, when I mail out the bills, it basically has a months worth of service already on it (4 cuts), then by the time the due date for the bill is due I would have done 3 more cuts. That is basically 7 cuts on credit. Crazy I feel!

Now if someone is 1 to 2 weeks behind, that is 8 to 9 cuts on credit. 2 months of service.


Thats why your charge the largest legal limit 24% annually. If you know they are going to pay your making good $. If you can't survive with a few late payers start leaving more $ in your bank account.

tiedeman
02-04-2006, 07:51 PM
Thats why your charge the largest legal limit 24% annually. If you know they are going to pay your making good $. If you can't survive with a few late payers start leaving more $ in your bank account.

I thought that you could only charge around 18% annually, and that is if you are "inc."

wriken
02-04-2006, 08:02 PM
Thats why your charge the largest legal limit 24% annually. If you know they are going to pay your making good $. If you can't survive with a few late payers start leaving more $ in your bank account. Seems like I looked into a late fee/interest thing, and there was limits and alot of rules to being able to charge it. There's threads on here about it.

mtdman
02-04-2006, 08:04 PM
Number one reason why I don't do commercial accounts is that they pay too slow, have always been late with paying, and don't care. I worked for 2 mcd's once that took 2 months to pay, hadn't even turned in their invoices to get paid yet when I demanded my money. Took the cash and never looked back. No where else do you work now and get paid months later, it doesn't happen with me either.

As far as people getting upset about it, send out a letter that reaffirms your late policies, and warn people that although you have slacked on that in the past, people are taking advantage of that and you will be inforcing them now. Then do it. Plain and simple.

amar
02-04-2006, 08:10 PM
I thought that you could only charge around 18% annually, and that is if you are "inc."


I am incorporated. I believe it's 24% check with a accountant though. I'm not sure why it would matter what you are. DBA LLC Scorp Ccorp...... your a business providing a service if they don't meet your terms stick it to them.
There are also late fees as in a fixed like a $25 or $29 late fee creditcard co's charge. Check with a accountant as to whats legal.

tiedeman
02-04-2006, 08:13 PM
I am incorporated. I believe it's 24% check with a accountant though. I'm not sure why it would matter what you are. DBA LLC Scorp Ccorp...... your a business providing a service if they don't meet your terms stick it to them.
There are also late fees as in a fixed like a $25 or $29 late fee creditcard co's charge. Check with a accountant as to whats legal.

Don't quote me on this, but last time I checked up on late fees was about 3 years ago, and the inc could charge charge like the 18%+ annually, but businesses that were not, could only charge around 2 to 3% annually.

rodfather
02-04-2006, 09:34 PM
1.5 per month or 18% max annually..any more you are involating Federal Usuary Laws and considered a loan shark.

amar
02-04-2006, 10:16 PM
I wounder if you can charge them more than 1.5% a month to get to the 18%faster and than turn it in?

Any idea on what fees you can legally asses?

tiedeman
02-04-2006, 10:34 PM
I know of one way, kind of around it, some consider it legal and some don't consider it legal. I even talked with my lawyer about it, and they said it is riding a thin line.

Instead of calling them late fees, you call them office fees, or rebilling fees. Something like that

dcondon
02-04-2006, 10:36 PM
Glad we didn't have to deal with that stuff this year, every one payed good for this area.:)

tiedeman
02-04-2006, 11:33 PM
Number one reason why I don't do commercial accounts is that they pay too slow, have always been late with paying, and don't care. I worked for 2 mcd's once that took 2 months to pay, hadn't even turned in their invoices to get paid yet when I demanded my money. Took the cash and never looked back. No where else do you work now and get paid months later, it doesn't happen with me either.

As far as people getting upset about it, send out a letter that reaffirms your late policies, and warn people that although you have slacked on that in the past, people are taking advantage of that and you will be inforcing them now. Then do it. Plain and simple.

now for me, its better the other way around. I have always got paid better from commerical accounts compared to residential. I have commerical accounts that pay within a week of receiving the bill

JimLewis
02-05-2006, 06:23 PM
I know of one way, kind of around it, some consider it legal and some don't consider it legal. I even talked with my lawyer about it, and they said it is riding a thin line.

