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View Full Version : Pre-paying customer's how is it working out


nobagger
01-02-2007, 08:17 PM
We are in the process of adopting a few new policy's for 2007, one of which is requiring our residential customer's to pre pay each month. I know a few of you guys do this already and I have a few questions, if and when you are unable to mow due to dry conditions what do you do? (refund or credit their account, show up and do 30 dollars worth of work?) Unlike a "seasonal contract" where you have to show up and sometimes do unnecessary work no matter what because they paid for it, I thought this might be a better alternative and hopefully eliminate slow and late paying customer's. Any feedback is appreciated.

Duekster
01-02-2007, 08:20 PM
I would do a little extra work and be sure they know it and could see it.

nobagger
01-02-2007, 08:26 PM
I would do a little extra work and be sure they know it and could see it.

So your saying you still showed up as if you were mowing, right?

Liquidfast
01-02-2007, 08:30 PM
Pre-paid is the ONLY way to go. In OUR agreement, we state that we reserve the right to reschedule 2 maintenance visits per season for either weather, equipment or any other reason we seem fit.

We also state that any missed visits over and above 2 will result in a credit towards future work. I have never been questioned on this EVER as the only other area a customers puts his/her signature or initials on the agreement are smack dab to the above statement.

It's hard not to do the work when we are paid seasonally and our living is based on timely payments but it also isn't fair to get paid or just show up and do a half a$$ job for the sake of saying you did "something".

Generally, (speaking of my area and my history only) the 2 week rule usually is all we need and keeps us paid.

Duekster
01-02-2007, 08:42 PM
So your saying you still showed up as if you were mowing, right?

Your help wants to be paid.

jeffex
01-03-2007, 05:55 AM
I get pre-paid for 2- 4 cuts. The ones I see come out with a check or I knock on the door. Some tape a check to the inside of the storm door for 1- 4 cuts. This works for me because of my cutting in the evenings. I only have 2 monthly customers who get billed and I am switching them over in 2007. If a customer is not home and they have nothing left in their account I cut the lawn and leave a bill for the service and they send me a check for 2-4 cuts or tape it to their storm door because they know I will drive by the next day. My route is very tight so this is convient for me. I just told people I was not in the credit business and it was fairly easy to convert them. Some have even offered to pre-pay the entire season but I turned that down. I don't have contracts but I have had my customers for a long time.

Az Gardener
01-03-2007, 06:19 AM
We never miss a service. Everything is irrigated and we just don't get enough rain to keep us from mowing every week.

Now as I post this we will probably get the mother of all el nino's and we wont cut for two weeks. :laugh:

I think you are on the right track. There is always something that needs to be done in the yard and as long as it is noticeable I don't think you clients would have a problem with it. You might drop them a note on those occasions to call their attention to what you have done. Sometimes the clients can't put their finger on what happened, they just noticed things looked better.

Can-Do Lawn Care
01-03-2007, 06:45 AM
Liquidfast, do you mind posting your pre-pay agreement? I would like to see some examples. Thanks

corey1977
01-03-2007, 07:17 AM
It works good for me a lot of times people will not be home when I show so I by pre paying I dont have to chase then down and stuff all I do is carry the bill book with me and do the paper work take each service call out of there balance and note the dates I did the service

William Camp
01-03-2007, 07:36 AM
I have a few customers that prepay for the season.

LawnTamer
01-03-2007, 11:10 AM
We have about half of our fertilization clients who pre-pay for the year. We send out notices in the fall, so they can pre-pay for the next year, and offer a 6% discount if they do, we also offer a free foundation spray. This does two things for us;
1. Secures our clients, if they've already paid us, they won't look twice at ads from other companies.
2. Gives us a good amount of capitol going into our slow season, this allows us to have a cushion in winter and buy a lot of our product for the next yr. when prices are low.

Every year we have a few clients that will pre-pay for mowing for the season, usually they will be out of the country or something.

kkls2006
01-03-2007, 11:19 AM
We bill out on the first of every month, Terms are payable in 14 days, although maintenance is certainly not our bread and butter. All other services such as Mulching, trimming, seeding, planting, etc are quoted separate and payable upon completion.

nobagger
01-03-2007, 12:07 PM
We bill out on the first of every month, Terms are payable in 14 days, although maintenance is certainly not our bread and butter. All other services such as Mulching, trimming, seeding, planting, etc are quoted separate and payable upon completion.

