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Envy Lawn Service
11-04-2002, 04:56 AM
I've been asked to bid on some commercial accounts for next season. Some have ask that I meet a certain deadline with my bid prior to the new year for annual budget purposes. Large commercial stuff is a new world to me. So I have a questions since they mentioned "annual" budget.

Does anyone have annual payers who pay the contract or a portion of it at one time?

Any type of advance payment?

How about semi-annual or quarterly?

Do you offer a discount for advance lump sum payment?

I've been kicking around the idea of offering several payment options with my bids. One because some may have a preference to certain payment terms. Two some of the accounts will require that I purchase more equipment and it sure wouldn't hurt my feelings to have some "advance" cash flow to put towards the purchase of new equipment. I could save myself some interest that way and still maintain more cash in the ol' bank account! So I could offer a little discount too ;)

Guido
11-04-2002, 06:32 AM
You can get payments before the work is completed, thats great.

If not.....I wouldn't let it go quartely, especially a large $$ account.

The longest I would go is monthly. You could spread the contract cost evenly over 12 months so you have a steady cash flow from the account.

Good Luck!

TurfPro
11-04-2002, 07:49 AM
I've found that giving them too many payment options confuses the issue. What most companys' like, is a set price they can Budget it makes the payroll dept's life easier and the company knows exactly how much they will spend this year.
I like to figure up all the services I would like to provide each year and then divide by 12.

The Mowerdude
11-04-2002, 08:35 AM
I have about 20 customers that pay way in advance. And it really helps me with my cashflow. One customer that I do about $10,000 per annum, writes me a $5,000 check in advance right at the very beginning of the year. These are ALL residentials as commercials have the same cashflow cramps that I have and are often times looking for that "net 30."

However, you'll have a hard time copying my example until you get firmly established with these people and a strong bond of trust is built up. So set it as a goal for down the road. I usually run into slackjawed amazement when I tell my LCO buddies that I get so much money in advance.

MPhillips
11-04-2002, 09:49 AM
our contract specifies payment at the beginning of the month for services to be performed during that month. We bill monthly. In reality our customers are typically on either 30 or 45 day AP cycles, so we end up getting payment at the end of the month for services performed during that month.

Swampbeast
11-04-2002, 10:35 AM
Charge em monthly. That way you get steady cash flow from them all year around. And its paid in advance of the work to be done.

:cool:

Sean Adams
11-04-2002, 04:25 PM
It's all going to depend on the client. Sometimes a larger company or outfit may want to take advantage of a significant savings offer. If it is a $30,000 contract and you are offering 10% off for prepayment, some will jump at the chance to save $3,000 - that's more than one month's service they are saving. However, these are usually rare, and you had better make certain you do what you are supposed to do. You don't want a dissatisfaction issue that turns into a request for a portion or most of their money back - especially if it has already been spent.

I agreewith everyone above. If you break it into 12 monthly payments, they can budget, you can budget, and you have a cash flow during the lean/slower months.

Residentials are often more willing to pay (partial payments) up front, but that is usually after a few years of service, due to the trust issue.

Never any harm in trying. The best bet is to give them as many sensible options as possible for them to choose from.

Envy Lawn Service
11-04-2002, 05:46 PM
Sean,

You just boarded my "train of thought" there. That's what I'm thinking. I'm a firm believer that it never hurts to ask and I think people like choices in there decision process. It makes them feel important and more in charge even though they are paying you to do something they can't or don't want to do.

I just think you have to be carefull in giving them too many choices to choose from. People tend to get bogged down in the thought process sometimes.

KLMlawn
11-04-2002, 06:27 PM
Sean, I have a question/comment regarding giving a 10% prepayment discount on larger $$$ accounts (commercial I would have to assume).
Seeing as from both so many threads and thru personal experience it is a fact that most larger accounts are usually interested in the lowest bottom line figures, wouldn't you say that taking $3000 out of your profits for a year off one account could hurt a bit if your numbers are close to begin with?
Another thing as a general comment, why is it that everyone feels the need to offer "terms" ... net 30, EOM 30 days ... or even some I have heard of offering a discount if the customer pays within 20 days of receipt of their bill.
Are we Lawn care professionals or lending institutions????
I can see offering a discount for prepayment, but not for paying a bill in a timely fashion for services already rendered ... who the hell started this concept anyway??? If anything we all should have a penalty for not paying in a timely fashion, not a reward ....

bubble boy
11-04-2002, 06:36 PM
Originally posted by Envy Lawn Service
Two some of the accounts will require that I purchase more equipment and it sure wouldn't hurt my feelings to have some "advance" cash flow to put towards the purchase of new equipment.

i've always been uncomfortable with the idea of buying equipment for just one or a few jobs. if expansion is in your plans then with a good budget fine...but losing the account that say you buy a z for can be rough.

just be sure to crunch the cash flow #

Envy Lawn Service
11-04-2002, 07:54 PM
Originally posted by bubble boy
i've always been uncomfortable with the idea of buying equipment for just one or a few jobs. if expansion is in your plans then with a good budget fine...but losing the account that say you buy a z for can be rough.

just be sure to crunch the cash flow #


My thoughts exactly......
The particulars are exactly what I'm after.....
I want everything to go smoothly.....

Getting a piece of equipment, paying cash and having the cash from a job that it was bought for doesn't hurt so much as payments and interest or cash right out of the nest egg.

I know Z's are cheap when you think of them in terms of how much money they can make you. But they can be a burden of debt or a bad buying decision if they aren't in use making you that money.

Turfdude
11-04-2002, 11:20 PM
Dude,

Once again I'll give my "get a bid spec package" answer. Many commercial accounts are highly organized and give you an outline of what they want done, when they want it done, when en you should bill and when they will pay. A lot of my better commercial accounts expect billing by the 5th of the month for prior month's service and pay net 15 or net 20. It is all apart of the contract. The standard services are spelled out w/ upgrades and additional services needing management consent.

Good luck

Bob

Tony Harrell
11-05-2002, 06:09 AM
Keep this in mind. Even profitable companies can/do go out of business because of cash flow problems. Let your mind wrap around that until you get your own answer.