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View Full Version : Billing Ideas: in advance, monthly, 12 month


lawnboy73
12-17-2011, 05:40 PM
Hey everyone .... looking to see how everyone bills their customers for best company cash flow results. I have been billing monthly for years, but am thinking about having different options to improve cash flow throughout the year. I was thinking about having the customers choose what services they will want performed throughout the year and putting them on a 12 month payment plan to have a consistant cash flow on a monthly basis. Thanks !!

arninglawns
12-20-2011, 07:02 PM
Our standard billing is monthly in advance. Every year, during the off-season, I offer a 10% discount to anyone who wants to pay for a year in advance. Works out real good, gives me a little extra cash flow in the winter. People give it as gifts to their family members, etc. Also seems to reduce the amount of times people call to skip a service because it hasn't grown enough or whatever reason.

tyler_mott85
12-21-2011, 08:09 PM
I'm just starting out and plan on only offering yearly service contracts payable in either 12 equal monthly payments, paid in advance, or a 10% discount for full payment. I can see it would be more difficult to transfer current customers over to this system when they are established monthly services performed based payments or adding every new customer into the mix from a certain point on out so I'm hoping that starting out this way will keep things simple.

Is it an uncommon way of doing it? sure. Will it maybe take me longer to build up my clientele? possibly. But the way I see it the added cash flow during the slow months....especially the first couple months of spring when you have lots of money going out in expenses while waiting on payments....will make it a lot easier in other aspects of the business management. Plus since I'm starting out part time I'm not worried about making a ton of sales just to have money coming in.

arninglawns
12-21-2011, 08:21 PM
Is it an uncommon way of doing it? sure. Will it maybe take me longer to build up my clientele? possibly.

It won't take you longer to build your *paying* clientele. :)

FWIW, we increased our regular customer base by 68% so far this year over last year doing it that way. Just make sure it's in the fine print on your website and all of your print, so they know what to expect before they call.

wbw
12-21-2011, 10:39 PM
Hey everyone .... looking to see how everyone bills their customers for best company cash flow results. I have been billing monthly for years, but am thinking about having different options to improve cash flow throughout the year. I was thinking about having the customers choose what services they will want performed throughout the year and putting them on a 12 month payment plan to have a consistant cash flow on a monthly basis. Thanks !!

This is strictly my opinion...I have no basis in fact or experience here.

1) I think it would be difficult to collect during the off months.

2) Manage your money better and you won't need consistent cash flow.

3) Focus instead on increasing your cash flow.

lawnboy73
12-22-2011, 12:18 AM
Thanks for the feedback guys! I was thinking that putting the regular full service customers on a 12 month cycle would be a good idea for us and them because it would allow them to know/budget for their monthly fee while it would keep some cash flow coming in during our slower months of Dec, Jan, Feb. Thoughts on accepting credit cards?

Dr.NewEarth
12-22-2011, 01:49 AM
I like to bill at the beginning of the month, before we do the work. We also accept major credit cards. We use contracts.

I don't like doing 12 payments for a nine month maintenance contract. You lose money doing that.
I'd rather have nine equal payments. I want the money in my account, not the clients. You lose money letting the client have a deal or a break to pay off longer.

If they can't afford the cost of service, most of them could be doing their own lawns.

jsslawncare
12-22-2011, 11:53 AM
WBW and Dr. Newearth said it best I think. Think long and hard about #2. I don't do contracts. I have several banks, business' or whatever that I bill monthly. I do very little business in Jan and Feb but I manage to make it. I get paided after I cut, every time. No discounts, no one pays early (a few pay late) that's just how it is. I guess I do it how I would want to pay if I were having my yard cut.

GreenI.A.
12-22-2011, 03:46 PM
I don't do maintenance, but I offer a few different payment options with my fert customers.
1. some prefer to pay per service, and receive a bill for what was done that particular day. (6-8 vistists per year)
2. Some get eight equal payments for the year spaced out monthly during the fert season. Basically I add up all of their services and average it out to eight equal payments.
3. Some do the same as above but lower the payements and stretch them out to 12 equal payments. This is more common on larger lawns with lower income, and makes it easier for the customer to add on additional summer services if they can start to pay for them in January
4' We offer a discount for pre payment. I offer two different dscount amounts, one for customers who prepay before February 15th , and a different rate for thos who prepay before April 1st (mostly new customers)

arninglawns
12-22-2011, 06:30 PM
I don't like the idea of a 12 month equal payment system. What happens when they sign up for 5 mowings in August, then drop you?

jsslawncare
12-22-2011, 07:28 PM
I don't like the idea of a 12 month equal payment system. What happens when they sign up for 5 mowings in August, then drop you?

