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DFW Area Landscaper
03-05-2004, 12:16 AM
Last spring, I was just starting out in this business. At the time, I was not requiring that credit cards be place on file as I am today. I was also not requiring any money down. It was very clear with all of my customers before they signed up for service that I would do the work and send them a bill after the fact.

Anyway, I've got two customers who I suspect may have been intentionally planning to rip me off from the get go. Now that I look at how they played me with 20/20 hindsight, I'm thinking (but cannot prove) that they may have commited fraud.

This what they did: They signed up for service. I did the work. I sent them a statement at the end of the month. They paid the first statement on time. The next month, they paid right on the due date. The next month, they were a few days late. The next month, even later.

All the while, I'm thinking to myself "I don't want to lose a customer. They've always paid me in the past. It's probably just an oversight." I continued to service their landscapes and they eventually paid. Finally, in the fall of the year, they stopped paying. Now the growing season is over, they haven't paid and I fully expect to see another LCO on their lawn this year.

Because I was foolish enough to bill in arrears with nothing in terms of leverage (like a credit card or an advance payment or deposit) and I was foolish enough to allow them to get 30 days behind, they have both managed to get two months worth of service for free. If you think about it, that's about a fourth of the entire season. By deadbeating a new inexperienced gullible LCO every year, they're able to shave 1/4 off their annual landscaping bill.

I plan to take both of them to small claims. I really don't care if it costs me more than it's worth. For me, it's the principal of the matter. I've already sued one deadbeat and won a judgement. That judgement will be filed against their real estate with the county clerk. The only way they can get out of paying me now is by entering bankruptcy.

Anyway, I was just wondering if other LCO's, especially first year LCO's, have experienced the same problems?

Later,
DFW Area Landscaper

dkeisala
03-05-2004, 12:19 AM
Said it once, I'll say it again - I always bill in advance of service. This way if things get out of hand, I can limit the amount of damage. I like to have the control, not my clients. I have more to lose than my clients do.

justmjc
03-05-2004, 12:24 AM
Let me ask how you bill in advance? Do you send the first bill explaining that services are paid ahead of time, so If they quit, they either recieve a credit or continue for 1 month until the credit is used up?

What do you say to get people to go along with this?

DFW Area Landscaper
03-05-2004, 12:24 AM
Dkeisala,

I've made dramatic changes over the winter. I now require a credit card be placed on file for automatic monthly payment. Not an option. No credit card, no service.

Later,
DFW Area Landscaper

Shady Brook
03-05-2004, 12:30 AM
I fully believe some intend to steal. I also think some prey upon new businesses. Show them you will not tolerate it, and take them to court. I would, if you have not done so, send them a statement with late charges, and indicate that if you do not receive payment by....a week from the day you send it, you will go the the court house to file a judgement. Send it certified mail, it seems more important and you make sure they get it. This may avoid the court hastle.

I believe Jim Lewis has written some great stuff on this issue, as he is generally a storehouse of wisdom concerning Lawncare. He also has good ideas of how to protect your business from further hastles of this nature.

Good luck
Jay

mbricker
03-05-2004, 12:47 AM
Shady Brook is on the money--nail them in small claims. be sure to take every scrap of documentation with you to court, if it gets that far. So far I've never had it get there. Once I tell them small claims is this train's next stop, I usually get payment. Only once I didn't, but she paid after I filed.

If they don't pay before the court date and you get a judgment, it WILL show up on their credit report. You may wish to check that out with your local small claims, and if that's for sure the case in your area, be sure to point that fact out to your customer in the warning letter.

I hate to be a whiner, but in this area, we are still in the dark ages even regarding contracts, and I'm positive I wouldn't get over 1 or 2 of my customers to give me a credit card. So far I'm not getting beat out of much money being paid after service is rendered

But also I've picked up on some warning signs. Renters, that's one. And definitely a group of college students renting a house.

Good luck

energy
03-05-2004, 12:57 AM
DFW, i would think that if i am a customer and you ask me for credit information, i would not choose you as my provider. How much business you got doing this and how much you have lost?

