Cash Flow issues..How to get paid quicker.

[macgyver_GA]

Sounds like you just need some cash reserves.

Pull out your bank statements for the last 6 months or so and figure out on average when your expenses and desposits take place then just mark out on a 30 day calendar when & how much your inflows and outflows are with a running total of aproximately how much cash you need in the bank to cover the expenses. For example: On day 5 I have to pay insurance of $200, on day 8 & 16 I have to pay employees for X $. These are based on averages so you'll need to add some fudge factor to the numbers.

For my one timers, I bill them immediately after service. Unless it's around the 1st of the month, then I just bill them with my other customers to make my life easier.

All of my monthly service customers get billed on the 1st of the month for that month's services I am to perform. I switched to this last year and I love it, and my clients don't have a problem with it. I don't give them a due date per se but I do send reminders on the 15th to those who haven't paid yet. Typically almost all of my clients have paid me by the 15th so I have yet to have a need to institute "due dates." I have one 90 year old lady who is slow to pay sometimes but she always pays me so I don't really worry about it.

I've been meaning to go pickup a credit card reader to offer credit card billing. I'm almost at the end of the season now so I'll probably just wait til the spring.

[fastlane]

Originally Posted by fivestarlandscapes

Hi all.
I have been in business for 3 years. Every month I look at the numbers and think Im doing well but by the time all the money comes in Ive already spent x amount on wages and fuel, fert, mulch etc. It seems like im spinning my wheels but on paper im making at least $250-$400 per day after all overhead and wages. Does anyone have a solution to cash flow issues? I bill monthly with 15 day terms. I know some companies charge credit cards per visit which I would like to do eventually. Any help would be appreciated!

At $250 a day x 4 days a week x 4 weeks you should have more than $4,000 a month in the bank. 2 month $8,000. You've been doing this for 3 years. Where did all the money go? Is this a cash flow or money management problem?

[seabee24]

Originally Posted by Duekster

Besides the 2.7 or 3% you get a $0.25 charge for each transaction.

One dollar per client for weekly charges adds up.

You increased cash flow over profits.

Well yes your right, but consider the following money saving info that accepting credit cards did for us.

1. I get paid weekly by better than half my res customers. I have better cash flow, which leaves me less stressed, not as broke.

2. Those that have signed up for the autopayment, don't spend any money on mailing invoices. That's 68 cents in savings.

3. I don't drive to the bank or the p.o. Box nearly half as often. Because my credit card transactions process and deposit and are enough money to run daily operations, I don't need to check my mail or go to the bank only once per week, on average. How much fuel and time does that save? Ever work all day only to get done when the bank is closed, put the deposit off 1 or 2 days?

4. Data processing....I think I click about 6 buttons, type the word yes, and boom all processed, and the customers account is updated..... Saves at least 10 mins per day in data entry

5. Because cash flow is better I now am able to take advantage of "deals" when they come along. I buy gas 400 gals at a time, when it's cheaper. I buy my fert early when I can get a deal. I also save time and money buying when it's convenient to me because I happen to be in the area.

6. Related to the autopsy customers I now have 100% collection on those customers.

7. Related to monthly payers, I have seen my average collection date move up on average 4 days, also seen a 3% increase in actually collecting money that otherwise would have been a collections agency or lost money, because this gives the customer other options to pay.

8. I have actually sold jobs, won bids. Simply because I took credit cards and the customer needed to use that method of payment, or wanted to earn miles or what ever.

So if you have tons of money laying around I admit I do take a small loss on using the cards, and if I had money laying around maybe I wouldn't. Fact is I don't, this was great for business.

If this isn't a good idea, why do all fast food accept when 6 years ago they didn't? Just look at the studies, yes they loose some money by swipping the card, but they gain so many new customers that otherwise didn't have cash in their pocket to buy the burger

[Duekster]

Originally Posted by seabee24

Well yes your right, but consider the following money saving info that accepting credit cards did for us.

1. I get paid weekly by better than half my res customers. I have better cash flow, which leaves me less stressed, not as broke.

2. Those that have signed up for the autopayment, don't spend any money on mailing invoices. That's 68 cents in savings.

3. I don't drive to the bank or the p.o. Box nearly half as often. Because my credit card transactions process and deposit and are enough money to run daily operations, I don't need to check my mail or go to the bank only once per week, on average. How much fuel and time does that save? Ever work all day only to get done when the bank is closed, put the deposit off 1 or 2 days?

4. Data processing....I think I click about 6 buttons, type the word yes, and boom all processed, and the customers account is updated..... Saves at least 10 mins per day in data entry

5. Because cash flow is better I now am able to take advantage of "deals" when they come along. I buy gas 400 gals at a time, when it's cheaper. I buy my fert early when I can get a deal. I also save time and money buying when it's convenient to me because I happen to be in the area.

6. Related to the autopsy customers I now have 100% collection on those customers.

7. Related to monthly payers, I have seen my average collection date move up on average 4 days, also seen a 3% increase in actually collecting money that otherwise would have been a collections agency or lost money, because this gives the customer other options to pay.

8. I have actually sold jobs, won bids. Simply because I took credit cards and the customer needed to use that method of payment, or wanted to earn miles or what ever.

So if you have tons of money laying around I admit I do take a small loss on using the cards, and if I had money laying around maybe I wouldn't. Fact is I don't, this was great for business.

If this isn't a good idea, why do all fast food accept when 6 years ago they didn't? Just look at the studies, yes they loose some money by swipping the card, but they gain so many new customers that otherwise didn't have cash in their pocket to buy the burger

Let me know when you get the same rate as Mikey D's when they swipe the card. If it works for you then have at it.

[seabee24]

I had a hard time at first, and on larger projects I do tell them payment maid with credit I will add a fee.

It does suck paying out some interest, but when I look at the other money savings, time savings, fuel savings, it's a no brainer.

I literally fell that accepting credit cards saves me 45 mins of time everyday and at least 1 gal of gas, and turns other dead beat customers into paying outstanding invoices.

It sucks buying spare parts too, but you know that $20.00 in random nuts and bolts sitting at your shop, will save you $20.00 the first time you need to open the bin and pull 1 single set out. After that it's just money saved

[Duekster]

Originally Posted by seabee24

I had a hard time at first, and on larger projects I do tell them payment maid with credit I will add a fee.

It does suck paying out some interest, but when I look at the other money savings, time savings, fuel savings, it's a no brainer.

I literally fell that accepting credit cards saves me 45 mins of time everyday and at least 1 gal of gas, and turns other dead beat customers into paying outstanding invoices.

It sucks buying spare parts too, but you know that $20.00 in random nuts and bolts sitting at your shop, will save you $20.00 the first time you need to open the bin and pull 1 single set out. After that it's just money saved

Getting paid with maids and housewives kills cash flow.

[seabee24]

Originally Posted by Duekster

Getting paid with maids and housewives kills cash flow.

It certainly brights up your spirits tho

[Duekster]

Originally Posted by seabee24

It certainly brights up your spirits tho

[fivestarlandscapes]

Thanks guys! Ive read some really excellent answers. To answer a few questions: I do all residential and bill at the end of each month regardless of the last service date. I should be billing after the last service for the month to get the money in that much sooner. Im going to try to start charging credit cards soon for service like someone mentioned. 80% of my customers are not home when I come to work at their property so its hard to get paid weekly. Thanks for the many great replies!

[Agape]

since I set up automatic payments for my maintenance accounts,(automatically charges a credit/debit card each month), cash flow hasn't been a problem as much, I get half down- balance upon completion on any one time job.