This is almost exactly what we are doing. I just worry about when it's too dry to mow for a couple of weeks, I dont want to be going through hours of paper work looking for a refund to give them. It wouldn't be hours of paperwork but you see my point. I'm more concerned about how your customers felt when you didn't or couldn't mow due to weather and the only thing you could do was weed or pick up debris, but those are things we either already do with our service or we could be billing separately and making more by doing so.

kkls2006
01-03-2007, 12:20 PM
I don't know about you But when it's to dry people seem to appreciate our honesty when they receive their bill (if we only cut twice we only bill them for two cuts) For us it's a great excuse to catch up on more time consuming jobs such as Hardscapes etc...When it rains we just hold off with all maintenance until everything dries out, that can be kind of hectic but thats the nature of our buisness.....

sgl41377
01-03-2007, 06:58 PM
All my clients sign either 9 month or 12 month contracts. They all prepay for the month. I have never had any complaints. DO A GOOD JOB AND THEY WILL NEVER QUESTION PRICE, no matter how many visits you do. I typically do 28 visits for a 9 month and 35 for a 12 month.

General Grounds
01-03-2007, 10:07 PM
:dancing: we take pre-pay on our chemical service, not pais in full before march 15, no prem. all other services are visa/mastercard only. last year i got so tired of chasin money into the next seasons march. people around here seem to have grown a major set of balls, they want $2000-3000 clean-ups and want to know why you need a check that day, i even got" no 30 days", ummmm i guess you dont read our aggreement. i also love, do a $600 trim, send a bill, get the check like 3 weeks later and its maybe half of what it should be. unreal, i was having such a nice evening too. im going to go kick my dog.

HOOLIE
01-03-2007, 10:14 PM
It just depends on how it's worded...is it 'per cut' or just a monthly price? If it's per cut then you run into the problem of refunds. Monthly, well that's the monthly price.

Some of my monthly's I mowed ONE TIME in August, still charged the monthly rate and never heard a peep out of anyone.

Precision
01-04-2007, 03:15 PM
All my clients sign either 9 month or 12 month contracts. They all prepay for the month. I have never had any complaints. DO A GOOD JOB AND THEY WILL NEVER QUESTION PRICE, no matter how many visits you do. I typically do 28 visits for a 9 month and 35 for a 12 month.
I find the same thing to be true. It is about quality work and selling the plan.

My only way (for my full service company) is to make equal payments for the entire year. You pay me when you sign the contract then pay at the beginning (or the 15th) of each month prior to service being done.

example. A client signs up on the March 26th and her first cut will be the 2nd. I get a check prior to leaving, for an entire month, She will be a "due on the 1st client" and her first month is already paid. Then she will recieve an invoice around the 15th for a due date of the 1st of May. If we have not recieved payment by the 7th she gets a late fee added and a reminder phone call. If payment is not recieved by the 14th she is suspended and send a letter stating such. If no response by the 21st she gets a intent to lien letter "certified" for services performed but not paid. If no response by the 1st a lien is filed and a copy is sent over "certified".

If she is on auto pay, she gets a call as soon as the card declines and has 7 days to make the card good prior to a late fee being added.

We also have a 30 day notice for cancellation. I explain this as needing time to replace them in the schedule and there are very few things in life that you don't have 30 days notice of that would require canceling of lawn care. Like moving. It takes at least 30 days to close on a house. They nod and always say that is fair.

I have very few problems with this system. I rarely have to go past the late fee and the call. Very rarely have to charge the late fee more than once.

My clients are all walked through the system. They all are made aware that we are charging them a certain amount for the season and to make budgetting better / easier for them we divide up the payment plan into equal payments. I stress that we are obviously doing more work in the spring and summer (our wet season) when our plants are growing the most. But we don't charge extra for it as we will be doing less work in the fall and winter. I point out that we anticipate 38-40 mows per season, weather dependent. With weekly mowing typically from the beginning of April to the middle of October and EOW the rest of the season.

For those few who don't get it right off, I further explain. It is just our way of avoiding charging you $300 in the 7 busy months and $150 in 5 slower months. Instead we charge you $235 every month. This way no one has to count mows per month, nor do you have months where the fertilization charge gets added to a 5 cut month for a whopper bill. Does that make sense? They almost always say yes. Does this sound like a more convient way to pay? They almost always say yes. IF THEY don't say yes, then politely leave. You are wasting your time.

Hope this helps.

lawnprosteveo
01-04-2007, 07:59 PM
If my customers prepay for 4 mowings for the month and I only mow 3 times due to drought or whatever, then I credit them one mowing on their next bill.

jeffscap
01-04-2007, 08:44 PM
This is almost exactly what we are doing. I just worry about when it's too dry to mow for a couple of weeks, I dont want to be going through hours of paper work looking for a refund to give them. It wouldn't be hours of paperwork but you see my point. I'm more concerned about how your customers felt when you didn't or couldn't mow due to weather and the only thing you could do was weed or pick up debris, but those are things we either already do with our service or we could be billing separately and making more by doing so.

Try using the clip software it will keep track of credits or debits.

crzymow
01-04-2007, 09:18 PM
welcome aboard jeffscap we should chat sometime

jeffscap
01-04-2007, 09:56 PM
welcome aboard jeffscap we should chat sometime

Thanks:waving:

tacoma200
01-04-2007, 11:32 PM
What's a pre-paying customer????????? I'm happy to get a post paying one.

