Whoa!! Only pay every 45 days??

[Pro-Cut Lawns]

I won a bid on a new commercial account this year. Turned in my quote, insurance certificate, W-9, and all required info. Mowed beginning first week of April and billed May One on 30 day net terms. Mowed the month of May, and billed June 1 on 30 day net terms. Still have received no payment. I called the local office yesterday (checks are cut in a main office out of state). He gets online and says he shows no record of the check being cut. Asks me if he mentioned when I got the bid that the company only makes payments every 45 days. I tell him thats a small detail he forgot to mention. I am ticked. It was 45 days Sat. By the time the check is cut and I receive it in the mail we are talking close to 60 days for payment. I told him my creditiors didnt give me 45 days to make my payments!!!

Its a small account that pays good and certainly isnt going to keep me or my family from eating, but its the principle of the thing. It's a large nation wide company and they are telling me WHEN they will pay me!!!

Just needed to vent. Do I need to let it go and finish out the seaon or drop the account?? I could use the time spent on the account to do other work (that pays on time) I am behind on and even pick up another account or two. I really don't want to loose any accounts but I am really ticked about the situation. Anyone else have any 45 day paying accounts??

[SIG]

I have had Goverment work that took 90 days to get paid. It's part of business in the 2000's. That is why you should always have reserves. It sucks but it is life.

[JB1]

we've got one that pays 90 days, we just charge accordingly.

[lawnstudent]

You have a signed contract that specifies net 30 days payment and a late payment penalty fee? Then charge them the penalty fee. If not, then shame on you. Close out the season and chaulk this one up to experience.

jim

[Jimbo]

I have two customers who are like this (both Commercial accounts) on a per cut basis. One thing is for sure..they pay so late I'll have plenty of money coming in over the winter.

Basically I bid high on these accounts and I have added to my 30 day terms "A 5% late payment penalty applies for payments received after 30 days from invoice date". Usually this does the job. If they pay late and don't pay me the penalty I will write it off at the end of the year.

If you don't want to do the 5% late penalty, you could bid high and do a 5% discount. Usally they will take the discount and pay early. (I am not sure how to keep my books straight when doing it this way though).

Good Luck!
Jimbo;)

[Brickman]

Personally I would explain to them that THEY signed the contract for 30 days, and like you mentioned nobody gives you 45 days, so either pay or find a new lawn guy and then stick to it.
Guys listen up, and gals. THE ONLY REASON THEY DO THIS IS TO MAKE MORE MONEY OFF OF YOUR MONEY. And there is no reason we should allow them to continue.
It boils down to the old saying, money talks, B. S. walks.

Let us know what you decide to do.

[kris]

It's not unusual to wait 60 days for money on commercial accounts. We bill at the start of each month .ei. May 1st for maintenance in May ...gives you head start on them;)

[Likestomow]

This is not the only business that has delayed payments. Insurance agents typically have to wait 45-60 days from the time they submit an application until they receive their commission.

You'll have to wait the 45-60 days for your first payment, but after that the rest of the checks should come every 30 days if you are submitting your invoices on time each month.

[cp]

Maybe I am lucky but I got this new commercial account that is an industrial plant with a main office in New jersey. They wanted to be billed monthly for work done, so I bill monthly on the last week of the month and I have a check on the 10th every month, never late, no questions asked...:D

[Albemarle Lawn]

You can expect it with commercial accounts.


NOTE THIS:
Eventually, you will lose big time when one of them files bankruptcy or reorganization. You are last to be paid, think about it, electric bill gets paid first for obvious reasons.

Price it in. Charge WAY more than you normally would.

This is a HUGE P.I.T.A. factor increase.

KB

[65hoss]

The hud contract I had a few years ago was like this. The longer your money stays in their account the more interest they make off you. They also know that somebody will want the job bad enough that they can keep these terms. I would add a late fee in if its in your contract.

Guess I'm lucky, the comm'l accounts I have will have a check to me within about 3 days.

[Pro-Cut Lawns]

Shame on me cause I don't have a contract. None of the guys locally that I know of (about 6 different LCO's) do contracts and people get really irritated and wont do contracts here. I've tried. I was told verbally that 30 day net terms was the norm, but now its 45 all of a sudden. I'll just live with it. Its only one account and once they start paying maybe the payment will flow a little better. Had I known in advance I would have factored that into my bid and bid a little higher.

You've all given me some options though and I appreciate it.

I picked up another new account last night next door to one that I drive 10 minutes to so things look a little better today.:D

Thanks guys

[Brickman]

You might try pre bill. Or if you bill at the end of the month put the first of the month in the date box.

65Hoss is right, that is why for me they either pay up on time or hit the road.

[Pro-Cut Lawns]

Brickman
I may try the billing change. I agree with you and 65 Hoss and am really inclined to drop the account. Its the principle of the thing. My original thought was to send them a letter of discontinuance of service effective July 1 for slow payment and let them find someone else.
Thanks for you input
Larry

[smburgess]

Sooo......

You would drop the account because it's commercial and they have a 45 day pay, but it doesn't hurt your cashflow......

You're not one of those guys that knock on the door when you get cutting their grass to collect your money, are you?

If you are, then go back to that world to run your business because in the real world commercial accounts 9 times out of 10 have a proceedure they go through to pay their bills, and 45 days is not uncommon.

I fail to find logic in your thought that you would drop them simply because they take 45 days to pay, not that it causes you a cashflow problem. I wish more peers in my area would think that way!

I would REALLY be surprised that they would change to a 30 day pay. If they don't do it for all their other vendors why would they do it for the guy that cuts their grass? Be logical (and smart) if it doesn't hurt you to wait 45 days to get paid, and you have a profitable contract, why give the business to someone else?

Sorry if I come off alittle stern, but I just don't follow your train of thought here...

[ADMowing]

I used to do Accounts Payable and Accounts Receivable for a Fortune 500 company. They paid their bills 45 days from the day they RECEIVE their invoice. So, I agree with what is mentioned about sending the invoice early. This is a common practice among businesses. Reason: They are not getting paid by their customers earlier than that and the cash flow has to match. This is a real issue in big business and something that they keep a close watch on.

A solution: When I paid the bills, we did have a few accounts who were ALLOWED to be paid early. You can talk to the Accounts Payable manager of the business who makes these decisions and tell him what hardship it causes you and he may change their pay schedule for you. It is all automated and can be done by typing in a number (30 days) in the "pay by" field instead of (45 days) when they enter your invoice into their computer.

Or.... you can realize that this is how it is done and not worry about it anymore. It is frustrating because by the time they get the invoice it has been 3-5 days and they stamp the received date on the invoice. They don't cut the check until 45 days and then it is another 3-5 days until you actually receive it. If you send the invoice 10 days early, you might get a nice result. The accounts payable clerk may catch it and realize that service has not been rendered and hold it. But, they are usually too busy to even care.

Just some inside information for you.

A & D

[wxmn6]

Think about it. You may had waited for 45 days for the first check to come, but after that you should be receiving a check from them once every month, if you send the bill on time. For example if you send a bill on May 1 for April services, you should receive a check around June 15, and if you send another bill on June 1 for May servies, you should receive a check around July 15. And it continues.