I was wondering the same thing.

mtdman
12-23-2011, 03:05 AM
This is strictly my opinion...I have no basis in fact or experience here.

1) I think it would be difficult to collect during the off months.

2) Manage your money better and you won't need consistent cash flow.

3) Focus instead on increasing your cash flow.

#2 right there says it all, plain and simple.

GreenI.A.
12-23-2011, 08:25 PM
I don't like the idea of a 12 month equal payment system. What happens when they sign up for 5 mowings in August, then drop you?

I was wondering the same thing.

The way we do the 12 equal payments for fert is that we track it and if they quit we either bill them for anything owed, or we reimburse them for any money they over paid. If some one signs up mid season, we will not offer them a 12 monthly payents, that is only offered to returning customers or customers who sign up before Jan 1st

For example here is an example of one of my clients
1 march Fert $77
2 April Fert $77
3 June Fert $77 + Merit $154
4 Aug Fert $77
5 Sept Aeration $194 + Overseed $150
6 Nov Fert $77 + Lime $77
Total Price for year = $960 / 12 payments $80

- If the cusomer quits in late May, they would have paid $400, but only used $154 in services so they would be creditted the difference of $246.
- Now the oposite, if the quit in Late September they would have been billed $640, when $806 in services were provided. A final bill would be isued for the remaining $166.

landscape5050
01-09-2012, 09:51 PM
This is strictly my opinion...I have no basis in fact or experience here.

1) I think it would be difficult to collect during the off months.

2) Manage your money better and you won't need consistent cash flow.

3) Focus instead on increasing your cash flow.


- We have started switching customers over to a "flat rate" type plan. It was worked very well for us. We do installs, maintenance, and snow removal. Here has been our experience.

- You have a credit card on file to run on the 1st of each month.
- We do 7 month plans and 12 months if they are a snow and ice customer.
-We have a guaranteed cushion for the off season. It doesn't have anything to do with not being able to "manage cash"
- Ties in nicely for the slow snow years and your seasonal snow contracts - We have found it's best to mix seasonal contracts with "per push pricing"
- You automatically weed out the customers you don't want and won't pay at all.
-Give's us an egde when bidding apartments and HOA's
- Your schedule is laid out a year in advance

We want to take it a step further and offer a pre season discount that must be paid by March 1st. Avg 1,500 - 2,000 per customer for base services and sign up 20 or so. That puts 30k-40k in your pocket just to start up with.

Any Suggestions from anyone on a good way to implement or any past experience?

Woody82986
01-10-2012, 10:44 AM
I offer basic monthly invoicing for work done during a particular month. I also offer a prepayment deal for a certain percentage of if a client prepays for mowing services only for the season by the end of March. I also offer a 12 month maintenance package with flat monthly billing. I only offer the latter two to clients who have been with me for at least half a season prior. Once I know they are decent clients then they are offered those two options. I am currently in the process of pushing all new clients to put a card number on file for payments. My entire goal is to remove as much guesswork as possible from my end and remove as much hands on activity with the lawn care company from my clients' ends. Most of my clients just need their lawn taken care of so this type of system works in my favor because it frees up time to spend on the clients who want full maintenance packages and who constantly want to talk about extra work.

wbw
01-10-2012, 11:12 AM
[QUOTE=landscape5050;4268369]- We have started switching customers over to a "flat rate" type plan. It was worked very well for us. We do installs, maintenance, and snow removal. Here has been our experience.


-We have a guaranteed cushion for the off season. It doesn't have anything to do with not being able to "manage cash" QUOTE]

The question is how to bill for the services. X$ of services billed over 12 months rather than 7-8 months the only benefit is cash flow during the off months. To Offset this benefit is less cash available during the busy months. This is definitely a cash management issue. The key is to both manage the cash you have and increase the future cash available. I bill in advance and 98% of my customers are year round but I provide service year round.

landscape5050
01-10-2012, 03:14 PM
wBw,

Maybe because you are in Houston you don't see the upside to this for snow contractors that service the same customers during both seasons.

Our "Flat Rate" customers have a certain number of snow removal events in the contract. Ours is 18 - 22 pushes. This year to date we have pushed snow .5 times :(. At the same time last year we were at 15 or so pushes. This adds stability on both sides. I have not been pushing snow, but I am still collecting money on the off years. I am sure it is different in your area.

landscape5050
01-10-2012, 03:17 PM
Woody82986,

I have never solicited this via mailers or letters. Usually verbal with a contract. I want to include the option to pre pay the package with an offer due by March 15th. Do you have a sample letter you send out that you wouldn't mind showing me for reference?

