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  #21  
Old 02-18-2011, 01:52 PM
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CLS LLC CLS LLC is offline
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I'm interested in this thread and will be following it. I also appreciate you sharing this information with us. I do have one question. Would spreading your money/line of credits over multiple banks have helped your situation? Naturally they all would have eventually cut or lowered your line of credits, but it seems, assuming they didn't do it all at the same time, you would have been in a better place to handle the coming credit crisis.
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  #22  
Old 02-18-2011, 01:58 PM
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AI Inc AI Inc is online now
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Quote:
Originally Posted by punt66 View Post
Did nothing wrong? He couldnt pay his mortgage!
Posted you quoted missed the fact that they were generating income because he was only paying interest.
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  #23  
Old 02-18-2011, 01:59 PM
blk90s13 blk90s13 is offline
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Interesting.
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  #24  
Old 02-18-2011, 02:01 PM
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Bad part about the dude with the baloon notes is after making all those payments, he is still upside down on those properties.
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  #25  
Old 02-18-2011, 02:15 PM
coolluv coolluv is offline
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I have a few questions. First, how can they just pull a line of credit away from you without any prior notification and then turn that line of credit into a loan that must be paid immediately and take money from your savings account to pay off the line of credit. With good credit, why wouldn't one of the local community banks bail you out?

Now I know that they pull $hit like this all the time but in your situation I don't see how its legal, and I don't see how you would not have a legal case against them for ruining your business. unless that line of credit that you signed for had those stipulations in it.

The other question I have is, why if you have been in business as long as you have been would you grow to the point that you needed that much of a credit line or should I say that you needed to use that much of the credit line. If you were making the money you say you were making you should of accumulated enough in savings to cover material cost and payroll etc. Like you said you were not to the point that you could eliminate the bank and have the credit line as an emergency.

So it sounds like you may have made the mistake of trying to grow too large to quickly, which is the same scenario playing out again.

I understand the use of the line of credit, but I think you got used to having it and relied on it too heavily to keep the doors open. Couldn't you talk to your vendor and have them sign a release relieving the company you did the work for from any liability with the promise of paying them when you get paid? Or have them come with you when you pick up the check and cash it and then pay the vendor. I'm sure you could work something out so the customer pays you.

I'm not saying your not telling the truth about everything, but something don't smell right.

Just asking.

Dave...
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  #26  
Old 02-18-2011, 03:02 PM
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planetlc planetlc is offline
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I really appreciate this post, your display of honesty is uncommon on online forums, and it shows that with some hard work that one can make their way out of tough times. Again, thanks for your honesty, details and information you are sharing about your personal struggles in the industry.
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  #27  
Old 02-18-2011, 03:18 PM
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93Chevy 93Chevy is offline
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Subscribed; I'm withholding my comments until later.
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  #28  
Old 02-18-2011, 03:23 PM
lawnjocky lawnjocky is offline
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I won't go so far as coyote10 in calling your story fiction but there is a very strong fish smell about it. I never thought much of your first how to fail story and I think less of this one. I would encourage others to follow two old sayings, "Don't believe everything you hear/read" and "Learn from others mistakes".
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  #29  
Old 02-18-2011, 03:26 PM
mcw615 mcw615 is offline
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First, I will make clear that I am not in your shoes and know every detail of everything, your market, clients, etc.

I do have a couple two cents to put in from your experience in the last 5 years.

One: Payment Terms. $18,000.00 in immediate materials and labor burden with a 45-60 payment to reimburse those expenses plus provide you with your profit. That right there to me is a huge red flag. I learned this lesson from charging customers 'per mowing'. Ex. Month of May mow account weekly, June 01 send invoice for services rendered from May 01-May 31, payment due June 30. At the beginning of each year there was always a struggle for money, a large overhead in labor, costs, mulch materials and having your accounts receivable on those terms. I went bold last year and said I am only offering maintenance contracts (contract is only way to set a solid price to invoice customers MONTHLY DEPOSITS), I did my calculations and knew I would loose 10-15% of my customers just because it 'seems complicated', but in return I knew I would be gaining more business from my customers by adding additional services. As far as projects go, I have payment terms (which are somewhat negotiated with the client) but 50% down 2 weeks before the start of the project to begin ordering/paying for materials, at 50% project completion a 25% payment is due; then immediately at the completion and 'walk-through' the final 25% is due. I have found this is completely fair, it is not forcing clients to pay for project before it is completed and they understand it is not making me have to buy the materials.

