View Full Version : Annual contract termination options.
12-26-2011, 09:27 AM
We are currently billing month to month for services performed. We are considering offering an annual contract paid monthly for selective services. IE: mowing, mulching, fertilizing, leaf clean up (2x) and shrub trimming.
We want bill on a 12 month basis to offset the lower income during the slower months. I also believe this method may be desireably by many homeowners as they will have a consistant invoice each month. It will also allow them to spread the overall seasonal cost out over 12 months instead of 8.
My concern is how to handle the customer that stops his service before the contract ends. My initial thought was to have a clause that states if services are terminated prior to end date without cause, all services all ready performed will be billed at the normal rates oulined below. (something to this degree).
This way, a customer contracted for 27 cuts at $40 per cut will actually be billed $50 per cut if he cancells early without cause.
I'm looking for any other suggestions as to how we can cover ourselves for those contracts that are cancelled early.
12-26-2011, 02:46 PM
There was a similar thread a couple days ago. Look for what I wrote then.
12-27-2011, 10:14 AM
I have done this on a 9 or 12 pmts. The contracts show all the services they receive not the time estimated or number of each service. If they split early your final bill need to be very explicit. Year total for contract. Amount they have paid to date. List Services performed to date: then list each service and number of times, and cost of each to that point of cancellation. Then list the jobs yeat to be perform and the cost of theses. This needs to balance when you add those 2 numbers up to the year total. Now show the amount they have paid and the amount for the services performed up to date and show balance. (you may owe them depending on when the payments start). I have had 5 cancellations like this in my 10 1/2 years in business. 1 i owed the apartment complex about 200. 2 of the people understood the invoice with now problem and 2 I had to take to small claims court and both times was awarded judgement because I show everything on the invoice and the judge even told 1 of the guys what are we doing here? this company has listed everything and spelled it all out. pay your bill with in 30 days from today. The guy wrote the check at that time in front of the judge.
12-27-2011, 05:59 PM
We do something simular with fertilizer, where customers can brake their payments up into 12 monthly payments. On the bill simply show charges to their account for any services rendered. Each month bill them for 1/12th of what the proposed yearly cost should be. With us and fertilizer for most of my customers if they cancel before June or so then they will probably receive a credit. If they cancel after October, they will probably receive a bill for an outstanding balance. If any services are added on mid season, then we give the customer the option of paying for it in full, or adding it to their account and splitting it up over the remainder of the year. We also only do the 12 payments for returning customers or whose who sign up before January. If a customer signs up April we have other payment options.
if you search my posts, I posted about this in another thread about a week ago or so with a break down on ow I do it. It is for fert, but should give you an idea that can be manipulated for maintenance
12-28-2011, 10:32 AM
How I do it is first i tell people if they think that it is likely that they will need to terminate the agreement before the year is up, then it is probably not the way to go. But if they expect to retain the services for the full year, then the monthly prorating of the costs is a good idea for both of us.
Then the agreement has a cancellation clause that stipulates that either party can terminate the agreement with thirty days notice. In the event that more services have been provided than have been paid for the customer owes the balance at the time of termination. If payments exceed the amount of services provided then further services as agreed at that time will be provided until the account is reconciled.
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