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tnt-g
05-22-2003, 01:24 AM
How do you guys set up your billing cycles and when do you expect payment by? I am getting tired of people paying when they feel like it. Most of my accounts pay on time or by the 15th but there are always the straglers. I used to say due upon receipt for payment terms. Now I have decided to do net 15. How do I get the client to pay attention to the terms of the bill in a tactfull manner? Just trying to get the cash to flow in more predictably.

cos
05-22-2003, 04:38 AM
Net 15, then another bill is sent. If not paid in 30, they get that bill and the current. If not paid, a statement of payment is sent.

I just sent out a certified letter and statement for snow. They called and told me a check was going out that day.

Brendan
05-22-2003, 05:13 AM
TNT,

I find that most people wait until the due date and then send the cheque. Sometimes I receive payment up to 5 days past the due date, depending on the mail service, weekends and public holidays.

To over come this problem and to make the cash flow more easy I make the terms 7 days net. This seems to work with the most payments being received on the 12 day.

You will always have some customers who are slow in paying. To chase them up I re-schedule their work to coincide when they are home so I can ask them to pay the account.

The above is relevant for residential customers. For commercial customers I try for 7 days net. Some pay within that time, most wait 30 days and one makes it difficult by trying for 60 days. I've finally got them down to 35 days.

Good luck

Brendan.

Georgiehopper
05-22-2003, 08:24 PM
I make payment due upon completion of the workt...and I nag the people for payment. They nag me plenty to get work started if we are behind due to rain, so I feel justified in nagging them for payment.

I have found the longer you allow a customer to hang onto a bill, the less likely you are to get paid. Seems they put things like lawn care and landscaping bills on the bottom of their priority list

Green Finger
05-22-2003, 08:39 PM
A lot of my old customers they are billed. Usually pay on time. But my new ones I tell them money is due when work is completed. It keeps the cash flow going. Keep billing, Calling and stop by their house if you have to. I got a few stiffers and they are really slpw.:cry:

Mueller Landscape Inc
05-22-2003, 11:05 PM
You could start charging a finance charge for customers who's payment is recieved after the due date. You should give notice to your customers first.

tiedeman
05-23-2003, 12:19 AM
we allow our customers 21 days to pay their bill..with a 3 day lean for those late ones coming in. If you are going to charge an interest charge make sure to check with your state for the right amount that you can charge. Like here in Michigan if you are INC you can charge 17% annual interest, but if not only 7% annual.

BRL
05-23-2003, 11:05 AM
This info has been posted here before & seems to make sense: If you are going to charge an "interest" or "Finance" charge, you will then need to become registered with the federal & state governments as a financial institution, and believe me you do not want to go through all of that licensing & regulation red tape. You are not a bank, you are a landscaping service business. Charge a late fee or late service charge, but not interest or finance charge. You are not financing your clients landscape services, or giving them a loan, you are charging them a fee for the privilege of paying their bill late, which is causing you to pay your bills late. And as mentioned, each state has its own laws saying how much you are allowed to charge for that fee, so make sure you check that first.

jason r.
05-23-2003, 02:01 PM
I have a few that pay w/ cash or check on every visit but, the majority are billed on the last day of the month and are given till the 15th to pay up. If payment isn't recieved I send out another invoice on the 16th with an additional $10 invoicing fee and a notice of cancellation if payment is not recieved by the end of that month. Last month I cancelled service on a repeated late payer and this month I had 2 that got the LETTER sent to them on the 16th. Got both checks on the 18th.:D

edrenckh
05-27-2003, 11:39 AM
You are not financing your clients landscape services, or giving them a loan...

Actually, if they don't pay on time, you are giving them a loan, whether you or they see it as that doesn't matter. Virtually all of my suppliers have a 1.5% on any unpaid balances clause. Elec company, garbage, etc.

I have been doing what my credits cards would do to me, regardless if it's legal or not. 18% annual interest, $29 late fee - each month.

If I have to take them to court I charge a $100 collection fee. I am filing two small claims court cases this week. I'll let you guys know how it all works out. Amounts are increased by ~$200 with the fees. They are both in the same county so it's in the same courthouse and will be the same day.

Basically, if you have it in writing in your contract, and the customer signs, it's legal. If you charge over the usury rate, as long as you are not a bank, I believe that's OK too.