What happens when you do a $30,000.00 seal job and that customers check bounces? They may have had the 30k in the bank when they signed the contract, but 2 months later anything could have happened. I would never put my or my company at risk like that, just because they signed the paper to pay you whats due, does not mean that will happen 100% of the time, putting my companies profit out there like that to pay for materials with good-contract-faith to get paid in a near 60 days..YES, the bank screwed you over, but if you had good contractual payment terms, you would have had your money to pay your suppliers and not be relying on a line of credit for the mean time waiting on money to come in.

Two: Where's your profit? You said after materials, labor, and overhead was paid for you were left with 12k profit-job/week...and only $20,000.00 in the bank? Like I said, don't know the in's and out's of every detail, but sounds as though you grew to operating off line of credit and were profit spending savy, when you should have been working to get out of relying off the line of credit to keep the engine of your business going.

Hope most of everything has recovered well, look forward to hearing more of the story.
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  #30  
Old 02-18-2011, 04:02 PM
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grassman177 grassman177 is offline
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Quote:
Originally Posted by PROCUT1 View Post
Ive never been on of those "redneck, the revolution is coming" types....But I now believe its going to happen.

Millions out of work......Millions losing their homes......Very few jobs out there......And a government that wants to cut all assistance and help to people that need it......All the while throwing money and tax cuts at people with billions in the bank...The very ones that are the reason this country crashed....

Eventually its going to boil over...

A quick explanation to why you dont understand why banks would rather foreclose on people and sell at a loss, than work with them to start making their payments again.........

Banks dont operate the way we think they do. Take deposits and loan money.....Thats the old way before deregulation.

They now make most of their money in "fees" and have experts working figuring out how to best screw their customers.

In the computer age. Banking transactions are instant.

When I get a customer check and deposit it, INSTANTLY the money comes out of their account. 3-5 days later it goes into my account.

Why the hold? Years ago a hold was necessary. My bank would have had to physically present the check to my customers bank, they would then do a physical transfer of money, then they would give me the money. That took time.

Now that its computerized and instant....Why the hold?

Because most of us dont have piles of money in the bank. We get a big check from a customer and we need to use that money to pay bills.

They realize this.

So what they do is, hang on to the money. You write checks on it. Those checks get paid......Along with charging you a $39 overdraft "COURTESY FEE"

Even though there is no risk on their part. They know the second you deposit the check if its good, and they already have the money before you walk out the door.

But they make billions on this scheme. And our government allows it because the banks have a lot more to offer a congressman than we do.


So heres the scenario. Lets say......

You have a great payment history......You lose your job, exhaust your savings and finally run out of money.....You miss a few mortgage payments
Your house is now in foreclosure....

Even though its worth far less than you owe on it......You want to keep it and keep your end of the commitment.

You get a new job and can start making your payments again.

You figure the bank will work with you now right? Great history, got into a little trouble, but you want to start paying them again.

You think that makes the most sense for the bank too......To get paid on the loan instead of getting stuck with a house that is worth less than you owe them....


Youre wrong.

Heres why.
Its a complicated process but Ill give the general idea.
When you took out the mortgage for 200,000. The bank would get paid back lets say 400,000 over the 30 year term.

The bank has to wait 30 years for the full profit.

The bankers get bonuses on THIS YEARS profits. So how do they maximize that? Credit default swaps.

They give you the mortgage.....And anybody else that wants one whether or not they are qualified. They take pieces of each mortgage, cut them up, and sell them as investments.

They also buy insurance on those investments.

Heres what happens in a nutshell.

Having insured your house not for the 200k you owe them, but for the 400k you are paying back over 30 years.

So.....You default.....The bank can do one of two things.

Work with you to get your payments back on track. And wait 30 years to get their profit and bonuses.

OR

Force the foreclosure. They make an "insurance claim" which pays them the FULL 400K THIS YEAR. Huge profit on the banks books, translating to multi million dollar bonuses to the bankers.

Whatever they get for your house is just extra profit.

It now is a much better deal for the bank to throw you out of your house even if youre ready willing and able to pay.

If all else fails. The government will step in. Pay the banks for your house, give them some extra money to throw you out. Kick in some tax breaks so they dont have to contribute back to the government that allowed this....

And we have our current lifestyle
exactly, and why did we put more RED necks back into office?

you just made me fightened even more by someone else confirming exactly what i think on the subject
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