Payment Terms

[XOFMOT]

I see that most everyone on here will either pick up payment when they finish that property, or bill on a monthly basis. I live in the northeast and a season contract will consist of say..aprox 25 visits for lawncare, my question is...for example you have an account that you charge $50.00 per visit x 25 visits = $1250.00 for the season, does anyone who works only half the year in the lawncare end of this business take that $1250.00 and split it up over the 12 months of the year? This would at least give you some cash flow during the "NON-SNOWPLOWING" times of the winter months. Just a thought.:)

[Finecut]

How worried do you think people would be about keeping current with their payments in Dec., Jan., Feb.? My guess is not very!

[LoneStarLawn]

I hope they would if they were under contract.

[XOFMOT]

My thoughts exactly Alan!.......Customer still owes for my services, just making the monthly payment less$$$ for them by streching it over 12 months

[Evan528]

what the advantage of getting your money over 12 months? Your getting the same amount of money!Is it just that you have trouble Budgiting your money?

[Eric ELM]

I agree with you on this Evan. I don't understand it either. I would rather work my 9 months and get 9 months pay 1 month at a time for 9 months and put the money to work for me, not let them have the use of my money.

It wouldn't work out for us Northerners that plow snow anyway. We would have to add the snow plowing to bill and that would be even more confusing.

[XOFMOT]

Evan,Eric,

I have NO PROBLEM at all with budgeting. (I'm married,two children 4 & 6, mortage, and everything else, as well as a $2500 a year property tax for just a .11 acre lot!)PLUS my wife is MRS.BUDGET anyway (thank GOD)!
I looking at it more from a customer point of view......When I went out and bought my new truck last year, I opted to pay it off in 1 year instead of all up front. Easyer on my wallet, even though I had all the cash to pay it off. (0% financing = a 1 year free loan to me). Within the next few weeks I'm going to be purchasing a large amount of equipment. I just received a credit card that I applied for that will give me 0% interst rate for all purchases until JUNE of 2002! I will take advantage of that!

But on that same thought I also agree with your thoughts on this subject. This was just a thought that was in my head that decided to come on out. Yes, I would rather get paid IN FULL what I was owed at the end of the month.Thank you for your input!:D

[GreenQuest Lawn]

I offer Pre-pay, 8 Month, & 12 Month billing on all my contracts. To date no one has chosen the 12 month. I wanted a few to go with it for some extra cash in the winter but so far people seem to only want pre pay and 8 month billing.

[Comet]

Intresting, has made me edit a commercial bid possibly, I can see maintaining res only in 8 but

Would this 8 month billing also apply to large commercial accounts over 100K in everyones book?
or let them be able to budget that over 12 months?

Snow is seporate on a yearly contract
thanks

[Lawn DOG]

I would say that the sooner you get your money the better. It is hard enough giving people monthly billing. Think about this. You mow a lawn on July 1st. You close your accounts on July 31st and send out bill on August 1st but don't receive payment until the Aug 30th. That is almost 2 months before you receive payment for services rendered on July 1st. They can't expect it to get any easier than that. This is the way I do it. Most people wait untill the last minute to pay their bills just like me. But if they forget I charge a hefty interest rate that is worst than almost any credit card. It is all in the signed contract. I have very few accounts that we do on hand shakes. Had to learn the hardway that not everybody is as nice as me.
There are faster ways to get the money but we do cater to the public and try to make it convenient as possible because face it in the service industry people like convenience. It is not convenient to be bothered 4 times a month to pay the lawn guy.

[bobbygedd]

i send out the bills for july, on july 25th, and have on the bill"please remit within 10 days". this means i wait 35 days to be paid for july 1st service, thats long enough. but some still send it 2 or 3 weeks later.

[Comet]

Ok thanks,,keep them coming, Im sure this is all helping XOFMOT out (the one who started the thread out),,( me too as I jumped in here)

Im still cramming here and editing to 3AM each night it seems.
Any sample contract agreements that you all use are appreciated here.
I finally feel comfortable with my numbers I added up.
Its the wording and payment shedualing Im having a tough time with.