LHlandscaping
03-05-2004, 02:01 AM
I am having similar problems with a few of my snow plowing accounts. I charge 6% weekly interest after 30 days and turn the account over to a collection agency after 60 days. I also explain that the customer assumes all collection agency fees, court costs, and attorneys fees in my legal discalimer. Only charged interest so far. However, you never know things may change. You cannot let people have an inch because they will take a mile. The sad thing is in PA even if a magistrate determines that you win the case there is still no way to make the deadbeat pay up. They can only add it to their credit report.

wallzwallz
03-05-2004, 08:12 AM
6% weekly interest? Is that legal in PA?

lawnman_scott
03-05-2004, 08:28 AM
Originally posted by justmjc
Let me ask how you bill in advance? Do you send the first bill explaining that services are paid ahead of time, so If they quit, they either recieve a credit or continue for 1 month until the credit is used up?

What do you say to get people to go along with this?
I just say, that I require the first month in advance. Harldy anyone questions it, and if they do I probably didnt lose any money because they werent going to pay anyway.

bobbygedd
03-05-2004, 09:09 AM
since feb . 15th i have signed about 10 new clients. 9 of them are on pre pay, didn't even question it, i have the first payment for thier service in the bank already, and the 2nd payment is due april 1st. which means i'll never get burned. the 10th client almost fell over when i told him our payment policy. he said no way. i said the only alternative is to pay me weekly at time of service, and i don't want to knock and have you answer the door in your pajamas makin me wait 10 min for a check. he said payment will be under the mat, each week. this does alot for us getting pre pay. 1st and most important, i'll never get beat out of money. 2nd we get start up money and are ahead from the start, mailing bills after service =extending credit. we are not a credit company. 3rd, as you grow you will see every trick in the book played on you, this is a typical one: at the beggining you give them a price for spring clean up, weekly mowing, and fall cleanup. say you quoted the fall cleanup at $300. you "mow" until october 31st, then leaf cleanup is in november. depending on the type of trees they have ,and weather coditions, the leaves may be half down in late october. now, for the "mowing fee", you been picking up leaves, but that's ok, cus you will charge them $300 for leaf cleanup in november, since you picked up alot of them in october, your job in november will be that much easier. right? NOPE, WRONG AGAIN! this is what they will say, "hi bob, listen, it seems that there really arent much leaves this year, you don't have to come anymore, my husband will take care of the leaves, we'll call you next spring." so, you've spent half of october cleaning leaves for the price of a grasscut, and you got boned out of your $300 leaf cleaning fee.it's because of this stupidity on the customers part, that we have developed our payment policies. i can't run a business, while being distracted, or actually haunted by thoughts of customers not paying for thier service. bruce lee once said, "if you make an azz of yourself, there will always be somebody waiting to ride you." translated=if you let them bone you, the more you'll get boned. yes, there are people who intentionally, from the start, plan on beating you out of your fees. smell the coffee son, it's a world of vipers.

DFW Area Landscaper
03-05-2004, 09:36 AM
++++I hate to be a whiner, but in this area, we are still in the dark ages even regarding contracts, and I'm positive I wouldn't get over 1 or 2 of my customers to give me a credit card.++++

I've had no problems with people giving me their credit card info. Most educated folks realize that everyone in our country is automatically protected against consumer fraud.

Just about everybody in our country has a credit card. We area a nation of debtors. Even my old man, who despises credit cards and what they have caused in terms of hardships to millions of american families, has a credit card. Just in case he ever needs it for something like this.

If a guy doesn't have a credit card, there's probably a good reason for it. And those are the people you don't want paying you after you've already done the work.