Envy Lawn Service
01-05-2007, 01:33 AM
It just depends on how it's worded...is it 'per cut' or just a monthly price? If it's per cut then you run into the problem of refunds. Monthly, well that's the monthly price.

Some of my monthly's I mowed ONE TIME in August, still charged the monthly rate and never heard a peep out of anyone.

EXACTLY!!!!!!!!!!!!!!!!!

It's in HOW you sell yourself/your services.

For me, I sell a seasonal agreement. This means anywhere from 32 consecutive weeks of service on up. If it's a mowing only gig... it's the same deal. I sell it that way... and I also sell the concept of lower fixed monthly payments due to the fact "it all evens out in the end."

Truth be known, with the way I price mowing, it typically really does all even out over the course of the season. I've actually went through a period of several years there where I was sorta on the loosing end. Didn't get to skip a cut on a single lawn for a few years there. Lot's of rain and lots of growth... like spring all year long. 2006 was a rare year where I was on the winning end of the deal. But not by a whole bunch.

I adopted the pre-pay policy for the following reasons:

1) To eliminate the worthless customers instantly.
2) To keep the good customers good.
3) To eliminate a lot of BS.
4) To streamline billing.
5) To streamline collections.
6) Because regular maintenance is not rocket science.
7) Because regular billing/payment should not be either.
8) Because I appreciate customer commitment and predictable income.
9) Because I choose not to be at the mercy of mother nature or the customer.
10) Because I see no sense in the headache of other billing methods.

Liquidfast
01-05-2007, 02:34 AM
Liquidfast, do you mind posting your pre-pay agreement? I would like to see some examples. Thanks

Sure.

Apr. 15 -May 15 $xx.xx

May 16 - June 15 $xx.xx

June 16 - July 15 $xx.xx

Please be advised any unused portion will be returned in the event of cancellation.

With a customers first year, I'll bill them every four weeks. That way, when the month arrives with 5 weeks, I'll get paid for that extra week. When the customer signs on the following year, I send out my pre-pay letter and state that we will bill as outlined above. I also mention that the customer will no longer be billed for the extra week if they pre-pay. It works everytime.

mike and jana
01-07-2007, 11:53 PM
We require pre-payment as well. Noone questions it. Our contract states we will visit a site so many times in 12 month period. It includes mowings, the labor for all applications and spot treatments for weeds. Those items tallyed up and divided by 12. Thats their monthly payment. They pay for the materials for applications in the month the service is performed. Example: They will be billed $140.00 for regular monthly service plus a $30.00 for per-emergent in Feb and again in April. Any other add on is billed in the month the service is performed. Dry or wet weather has no affect on it. You keep your required visits to a level that you know will be necessay. My area is 30-33 for a 12 month contract.

Envy Lawn Service
01-08-2007, 12:54 AM
We require pre-payment as well. Noone questions it. Our contract states we will visit a site so many times in 12 month period. It includes mowings, the labor for all applications and spot treatments for weeds. Those items tallyed up and divided by 12. Thats their monthly payment. They pay for the materials for applications in the month the service is performed. Example: They will be billed $140.00 for regular monthly service plus a $30.00 for per-emergent in Feb and again in April. Any other add on is billed in the month the service is performed. Dry or wet weather has no affect on it. You keep your required visits to a level that you know will be necessay. My area is 30-33 for a 12 month contract.

During the off-season, you might want to look into streamlining things just a hair more.

There is nothing wrong with the way you are doing it now.
I do it that way sometimes too.

However, there is an option most customers seem to like even more and that's totally fixed monthly billing. You just add the cost of the apps and stuff that they are going to take for the season into the payment arrangement.

So for the example you just gave, you would increase their 12 payments by $5 each.
This way their bill is not $30 extra two months a year.
Easier for you (simplified billing) easier for them with fixed repetitive billing.

The ONLY thing you have to watch out for are the customers/sites where you bill large amounts extra by year's end. If these sites want a lot of expensive early-season extras, you can get in a bit of a pickle should they cancel you right after you have invested a large amount of time and/or materials into the property. Yeah, I protect myself with clauses and itemization in my annual agreements.... and they are still liable to pay for "work performed to date" plus fees and such. But that doesn't mean it might not take extra effort to COLLECT it.

I keep this in mind and try to lay out all such contracts in a manner where they have paid for most or all of any such work already.... meaning I avoid starting a contract in March or April and doing a big landscape job first thing, etc.

I'm smart about it. Instead, I might break it up separate in year one, do the big job extra.... take deposit up front for regular weekly maintenace, making it a 9-pay ending in december. Then I 'renew' them in January for the next season on 12-pay and collect 3 or 4 payments before ever lifting a finger on their site.

I do as many as I can that way. I focus on collecting as much up-front as possible.
The more, the better.