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View Full Version : should people with bad credit pay higher maint fees?


bobbygedd
11-14-2004, 10:03 AM
i was just thinking.....you have a bad credit rating, you get crappier deals, right? you get credit cards with annual fees, higher % rates, stiffer late/over the limit fees. you buy a car, you get a higher interest rate, therefor the car cost you more. same with a house. if you have bad credit, you pay higher prices than someone with good credit. so, since the common lawnboy is so bold as to issue credit to his clients, shouldn't the ones with bad credit be charged more? makes sense to me. that's the way the rest of the world works

SodKing
11-14-2004, 10:09 AM
Most of our accounts are either homes with a value greater than $1 mil or commercial accounts for properties worth $3 - $30 mil. Our targeted market does not have cleints that would have credit problems.

My position being stated, if I were to sign up an account with credit risk I would require the applicant to post a deposit equal to 2 months services and assign a higher interest rate on past due amounts. The price for their service would not be higher and would remain competitive within the respective market.

HOOLIE
11-14-2004, 10:12 AM
Thats a good idea. Imagine their dismay, thinking they are hiring some dumb shmuck, instead, you have them filling out a form to pull their credit.

Probably would help to instantly weed out the less desirable customers.

shepoutside
11-14-2004, 10:13 AM
Mine do, as I have a over 30 day late penalty, then collection fee's if it goes beyond that. I'm not going to do credit checks on most of my potential customers, and commercial accounts rewire a purchase order. Part of when I go to quote a job, is to interview them too, and will quote extra high, or not at all, if I get a bad vibe. While quoting in the spring, the guy gets a phone call, and answers it in front of me, tell'n B.S. story to his credit card company. Needless to say, he never became my customer. Think if I knew they were a risk, then they would have to pre-pay.

Bull
11-14-2004, 10:24 AM
Sodking, I agree with your last comment or approach to handling credit issues but do not be misled to think that just because someone lives in a large house, drives fine cars and seems to have the best of everything that they are not a credit risk or can become one. My brother-n-law works for a doctor who makes $750k plus a year and they are always either paying him only a portion of what they owe or asking him to hold the check until a certain day. In his eyes they are a credit risk. Sometimes even more so than the average homeowner out here honestly living from week to week.

lawnman_scott
11-14-2004, 10:25 AM
Most of our accounts are either homes with a value greater than $1 mil or commercial accounts for properties worth $3 - $30 mil. Our targeted market does not have cleints that would have credit problems.

My position being stated, if I were to sign up an account with credit risk I would require the applicant to post a deposit equal to 2 months services and assign a higher interest rate on past due amounts. The price for their service would not be higher and would remain competitive within the respective market.
I was mowing a home that was forclosed on by a bank. It was selling for $2.3 million, so dont be so sure they dont have credit problems.

lawnman_scott
11-14-2004, 10:25 AM
i was just thinking.....you have a bad credit rating, you get crappier deals, right? you get credit cards with annual fees, higher % rates, stiffer late/over the limit fees. you buy a car, you get a higher interest rate, therefor the car cost you more. same with a house. if you have bad credit, you pay higher prices than someone with good credit. so, since the common lawnboy is so bold as to issue credit to his clients, shouldn't the ones with bad credit be charged more? makes sense to me. that's the way the rest of the world worksDo they give you their social security # so that you can verify their credit?

bobbygedd
11-14-2004, 10:35 AM
i don't know scott. is that what i need? this new, ingenious plan i have is still in its embryo state.

CuttingCrew
11-14-2004, 10:49 AM
One of our clients that lived in an $875,000 house filled bankruptcy last month. He never missed a payment to us though.
I base it on my experience with the customer.

lawnman_scott
11-14-2004, 11:34 AM
i don't know scott. is that what i need? this new, ingenious plan i have is still in its embryo state.Yeah thats what you need to do a credit check on them. I doubt they will give it to the "lawnboy". You could make up a credit application though, for those who wont pay in advance, just to belittle them.

AintNoFun
11-14-2004, 03:15 PM
and how much is each credit check gonna cost. I think i paid $25 last time to get a credit report on myself? so who is going to eat that, you or the customer? and we know the customer is going to tell you to go pound salt....

JustMowIt
11-14-2004, 03:35 PM
We charge the same for all, but since we bill each mow to a credit/debit card the next day after, we are at risk for 1 mow, about the cost of a credit report. If the card is declined, we add a $5 late fee, & leave 1 phone message. If the card does not go through after several weeks, we file on the property with an additional $250.00 in collection fees.