Instead of calling them late fees, you call them office fees, or rebilling fees. Something like that

No matter what you call it, you are only allowed to charge a customer a certain percentage per year. Each state has it's own laws that govern it and the federal goverment has lawns that govern it too. The state laws can be more restrictive than the federal laws but they can't be more liberal. Federal law always takes precedence over state laws."

Anyway, calling it something else won't get you around it. You can call it what you want. But if you're simply increasing the amount they owe due to the fact that they haven't paid, every court in the land is going to consider that a late fee, no matter how you word it.

ALarsh
02-05-2006, 09:23 PM
I have not had a problem with getting my money. All my residential accounts are due on the 15th day of the month. All of them have came in except 2. I stopped cutting after that and sent them another invoice. Payment came promptly after that. Never had another problem.

JimLewis
02-06-2006, 01:00 AM
Well, good for you .... Congratulations. This thread probably isn't for you then.

amar
02-06-2006, 08:02 AM
No matter what you call it, you are only allowed to charge a customer a certain percentage per year. Each state has it's own laws that govern it and the federal goverment has lawns that govern it too. The state laws can be more restrictive than the federal laws but they can't be more liberal. Federal law always takes precedence over state laws."

Anyway, calling it something else won't get you around it. You can call it what you want. But if you're simply increasing the amount they owe due to the fact that they haven't paid, every court in the land is going to consider that a late fee, no matter how you word it.


I'm going to have say your wrong! Every credit card charges the annual fee and a late penalty fee. If you pay after the due date.

Precision
02-06-2006, 09:24 AM
I'm going to have say your wrong! Every credit card charges the annual fee and a late penalty fee. If you pay after the due date.

different classes of business have different rules.
Credit card companies are in the business of loaning money and thus are a different class of business and have different rules.

If you want to know the big time rates, that goes to payday advance and check cashing places. Sometimes as much as 500% annual.

and the annual fee has nothing to do with being late unless it is waived then reinstated once you fall behind. that is completely valid. Removal of a discount is different than a charge.

naturescape
02-06-2006, 09:37 AM
different classes of business have different rules.
Credit card companies are in the business of loaning money and thus are a different class of business and have different rules.

And there's the problem! It might be nice if government in this country was a little fairer towards the small business. Actually, a LOT more fair would be better! Let's see how big corporations do on being paid late. If I remember right, last time I had a plumber (and that's a small company) out or paid for something at Home Depot, it was due and payable at the time of the transaction. We are extending that time by having customers pay their bill weeks after the work is done. If they can't do that, they need to be charged a reasonable late fee. Having a late fee is only fair and sensible especially when it is pointed out in the contract.

DFW Area Landscaper
02-06-2006, 12:11 PM
Time after time, I keep hearing other LCO's tell me they simply don't have problems getting paid.

I honestly can't imagine where they are coming from. It doesn't make an ounce of sense to me.

I have concluded that the LCO's who are saying this are either too disorganized to know that some of their customers are stiffing them or they are lying. Don't know why they would lie, but 3 years in this business has taught me repeatedly that american home owners simply don't pay the lawn guy on time.

Later,
DFW Area Landscaper

JimLewis
02-06-2006, 02:08 PM
DFW....Yah, I am with you on that one. I don't get it either. It's the nature of our industry and almost every LCO I know, locally or otherwise, has this same challenge.

I've concluded pretty much the same as you. Either they are lying or they have just a super small business with like 10 accounts or something and they just happened to get really lucky with those 10 accounts. I don't believe for a minute that any LCO with a sizable number of accounts ALWAYS gets paid on time, simply by sending out an invoice and waiting for checks to come in. I just don't buy it.

JimLewis
02-06-2006, 02:16 PM
I'm going to have say your wrong! Every credit card charges the annual fee and a late penalty fee. If you pay after the due date.

Like Precision said, that's a whole other ball of wax. You're comparing apples to oranges. Sure there are lots of other fees that banks or credit card companies charge. But those are not late fees. And you are at fault trying to compare those other fees to the late fees that we charge.