If you don't have a contract and you take them to court and they don't show, you win the award automatically (and still have to collect).

A verbal agreement in which both sides disagree, the judge will decide. If the customer has a history of payment, then stops paying, that's as good as a written contract (almost).

In MN, you can file a mechanics lien on the house if needed. You can certainly file a judgment in all cases.

The Green Way
05-27-2003, 03:05 PM
Anyone ever charge a flaat rate for a late fee?

Rebel7695
06-09-2003, 10:30 PM
Originally posted by edrenckh
[B]

Basically, if you have it in writing in your contract, and the customer signs, it's legal. If you charge over the usury rate, as long as you are not a bank, I believe that's OK too.

.

I dont believe it is legal... that is considered loansharking, you know mafia type stuff.. the gov. does frown upon that..

mtdman
06-10-2003, 12:16 AM
Rarely do I have to charge late fees. My statements say due the 15th, and most people pay by the 15th. However, I have a few people that stretch it to the end of the month. I let those folks slide, because I've worked for them for years and know they'll pay, even if they are late. When I have done a late fee, it was $10 flat rate. Usually the end of the year statement is the one that people drag their feet on, and that's when the late fees come out if necessary. I have stopped service on clients in the past, and required them to pay a $200 deposit to start back up.

Last year I was screwed outta about $250 from 2 clients, the first time in 5 years I had that problem. One guy skipped town, after working for him for 3 years, and another guy bounced a check and then moved. A third customer bounced a check and I gave her 15 days to pay. Then I went and filed a criminal complaint against her. I had the money the next day. Needless to say, she wasn't invited back.

DFW Area Landscaper
12-08-2003, 11:06 PM
edrenckh,

++++I have been doing what my credits cards would do to me, regardless if it's legal or not. 18% annual interest, $29 late fee - each month++++

That's exactly what I'm going to start doing next year. I just decided to do this when I was late with my Texaco bill. When I got the bill, they had a $29 late fee and 18.99% APR. Guess what the first thing I did was when I saw that $29 late fee? You guessed it...called them up and told them I had a check in the mail, and begged them to waive that late fee. They waived the $29 late fee but not the interest. I just finished re-writing my contracts for all new customers going forward. I figure if they call me when they see the $29 late fee, I can keep mowing because they intend to pay. I'll gladly waive the late fee if I can see that they intend to pay. But if they don't call me after I send out the statment with the $29 late fee, I'll leave a note on the door next time I mow saying that this is the last cut until I get paid. That's the plan for 2004.

Question: Do many customers see the $29 late fee and just get mad and cancel? That's my only reservation about the $29 late fee. But I've got to do something different because I'm running into a real A/R nightmare. People are just paying me when they want to, if at all. I'd be perfectly content if they'd just call me and say they are strapped but they do intend to pay, but I haven't gotten a single call to that effect in my first full year of business. As for my current late fee of 2% of the balance due, well, it just isn't providing the catalyst I need to get my payments on time.

Additionally, no one, and I mean absolutely no one, will have me doing any work on their landscape in 2004 without 1.) a signed contract and 2.) a deposit on account equal to one month's estimated billing. Nor will I be doing any one time work unless it a big dollar gig. At least that's the plan right now...if customers start balking at the deposit and it's costing me business, I'll have to re-evaluate. But I've seen a lot of guys on here saying that they bill a month in advance. I really don't see the difference between advance billing and a deposit. I'd do advance billing in a heart beat if I could figure out how to make it work in Quickbooks.

+++++If I have to take them to court I charge a $100 collection fee. I am filing two small claims court cases this week. +++++

Is that stated in your contract? Will the small claims courts allow this? If they do, why only $100?

I just sued my first deadbeat this afternoon. He owes me $244.40 plus court costs of $62.00. I figure I'll just take all my deadbeats to court during the winter while I have nothing better to do. I figure getting a judgement is one thing, but collecting may be totally different. Let me know how your small claims court hearings go. I am curious.

Later,
DFW Area Landscaper

edrenckh
12-08-2003, 11:14 PM
If they don't show up for Court, it will fly by default.

If they do, the judge may not award it.