Thanks in advance,

wbw
01-10-2012, 05:41 PM
wBw,

Maybe because you are in Houston you don't see the upside to this for snow contractors that service the same customers during both seasons.

Our "Flat Rate" customers have a certain number of snow removal events in the contract. Ours is 18 - 22 pushes. This year to date we have pushed snow .5 times :(. At the same time last year we were at 15 or so pushes. This adds stability on both sides. I have not been pushing snow, but I am still collecting money on the off years. I am sure it is different in your area.

The OP was not asking about creating additional revenues. You are doing exactly what I suggested. Increasing cash flow.

PlantscapeSolutions
01-12-2012, 12:31 AM
I only have a few contract customers. For everyone else we bill for services rendered at the end of the month. The benefit of this is we get paid for exactly what we do and there is no guessing how much labor will be required for a years worth of upkeep. We do a lot of high end homes where the upkeep can be substantial.

I had a lawyer who was referred to my by another client rip me off so I hate contracts. We did a ton of work and he let us go after two payments because I refused to do out of contract irrigation work for free. It cost me about a grand.

landscape5050
01-12-2012, 12:37 AM
I only have a few contract customers. For everyone else we bill for services rendered at the end of the month. The benefit of this is we get paid for exactly what we do and there is no guessing how much labor will be required for a years worth of upkeep. We do a lot of high end homes where the upkeep can be substantial.

I had a lawyer who was referred to my by another client rip me off so I hate contracts. We did a ton of work and he let us go after two payments because I refused to do out of contract irrigation work for free. It cost me about a grand.
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landscape5050
01-12-2012, 12:56 AM
We do the same thing. We have several clients we do just about everything imaginable for who pay monthly as services are rendered. We have some that pay a monthly rate that includes snow, lawn, fert, sprinklers on/off. Then they will add say 3k in Christmas lights in the fall and pay for it upon completion. I don't think one way is better. I like the idea of taking an apartment complex that you do 12 month service for and splitting over 12 payments. It is not for every customer, but I do like having a mix especially when snow is a consideration. It keeps other contractors off your property, keeps them away from your client and it keeps them loyal. They rely on you for everything that way. I like having a mix.

I am interested to hear more about what everyone does. This is one area I am spending a lot of time thinking about lately. I want to use this discussion to learn more and get some good ideas. So what does anyone else do? One thing we all need to do as an industry is become more professional in what we do. A solid contract is a must no matter the situation or payment plan and it must be enforced. The other thing I have learned is not to take anyone's garbage so to speak. If a client treats us like crap, refuses to pay, and even had a contract one top of that. All invoices, statements, pictures, and contracts are sent to my attorney, no questions asked. The same people screwing people in your community are screwing other people and I have found that those people don't like to be called out. If you file a lien they are not going to say " so and so filed a lien on my house because I screwed him!" they don't say a word. 99% of the time a $150 letter from your attorney does the trick. It's not fun to waste $150 , but if the difference is between collecting 3k or not then its worth it. Another fun fact. One of my customers that stiffed me was out of town all summer. The collection agency tried serving him papers, but no one was ever home for months. I saw him one day and it reminded me about the money he still owed from a few years back. I called the collection agency and said he's in town and he's still at the same address. Go get him! They called 3 days later saying they were happy I called back. He was known by first name basis in the collection office and when they finally served him my papers they served him papers for 4 other company's.... In the same collection agency!

To make a long story short I would like to hear how everyone handles seasonal contracts vs flat rate payments and how it works or doesn't work for them.

Thanks!
Posted via Mobile Device

MarkintheGarden
01-12-2012, 02:01 AM
I let my customers choose wether to pay as I provide service, pay at the end of the month, 12 monthly prorated payments, or one yearly payment in advance. I offer all these options, but I do not take credit cards (this could change).

I think what works best and increases my per account total is the 12 monthly prorated payments. I call it budget billing, cause that is what the utility companies call it, so customers understand. I almost always do not offer this option until it seems certain that the customer and I are happy with each other.

To explain why I think this is best, an example of one account is;

24 lawn mowing services per year provided on a schedule that will produce maximum benefit to turfgrass developement, at a cost of $35.00 per service for a total of $840.00 divided by 12 payments of $70.00. Any additional services can be provided and added to the monthly statement, or paid on a separate invoice or contract.