We are 100% Residential & I doubt this would work for commercial accounts.
MJ

Turf Medic
11-14-2004, 04:24 PM
We charge the same for all, but since we bill each mow to a credit/debit card the next day after, we are at risk for 1 mow, about the cost of a credit report. If the card is declined, we add a $5 late fee, & leave 1 phone message. If the card does not go through after several weeks, we file on the property with an additional $250.00 in collection fees.

We are 100% Residential & I doubt this would work for commercial accounts.
MJ

MJ

Do you attempt to run the charge through at a later time if it is declined the first time.

dishboy
11-14-2004, 04:39 PM
I don't believe so, should they pay you less because you smoke dope, drink beer and and will quit on any whim?

bobbygedd
11-14-2004, 04:43 PM
*******, no need to be rude. i'm making a point, that being, if we intend on issuing credit, perhaps we should be knowledgable about how to run a credit dept. do u know how?

paponte
11-14-2004, 05:18 PM
If your st00pid enough to grant them credit without at LEAST a signed contract, it doesn't matter what you charge them. Your not getting paid either way! As with ANY lender, if you want credit you MUST apply for it. Rule of thumb, Don't have credit, Can't get credit, Don't give credit.

If you want credit without filling out an app? You pay in advance. :cool:

bobbygedd
11-14-2004, 05:26 PM
credit companies don't ONLY required a signed contract, they require you to qualify. it is then determined how much credit, and what the terms are, that you qualify for. you may only qualify for $200 worth of credit, or 3, or 4. and there may be higher interest rates depending on your qualifications.

dishboy
11-14-2004, 05:43 PM
*******, no need to be rude. i'm making a point, that being, if we intend on issuing credit, perhaps we should be knowledgable about how to run a credit dept. do u know how?


ditto*******, who is issueing credit, my billing cycle is 30 days, until I close out the books for the month I don't know what is due. If you get your car worked on do you pay first? I don't. So if your setting rates based on peoples history is it not fair they pay you based on your history? I don't think so. If you don't trust someone to pay you don't work for them. Would I hire you based on what I know about you? No

bobbygedd
11-14-2004, 05:51 PM
a@ss@hole, when you applied for a mortgage, did you give the credit agent a pee test first, to see if he was on dope? when you bring your truck in for repair, guess what, you aint getting your truck back till the bill is paid. bottom line, you are issuing credit, and you don't have a god damn clue on how to run a credit agency. you are a damn fool!

MidAtlantic
11-14-2004, 06:11 PM
If you require them to fill out a credit application for their lawn service and the other 10 guys bidding the job are requiring it they may think its shady. You know how contractors have a bad rap for scams. I highly doubt they are going to release personal information like socials and bank accounts to their lawn boy.

Just make sure your contract spells our your policy about late payments, bounced checks, collection fees, attorney fees, suspension of service, delays and remobilizations. If not put some in there or you don't have an enforceable contract. These items are very common in landscaping contracts.


Heres something to think about....In our sports surface repair and construction contracts we have a no pay no play clause that the owner agrees that its an open project till final payment is made. Any installed or unistalled items is considered property of the contractor till final payment is made....So if the customer doesn't pay we can take down the fence and remove anything that we installed. Nobody wants anything repossess. That would scare them into paying.

Maybe a clause could be created for plantings and hardscapes that will allow you to come back and do the same thing if a customer is playing hard ball and doesn't want to pay. I can't think of one for grass cutting or treatments except suspending service. If they play hard ball they will just go out and find another service provider to pick up where you left off.

If you have a strong contract that is enforecable that is pro contractor and the customer doesn't want to sign it cause of your clauses then I wouldn't do work for them.


Anybody have any clauses was created by an attorney that is enforceable?

dishboy
11-14-2004, 06:37 PM
a@ss@hole, when you applied for a mortgage, did you give the credit agent a pee test first, to see if he was on dope? when you bring your truck in for repair, guess what, you aint getting your truck back till the bill is paid. bottom line, you are issuing credit, and you don't have a god damn clue on how to run a credit agency. you are a damn fool!