DFW Area Landscaper
12-08-2003, 11:39 PM
edrenckh,

++++If they don't show up for Court, it will fly by default.

If they do, the judge may not award it.++++

I just re-worded my contract as follows:

Payments and Service Termination
Meier's Landscape Maintenance will invoice customer for service on the 25th of each month. Customer agrees to pay each invoice within 15 days of the billing date. A late fee of $29.00 will be added to customer's account each time payment is not made by the due date. A finance charge of 2% per month will also be added to all past due balances. Service will be terminated if payment becomes more than 15 days past due and customer will pay any additional collection costs incurred by Meier's Landscape Maintenance. Customer agrees, that if account is delinquent, a fee of $40 will be charged for time to send each certified mailing and a fee of $550 will be charged for time required to appear in court. Customer agrees to pay $25 for each check that is returned NSF. Either party may cancel this contract at any time without cause by providing seven days written notice of intent to cancel.

I figure if they'll allow $100, they'll allow $550. I guess I'll ask for the sky and see if the judge will allow it. It'll be agreed to in writing by both parties. That ought to be worth something. Who knows?

Later,
DFW Area Landscaper

edrenckh
12-09-2003, 07:37 AM
Maybe better to put something like "Will pay all collection costs, including attorney fees, collection fees, costs, etc."

Find some language from your credit card statement. Then it won't look so bad from the customers point and if you hire an attorney it will be way more than $550.

scott's turf
12-09-2003, 07:40 AM
How much do you guys typically bring in durring the year in late fees. For the past couple of years we have brought in around $250. Never had a problem collecting it.

DFW Area Landscaper
12-09-2003, 09:20 AM
++++How much do you guys typically bring in durring the year in late fees. For the past couple of years we have brought in around $250. Never had a problem collecting it.++++

I've billed $197 in late fees through my first 11 months in the business. I've collected some of those late fees. Most haven't been paid and just last week I had to write some of them off to bad debt.

My late fees are very mild too...2% of the balance due per month.

I'm not sure why I seem to be doing so much worse than others in the industry with A/R.

I'd still like to hear some feedback to my question about heafty late fees and how often customers get mad about them and cancel.

+++++Find some language from your credit card statement. Then it won't look so bad from the customers point and if you hire an attorney it will be way more than $550.+++++

My contract that contains the $550 for time language is for recurring services only...mowing...weed control/fert...bed maintenance...shrub trimming...mulch. The balance due from one of these customers won't ever go over the limits of small claims court. I plan to drag these individuals into court and do it myself.

When I get larger dollar installs, I write up a specific contract for the job.

Later,
DFW Area Landscaper

Later,
DFW Area Landscaper

olderthandirt
12-09-2003, 09:26 AM
edrenckh
Never put a # down, in small claims it comes down to not so much what the laws says as what the judje feels thats fair to both parties. Remember small claims is usually run by a referee and a judje just signs off on it, so they try to keep both parties happy
QUOTE]Originally posted by edrenckh
[B]Maybe better to put something like "Will pay all collection costs, including attorney fees, collection fees, costs, etc."

Great advise! Stop there!!!! Simply to the point and you will never have to try to explain how you arrived at a certain #




Mac

GreenQuest Lawn
12-09-2003, 10:08 AM
Seems my over due invoices are always approximately the same as my payables.;)

DFW Area Landscaper
12-12-2003, 11:36 PM
++++Maybe better to put something like "Will pay all collection costs, including attorney fees, collection fees, costs, etc."

Great advise! Stop there!!!! Simply to the point and you will never have to try to explain how you arrived at a certain #++++

If you include that verbiage, and if you take the dead beat to small claims court yourself, you'll get paid nothing for the time you spend (waste) collecting the money that's owed to you. I would think that if the contract says something like "if you don't pay me and I have to sue you to collect, I'm charging $XXX.XX for my time", it ought to be pretty reasonable with the judge. But if you don't include that verbiage, then you may get nothing for the time you spend suing them. Of course, if you did outsource the work to an attorney, the fees would probably be even higher.

I just think the courts might ok a fee for time spent suing a deadbeat if the amount had been agreed to in writing by both parties.

This issue might actually be worth running past an attorney. Or just figure it out via trial and error.

Later,
DFW Area Landscaper