View Full Version : What are your Late Payment Policys?
01-13-2004, 07:51 PM
I think my new rule for weekly mowing customers is gonna be if i dont recieve payment by the due date there will be a late fee of $15.00.... If its a few days late i will try to let the late fee slide( I will give them an extra 5-7 days).... If the customer has not paid after 30 days from the due date I will stop service until I revieve payment. Interest will then accru after 30 days form the due date of the unpaid invoice! Does that sound fair.... I have many customers that feel they can wait until the end of the year to pay up.... It will help to have a due date too, I didnt have one on there before.
What are some of your late payment policies? I want to be fair... I dont mind giving them a little while to pay there bill, but some of my customers take advantage of it.
How long should i give my customers to pay there bill, how many days from the time i mail them out?
01-13-2004, 09:13 PM
Thats a good post, I go threw the same stuff. People take advantage. You would send in a truck or a mortage payment late. I know I would'nt. I would also like to here any polices reguarding this topic.
i give my customers 30 days from billing date to pay after that i charge 1.7 % interest, after 60 days no payment i put account on hold and send out letter, after 90 days i do phone calls and sent out final notice letters, then last option send it to colection agentcies. I don't know if this is the best way but i just copied it from larger companies like your gas, tele,and hydro. I seem to get most of my monies before the collection companies get involed, but i get a certian amount of unpayed acounts every season, not because of poor quallity workmanship, just because these customers that do that with every company they deal with not only lawn care.
I think we as lawn care companies should set up a black list of people that don't pay
what do you think?
I agree with tryz about the black list, some people would never be able to hire a legitimate business again. My policy is similar to tryz's .
01-13-2004, 09:56 PM
I have adopted a late payment policy that has worked wonderfully for me. I send out invoices on the 15th of each month, and my payments are due by the 30th of the month. I tell my new customers this when they sign up for service. This way, they have a few days to fall back on between when my money is due, and when I have to be back at their properties for the first cut of the month. They know that if I haven't received my money by the time I'm scheduled to cut their lawn on the first day of the month, I'll stop service, and their lawn won't be serviced untill I have been paid in full. I don't let accounts get more than 1 month delinquent. This has worked out really well.
01-13-2004, 11:15 PM
ok, how many guys have actually enforced the late fee, and/or cancelation process, but were able keep the customer? this is the thing about these late fees and interest fees. customers
(the ones who like to jerk u around) think that we are whale cr@p, you know, so low that we can't even float, and i'm thinking that if you actually ENFORCED a late fee, or cancellation until the matter was resolved, they would just grab the next guy they saw and he would start tommorow. for me, when a client doesn't pay, and is very late(30 days) it usuaLLY MEANS THE END FOR US.
01-14-2004, 03:17 AM
Like Bobby, if someone is a late payer, then my "policy" is just to get rid of them. At least in the market I am in, there's PLENTY of good clients to go around. Not worth my time trying to hound late payers.
01-14-2004, 03:48 AM
The problem with these policies is that there are laws that govern the assesment of late fees. I found that out when I tried to level late fees on a client that happened to be a lawyer. At the time, in Michigan, you couldn't assess late fees until the payment was 30 days past due. However, in this business, by that time you could have 2 to 3 months worth of work into someone and not get paid. I make my payments due on the 15th. If I'm not paid by the 30th, I start calling. If I don't get a response or payment soon after, services are suspended. At the 30 day overdue mark I hit them up with $10 for every 30 days. If they are continual late payers, I charge a deposit to reinstate service, and usually I get rid of late payers that are habitual.
01-14-2004, 08:33 AM
I send out bills on the 26 of each month and the customers have to have payment in by the 10th of the following month or its a $25 dollar late charge
For the lawn work I send invoices out the end of every month. They get 14 days from invoice date to pay the bill.
For the contract I'm working on now...If not received by due date 15% late fee. If unpaid balance ever goes beyond $500 then all services are discontinued until a zero balance is achieved. In addition, if some sort of partial payment is not received 45 days from the due date on the invoice all work is stopped no matter what the balance is.
DFW Area Landscaper
01-14-2004, 11:54 AM
I know customers are precious, but I don't think it makes good sense to worry about losing a customer who won't pay. Really and truly, at least in my mind, a customer who won't pay is a thief.
I still have accounts who haven't paid for work I did in 2003. If I don't get paid on any of it, my uncollectible percentage will be around 6%. I'm suing one guy and it looks like I may have to sue three or four more. Over 50%+ of my customers paid me late at least once this past year. I get the feeling that some of them were testing me. They'd pay on time the first few times, then they'd pay a week late. Once they saw how light my late fees were, they'd start getting later and later each month. Until finally the season ended and now a few still owe me money.