I had it broken down into 12 payments until I seen this thread.
My bid proposal has been completed although I seem to be editing it here and there.

Of course the management board might say go fly a kite with your proposal (I think not though, but one never knows)

Concidering all the eliments involved with the complete overall maintenance
does anyone keep the billing seporate for services and submitt them monthly? Say weekly maintenance submitted
then all other work submitted as the months or weeks go by?

I seem to be having a difficult time trying to break it down that way or if so I need redo the entire contract over, the easiest way was to total everything up (figuring my cost,labor,time etc. with exceptions to work outside the agreement etc.) and break it down into 8 or 12 monthly payments
thanks a bunch, your info is greatly appreciated

[Lawn Wizard]

XOFMOT I had the same idea when I started! But I couldnt figure out away to implement properly.
Ive read a few small business books and a recurring them on billing is "A dollar recieved today is worth more than a dollar recieved tomorrow." Basically this means If I give you 1 dollar today you have the possibility of making that into 2 dollars by tomorrow as opposed to 1 dollar you would recieve tomorrow that you cant do anything with! Always better to have payment as quickly as possible in my book!

[Finecut]

I agree, you hope they will pay whether they have a contract or not. You can take people to court and have a judge issue a judgement in your favor and still not get paid. Then you need to go back to court and file a lein on their property, if they own the property in question. If you were to stop mowing their lawn for non payment in July, you might get a customer to pay. If you have already done the work, what leverage do you have to collect payment? Go back to last November-December-January-February posts, see how many people are asking how do I collect past due bills. What IM trying to tell you is get your money while the gettings good! If they can't afford to pay your bill at the time of service, be it monthly or weekly (whatever you've agreed upon), you don't want or need them as a customer.

[kris]

We bill at the START of the month for that months service, There is the odd commercial account that spells things out a little differant and we go along with it..... Works for us. Does anyone else do this type of billing???

[LoneStarLawn]

How would you handle weather delays? As well as unexpected work performed at an account?

[Comet]

Ok, Im listning in and checking responses to all the above from KOFMOT's post and learning.

So if a perticular ACCOUNT lets say was 100k for EXAMPLE total for the year in a BID which included covering all the services ranging from manicuring, cleanups, trimming/pruning, fall/spring colors,fert, mulching for the entire year etc..
"with having no additional services required outside of the proposal just for argument sake (quite unusual)"

Its NOT UNUSUAL to bill the management $ 12,500.00 per/month on the 25th or so with the way your all indicading etc, with please remitt payment within 10 days? (this figure was for an 8mth billing)
or is this eXtreamly very unlikely to ever take place and too much to ask for, or does one let an account ride for 12 months such as this)
$ 8,333.00 per/month?
or
do they generally want to have you bill them as you perfom the work?

Not ever having such a large account like this in the past leaves me with these questions like KOFMOT, I am checking in and reading all these responses to this thread that KOFMOT started

I have the equipment, manpower to complete these job duties efficiently but the lack of experience with a large account such as this.
YES,I would like to get paid ASAP concidering all the expenses I will be generating.
thank you for your time

[smburgess]

Most of these posts just seem strange to me. I do alot of "it cost you x amount of dollars for x services, divided by twelve". Usually the agreement starts on Jan. 1 but not always, which puts me way ahead money wise. It's always the client that wants it this way - they want even payments to budget. It seems pretty simple and straight forward to me. I have some late payers, but I don't live month to month, I have operating capital I guess that may be the difference. I don't mind waiting a week thirty days for the money to come in, it's just how business' operate.

[XOFMOT]

Well, it looks like most everyone is doing the "END OF MONTH" type of billing/payment plan based on that months services. Sounds like it would work, and since it seems to be the norm, I will be following along that way as well.

QUESTION: when you send out your end of month bill to a customer, is anyone also including a S.A.S.E. for them to remit payment to you?

Thanks again! you all have been a wonderful help in my business!!!

[1MajorTom]

Quote: QUESTION: when you send out your end of month bill to a customer, is anyone also including a S.A.S.E. for them to remit payment to you?