Later,
DFW Area Landscaper

GreenTurf
03-05-2004, 10:03 AM
DFW area landscaper,
you are a smart for accepting credit cards. If last year was your first year in business and your customers paid you cash, and lets say the ones that paid on time everytime all year long, how do they respond to you saying that your payment method is directly taken from credit card at end of month and can no longer pay cash for this coming year. do they like the idea? Do you still send them a receipt every month. I plan on implementing this maybe next year. I would rather have all of my money come in at the end of the month instead of bits and pieces. How much do you pay in fees for transactions. Thanks in advance for any advice

GreenTurf
03-05-2004, 10:06 AM
if i am like most people, i keep my money in my checking account and it would be more of a pain to keep taken money out every week to pay a lawn service in cash, then to have him charge my debit card at the end of the month

DFW Area Landscaper
03-05-2004, 10:23 AM
++++you are a smart for accepting credit cards. If last year was your first year in business and your customers paid you cash, and lets say the ones that paid on time everytime all year long, how do they respond to you saying that your payment method is directly taken from credit card at end of month and can no longer pay cash for this coming year.++++

Existing customers are grandfathered under the old system. I do the work, then they pay me. All new customers have to give me a credit card for automatic monthly payment. I still them a statement at the end of the month showing a zero balance due.

Later,
DFW Area Landscaper

dkeisala
03-05-2004, 02:06 PM
Originally posted by justmjc
Let me ask how you bill in advance? Do you send the first bill explaining that services are paid ahead of time, so If they quit, they either recieve a credit or continue for 1 month until the credit is used up?

What do you say to get people to go along with this? They are on annual contract so they typically don't quit. If they do, service is pro-rated to reflect actual cost of services received and they either end up flush or owing.

On the few month-to-month accounts I pick up each season, those are billed in arrears but they are monitored VERY closely. I won't let a billing situation like that get out of hand.

dkeisala
03-05-2004, 02:10 PM
Originally posted by DFW Area Landscaper
Dkeisala,

I've made dramatic changes over the winter. I now require a credit card be placed on file for automatic monthly payment. Not an option. No credit card, no service.

Later,
DFW Area Landscaper I tested credit card acceptance for one year. After that year, the merchant service was going to jack fee's WAY up because I rarely utilized the service. It was an expense I wasn't willing to absorb. Besides, nothing is stopping your clients from disputing the charge. If they want to screw you badly enough, they'll find a way to do it. Credit card acceptance may make you feel better but doesn't really give you the protection you are looking for.

Perhaps I'm fortunate but I don't have many billing problems. Usually nasty letters and incessant phone calls work wonders for me. And if I even sniff the possibility of a problem when doing a bid, I won't take on the account. If problems develop after signing a new client, I resolve it quickly, "up to and including termination of services". Then they can become someone else's problem.

LHlandscaping
03-05-2004, 04:10 PM
I never had anyone tell me otherwise. Then again stealing, which they are doing is definetly illegal in PA.

James Cormier
03-05-2004, 04:24 PM
DFW, you need to budget for bad debt, that way when it happens you will not be hit to hard,

my advise is call the customer, talk with them, knock on the door and explain you need to get paid, Ive been servicing some lawns for 10 plus years and some people are just slow in paying.
But every year I budget for bad debt, And if i dont have any that amount gets put into next years budget.

bobbygedd
03-05-2004, 04:41 PM
how do you "budget for bad debt?" in other words calculate that into operating costs, and base the price of doing business on this?

James Cormier
03-06-2004, 06:12 PM
Thats right bobby, if you budget a small amount for it just like you budget for fuel, paper, truck payments then it dosent hit as hard,

that dosent mean you dont go after it when someone stiffs you. and when you dont have to spend that amount it increases your bottom line

Of course if you dont stick to your budget, on income or spending then it dosent matter, I was amazed at how many people dont do a budget at all. It is very helpfull in growing any business.

Did that come off as arrogant? If so it wasnt ment to be.

bobbygedd
03-06-2004, 06:18 PM
not arrogent at all. basically, in direct terms, your other customers are paying a bit extra to compensate for the one who boned you. of course we don't word it that way, we call it, "the price of doing business", but it's the same thing. i started a thread about this very same practice some time ago, and i got whalloped by the members, saying this is no way to run a business. every other business functions this way, why not me?