Either party can terminate the contract with thirty days notice. At the end of the year, or in the event of cancellation the account is reconciled (balanced). Services provided to date and payments made are both totaled and compared, the difference is due, or if services are owed, then services are provided until the account is balanced. No cash refund.

I think this works best because it gives the customer a budgeted payment, and they become comfortable and in the habit of making the payment. After they get that payment integrated into their budget it increases the possibility of doing additional services. It also has the benefit of putting the customer at ease, no worry that "the bill will be high this month". And they do not get out of the habit of paying me during the off season. Another benefit for them is I lock the price per cut for the year. My policy is to increase prices every two years, but only the yearly prorate accounts and yearly advance payments have the price locked in for the year. I think this method allows me to charge more per service, and retain customers year after year, and still get a lot of additional service requests. It is not about my money management, it is about their money management, and if you have not noticed bad money management is rampant. A customer who gets a big bill in spring might be motivated to look around to see if they can save some money. But if they get the same bill 12 months of the year, they do not think about the fact that they could save 5 or even 10 bucks a cut. But they might think, some flowers would be nice, and of course some mulch will make it all look great.

Of course some customers (the older people mostly) would rather write me a check every time I do any service. I have had customers write me 30 checks in one year, none of them over 50. I would rather get twelve checks for the same total, but it is their choice.

I have only two customers who pay for the year in advance. I do not offer a discount, but I do offer a good price. I think that I should write these contracts differently and offer a discount that can be used as a tax deduction. I am looking into that.

I think that giving the customer the option is worth the extra work. My business model is to provide top quality reliable service, friendly expert customer service at fair (premium) prices. For the last ten years, I have delivered that, and for the last five years I have been invoicing and collecting premium prices. I still do design and install work at market rates and sometimes lower, but I think that is due to being a small, low overhead company compared to the outfits I bid against for the design/build projects.

MarkintheGarden
01-12-2012, 02:26 AM
We do the same thing. We have several clients we do just about everything imaginable for who pay monthly as services are rendered. We have some that pay a monthly rate that includes snow, lawn, fert, sprinklers on/off. Then they will add say 3k in Christmas lights in the fall and pay for it upon completion. I don't think one way is better. I like the idea of taking an apartment complex that you do 12 month service for and splitting over 12 payments. It is not for every customer, but I do like having a mix especially when snow is a consideration. It keeps other contractors off your property, keeps them away from your client and it keeps them loyal. They rely on you for everything that way. I like having a mix.

I am interested to hear more about what everyone does. This is one area I am spending a lot of time thinking about lately. I want to use this discussion to learn more and get some good ideas. So what does anyone else do? One thing we all need to do as an industry is become more professional in what we do. A solid contract is a must no matter the situation or payment plan and it must be enforced. The other thing I have learned is not to take anyone's garbage so to speak. If a client treats us like crap, refuses to pay, and even had a contract one top of that. All invoices, statements, pictures, and contracts are sent to my attorney, no questions asked. The same people screwing people in your community are screwing other people and I have found that those people don't like to be called out. If you file a lien they are not going to say " so and so filed a lien on my house because I screwed him!" they don't say a word. 99% of the time a $150 letter from your attorney does the trick. It's not fun to waste $150 , but if the difference is between collecting 3k or not then its worth it. Another fun fact. One of my customers that stiffed me was out of town all summer. The collection agency tried serving him papers, but no one was ever home for months. I saw him one day and it reminded me about the money he still owed from a few years back. I called the collection agency and said he's in town and he's still at the same address. Go get him! They called 3 days later saying they were happy I called back. He was known by first name basis in the collection office and when they finally served him my papers they served him papers for 4 other company's.... In the same collection agency!

To make a long story short I would like to hear how everyone handles seasonal contracts vs flat rate payments and how it works or doesn't work for them.

Thanks!
Posted via Mobile Device

I so agree, it is not for every customer, and I would not want all of my customers on that method. like you, I enjoy the mix. But in all cases, yes, keep them other contractors off the property and be the go to person.

I have a few customers for whom I do whatever I think needs done whenever I think it needs to be done. I keep their property in top shape and invoice accordingly. These kind of customers it is best to bill at the end of the month. They are affluent so no need to manage their costs. Sometimes, these are slow payers, but after seven or more years at premium prices, and authorization to do as I feel is needed, it is as good as money in the bank (even better).

When it comes to collections, I prefer to keep that in house. I have some experience and methods, but I have not had to do any collections in three years.