I'll be the first to recognize I should have suspended service on some of these accounts sooner than I did. In fact, I've only suspended service on one customer for non-payment since I started into this business. He paid less than a week later. Lesson learned.
I've re-written my contracts for 2004. I'm grandfathering all my existing customers under the terms they're now under. But going forward, no one else is going to prioritize my bills for next month anymore. I'm also shortening my payment due date from 30 days to 23 days.
$29 late fee
2% per month finance charge
$75 for all certified mailings
$450 for appearance in small claims court
Advance payment for last month's service is now required before any services will be performed
Going forward, a past due customer gets two cuts. Third time, I leave a note explaining that service is suspended until payment is rendered. After they pay, the next cut is double the normal amount. All these details are in my written contract. And I won't do a thing for anyone without a written contract again.
I expect to do much better than 6% uncollectibles in 2004. If I don't have huge improvements, I'll just start requiring credit cards and giving up the credit card charges of 3% per month. I hate the thought of having 3% come off the top of all revenues, but I may have to start doing it.
DFW Area Landscaper
01-14-2004, 01:30 PM
I started charging a small late fee last year (only $3.00 monthly don't ask where i came up with that figure). I enforced it to the customers who are always late the customer who every once in a while that is late didn't get charged.It worked with some people but not with others.This year I am going to get rid of the late payers before the season even starts.I am also thinking of raising the late fee to $10-$15 this year.
01-14-2004, 02:04 PM
I bill by mail at end of month, if I have a check before the next statement is prepared, no late charge. I have some customers that must get my bill, write check, and take it to P.O. that day. Others always send check about 28th of the month.
Lawyer here told me several years ago that I can get away with 7% late fee per month. But if customer is late paying a $35 bill, the late charge is less than $3. Not enough incentive for some of them. May make a minimum late fee of $10 this year.
I do ignore late fee for good customer who doesn't make late pay a habit.
Generally an unpaid balance over 45 days stops service. Depending on relationship with customer, 45 days may get them a letter threatening small claims court. Usually that is also end of working for them.
Never had to take anyone to small claims. I remind them they will see negative effect on their credit rating if I get judgment on them. There are a few that I don't have the heart to take to small claims, or even threaten it, because of circumstances. One that comes to mind is single mom with 2 kids at home, one disabled, who has lost 2 jobs this past year. She currently owes me about $230. She has not responded to last letter, so I guess I won't see the money. But I sure won't work for her anymore--my heart isn't THAT big.
My deadbeats are costing me less than 1% a year. I follow my gut when looking at new customer. Renters make me cautious; several college students sharing a house--absolutely no way I'm working for them without month paid in advance at all times.
Perhaps I shouldn't say this, in past the worst offenders were dentists and psychiatrists.
In the state of North Carolina the maximum late fee you can charge is something like 18 % per year or 1.5 % per month. Look at your state usary laws to figure how much interest you can charge on late fees.
Here's the new policy:
You are going to pay on time, or my two associates in suits and dark glasses are going to pay you a visit and help you write out the check with your good hand.:D
Have any of you tried automatic withdrawl or auto bill pay. Payments come out of the customers account and into your business account automaticaly. I use this on my rental property and it works great. People actually prefer it and so do I. Come to think of it I also have two boys that take Karate. I have to sign a 6 month contract in which payments are automatically taken out of my account the 1st of every month for 6 months and then I have to renew.
There's 2 examples in which it works. Why wouldn't it work in lawn care? I'll be starting up next year a property managment and maintenance company and will definitly push for this type of payment with every customer. Late payers are no more. Oh and one more thing. My tenants that do not use this service and write a check monthly, if they are late they get charged a late fee. The third time they are late they have 2 choices, either move out or sign up for auto bill pay. In the case of lawn care you either stop service or they go to auto bill pay.
There's always an easier way especially with technology.
01-14-2004, 11:33 PM
I still have one customer that owes 130.00 from October 03. It was at 480.00 but they sent in 350.00. I have called and sent out final invoices for a couple of the months following. I finally got in contact with her and she said she was out of town and would send it to me. Havent recieved anything yet. I go by the house almost daily to try and catch her, but nobody is home. Phone calls now get unreturned. Do you think it is too late to start sending out an invoice with a late fee... of say 15.00 per month??
My last invoice was sent out on the last day of October... so even though it is not the end of Jan. I guess i should take on another 60.00 in late fees. In my eyes it is just a threat. I just want the 130.00 and dont care about the late fees.
So what do you think?? Is it too late, or should i do it. And do you think i need to include a letter with that??
01-15-2004, 11:58 PM
Hey guys... you have any ideas on the situation i described above. I actually waited for her tonight by sitting across the street and waiting for her to go inside, but when i went up to the door around 9:50 PM she did not answer. Now i want that money even more..
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