OK BOOBY, in twenty four years I have never been stiffed and never had to go to court to get paid. Can you say the same? I have sent two letters explaining why it was in their interest to pay their bill and was paid within 30 days on both. Calling me names will not get me to agree with you on your business practices nor will it elevate your IQ one point. And yes I do care if the mechanic or mortgage agent smokes his lunch because it clearly changes his perception of reality as cleary demontrated by the overwhelming customer service problems you daily grace this website with.

bobbygedd
11-14-2004, 06:40 PM
yea ok, you never been stiffed? that's cus you live in idaho i guess. you come down this way you and your "golly gee" attitude will get eaten up alive.

jaybird
11-14-2004, 07:43 PM
imo,dishboy has a bigger brain than bobbygedd.

bobbygedd
11-14-2004, 07:44 PM
who cares about your opinion

Mo Green
11-14-2004, 07:52 PM
C'mon fellas, let's play nice.

PLI1
11-14-2004, 07:53 PM
IMO, many customers would run the other way if their potential lawnboy would require to pull their credit history before performing services.

tonygreek
11-14-2004, 08:33 PM
first off, nice way to think outside the box. even though i knew i'd shoot down your idea right off the bat, it's good to see someone trying to apply other business processes to their own.

bobby, the logistics of doing credit checks, and their subsequent cost, would far out-weigh any benefits your business could gain from them. not only would you have to take your time to handle the additional paperwork, you'd have to pay fees to either a subscription service or a la carte to pull someone's report. so for every bad credit risk you can try to pump the fees up on, you'll have 3 that are fine and you've just wasted the money of pulling their scores. add to this that if you decline someone, by law you must also provide them with their report. you reeeeeally want no part of that hassle. besides, if you tell someone they have bad credit and charge more, or don't tell them and still charge them more, odds are they'll find another cheaper lco.

for my non-lco businesses, high-ticket exterior remodeling, we don't pull credit scores. option 1, pay cash (or outside financing). option 2, pay by credit card. option 3, and at our discretion, we'll issue credit in a form that benefits me enough to dissuade a customer from using our line. more than enough people have been screwed out of their homes because some sunroom dealer bs'ed them on the terms and forced a sale of their home.

tony

bobbygedd
11-14-2004, 08:41 PM
so, i see i'm getting my point accross, even though you all aint seeing it. how on earth can you be bold enough to extend credit, when YOU KNOW NOTHING ABOUT extending credit. other businesses have credit departments with people who specialize in extending credit.they know all the laws involving credit, they know how to screen, how to protect the company from getting ripped off, how to collect, how to apply late fees/interest because of the risks involved in extending credit. now you wouldn't apply pesticides if you knew nothing about them, would you? you wouldn't put up a retaining wall that needed to retain 40,000 lbs of earth, without knowing how, would you? of course not. why then, do you extend credit, when you don't know a damn thing about how to extend credit?

tonygreek
11-14-2004, 09:11 PM
bobby, you are wrong on your assumption regarding not knowing enough to potentially protect ourselves. unless you are doing big ticket work, there's simply no need. if you are talking typical maintenance services, you have the ability to readily stop services until payment is made. you control the costs. the only low cost thing i can think of that uses credit apps are cell phone providers. the reason they do make you go through the hoops for a low-dollar services is that, yes, there is a base cost that they control, but the end-user controls the overages, ie 20 hours of calls to china. you don't have that risk with comparably low-cost service businesses. imagine a plumber coming to clear a drain for you. should they run your credit-worthiness first? no, because the hassle outweighs the risks. you'll spend as much pulling credit scores (and the time involved) as you would to lose an equal amount of money from the occassional cheat.

you say we miss the whole point of extending credit to someone we don't from adam, or the process of credit extension (which btw, is not true) but you are missing the absolute essential point: for what is essentially a low-dollar business, the economics of the idea simply do not work.

if you are talking high-dollar landscape installs, then by all means, if you are extending credit, investigate their credit worthiness. in-house financing, unless it's an insane deal like 12/24 months/whatever same-as-cash is almost always a last resort for a customer, and the company itself. in-house, especially in the remodeling industry, is almost always a way to lure in the credit-risk, not the credit-rich. it's an end-around on the banks that have probably already turned them down.

tony

PLI1
11-14-2004, 09:14 PM
I don't see what you need to know about credit when you place net 10,15,30 or whatever days on your invoices. If they don't pay you contact them and ask them to pay or else service stops. If they still don't pay you contact them again with the next step all the way up to threatening legal action plus associated fees ect..ect.. Been in business 21 years and have never been stiffed. I have fought hard to get money owed me in the past. I don't have a degree in credit management or whatever you are getting at, but I do know the legal route to collect money from deadbeats and have well worded contracts that have protected me from being taken to the cleaners. I feel its better to worry more about how to better service my customers than finding out their credit score.