Nothing wrong with you charging an "annual fee" to any of your customers. You can certainly do that if you want, just like some credit card companies do. But try selling that one to your clients. I don't think they are gonna go for it. Credit card companies also have "Over-the-limit" fees too. And I suppose you could charge your customer one of those fees too. But do they really have a set credit limit? And again, try selling this to the customer. Banks and credit cards also charge NSF fees, Returned Check Fees, Account maintenance fees, transfer fees, check order fees, and a bunch of other fees. But these aren't late fees. And almost none of them apply to our industry.

So I don't see your point. We're talking specifically about late fees here. If you want to talk about other legitimate fees, fine. But Tiedman was suggesting that we could just charge a late fee, and call it something else. I am saying it doesn't work that way. There are limits to what we can charge as late fees, no matter what you call them.

tiedeman
02-06-2006, 02:21 PM
Time after time, I keep hearing other LCO's tell me they simply don't have problems getting paid.

I honestly can't imagine where they are coming from. It doesn't make an ounce of sense to me.

I have concluded that the LCO's who are saying this are either too disorganized to know that some of their customers are stiffing them or they are lying. Don't know why they would lie, but 3 years in this business has taught me repeatedly that american home owners simply don't pay the lawn guy on time.

Later,
DFW Area Landscaper

Haven't you went to basically the credit card processing way?

checked your PM by the way about the credit card question

lawnwizards
02-06-2006, 07:39 PM
Think about it though, when I mail out the bills, it basically has a months worth of service already on it (4 cuts), then by the time the due date for the bill is due I would have done 3 more cuts. That is basically 7 cuts on credit. Crazy I feel!

Now if someone is 1 to 2 weeks behind, that is 8 to 9 cuts on credit. 2 months of service.
have you ever thought about sending your bills out on the 15th of the month. then let them have the 21 days to pay. more then likely they will want to make sure you mow the whole month then pay. you'd still get your money 14 days faster because they'd pay at the end of the month. tell, me if this is understandable.... :p

Envy Lawn Service
02-06-2006, 08:50 PM
Time after time, I keep hearing other LCO's tell me they simply don't have problems getting paid.

I honestly can't imagine where they are coming from. It doesn't make an ounce of sense to me.

I have concluded that the LCO's who are saying this are either too disorganized to know that some of their customers are stiffing them or they are lying. Don't know why they would lie, but 3 years in this business has taught me repeatedly that american home owners simply don't pay the lawn guy on time.

Later,
DFW Area Landscaper

Well yeah, they are either (A) lying or (B) have a different definition of what 'late' is.

Some guys have come to expect this lag in getting paid as the norm. They do a month's work. Then they prepare a bill, send that out, wait for the customer or 'processing' if it is commercial, then it's late, and they are out 2 1/2-3 months working before payment #1 arrives and so forth. So they just accept that as normal operation. So it is no wonder that when they finally stop to realize someone is too too far behind, they have already completed 4-5 months of work that is due and payable on a stiff.

Again, second time I've said this today, but people call me crazy due to various policies of mine. Oh well, like it or not, I like my advance payment plan. LCO's and customers alike tend to gasp when I bring it up... and yes it does keep me from closing some deals, but OH WELL...

I don't have to chase my money. No accounts payable and no sizeable arrears at all except for 12 pay'ers later in the season. When payment ceases, services cease. So if they try to stiff me, the due and payable for services already rendered is small and I don't have to be in a panic to recover it.

DFW Area Landscaper
02-06-2006, 09:41 PM
Tiedeman,

I sent you an e-mail.

Later,
DFW Area Landscaper

firefightergw
02-06-2006, 10:13 PM
Last year was my first year. I put a 12 month contract together and put a customer on it. They made the first monthly payment and when the next month came due they told me it would be next week before they could pay me. When I went back to mow the next week they had a door hanger on their door from Colortime Rent to Own saying they were sorry that they missed them about their account. I called the customer and cancelled the contract. Next time I put a customer on a 12 month, I'll do it by auto-pay by credit card.