I think it is a nice gesture if you only have 20 to 30 customers.
We have 94 at this point. Although most of our customers are not set up on the monthly billing plan, if they all were, that would be $63.92 a month for postage, $767.04 a year. Just for the extra stamp it would be $383.52 more. Is it really worth it? What do you actually gain by including the stamp?

Also you have to take into consideration, how many times when you get a bill in the mail is the postage included? Your electric bill, your credit card bills, the phone bill, the water bill, etc. None of those bills come with paid postage, and we still send in our payments on time. Basically it's just a fact of life. When paying a bill, you have to pay the postage.

Just my 2 cents

[LoneStarLawn]

We send out a SASE for our customers, but after two late payments that customer will lose the privelage of the stamp.

[LoneStarLawn]

Originally posted by 1MajorTom
Quote: QUESTION: when you send out your end of month bill to a customer, is anyone also including a S.A.S.E. for them to remit payment to you?

I think it is a nice gesture if you only have 20 to 30 customers.
We have 94 at this point. Although most of our customers are not set up on the monthly billing plan, if they all were, that would be $63.92 a month for postage, $767.04 a year. Just for the extra stamp it would be $383.52 more. Is it really worth it? What do you actually gain by including the stamp?

Also you have to take into consideration, how many times when you get a bill in the mail is the postage included? Your electric bill, your credit card bills, the phone bill, the water bill, etc. None of those bills come with paid postage, and we still send in our payments on time.

Why do what everyone is doing...we have found out that we will get payments quicker that way. We have over 60 accounts and the expense of the stamp is included in our overall expenses. It is just something we do and the customer really appreciates it. Just another tax deduction.

Plus we do not send out the same amount of invoices during the winter so your numbers may be off for some people.

[Evan528]

I dont provide a stamp but i do provide a self adressed envelope with my invoices. Seem to get payment faster using this method. They already have the envelope handy.... just throw a check in it and send it off!

[1MajorTom]

Quote: but after two late payments that customer will lose the privelage of the stamp.

I bet that scares them into sending their payment in sooner! ;)

[LoneStarLawn]

Well we had customers calling asking why there wasn't a stamp. After we explained to them our policy they were not late again. So I guess it works.

[SLS]

I am a "small-time" LCO (30 1 acre residential accounts).

My agreement with the client is "payment due as service is rendered".

Most are not home when I mow their lawn so I leave a SASE with the bill inside of it on their door as I leave.

Most clients have the payment in my mailbox in 3-5 days.

I've always thought that the envelope and stamp prompted them to send it quickly as all they had to do was scribble out a check and pop it in the box.

Of course, my postage bill is less than $15 a month at this point (and I do write it off) so I might feel differently about paying the postage is it was a "big hit" to my bottom line.

I do believe that the sooner you have your money...the better because that allows it to work for YOU sooner and it a fact that the dollar is worth less today than it was yesterday....

[kris]

Originally posted by LoneStarLawn
How would you handle weather delays? As well as unexpected work performed at an account?
All our customers are billed the same each month(just like a snow contract where you get paid if it snows or it doesn't), there have been weeks when the grass hasn't grown but we always show up and perhaps spend more time in the shrub beds, do a little sweeping in the parking lot etc... no such thing as a weather delay, we may get a day behind but can usually get caught up within two. As far as "extra" work, it is billed seperate, either right away or at the end of the month.

[LoneStarLawn]

Thanks for the explaination Kris. The reason I say "weather delay" is for near the end of the month. Say the last day of the month it rains so the job must be postponed until the next month. I was just wondering how you would keep up will the paperwork for that like taxes , but I take it most of your accounts are contracted.

[Lawn DOG]

I have to agree with almost everybody on this one. The SASE is a great way to encourage quick payment. I feel that we spend enough in providing a great service and they can get their own stamp.
BUT, this does bring up some interesting possibilities for some cheap public relations work. I think LoneStarLawn may have changed my view on this.
I already use about 150 stamps a month whats another 150. I think if any of my bills every showed up with a SASE I would say wow that is nice and pay that bill first.