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Old 02-20-2012, 12:29 PM
PerfiCut L&L's Avatar
PerfiCut L&L PerfiCut L&L is offline
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Join Date: Jan 2006
Location: Glen Burnie, MD
Posts: 458
Looking for ideas on billing lawn customers.

We have been billing at the end of each month for years now. The majority of our work is residential, 1/4 acre or less in size. Every year we have several customers for one reason or another get behind on their payments and we never collect on it. We do about 250 customers give or take. Last year we required a credit card as a security deposit only to be billed in the event the account becomes 30 days past due. This is all layed out in our agreements, so they customer knows ahead of time, and has authorized this.

This dropped the outstanding debt at the end of the year by more than 50%. We have about 75% compliance with our customers and this year we intend to increase that to 100% compliance by all customers. However, we still end up with those credit cards that are either bad/cancelled/or at their limit, preventing us from being able to apply that charge.

Anyhow, long story short. Credit cards worked great and I think they will work even better with 100% compliance. Only lost revenue will be from those whose cards are not good for the transaction.

We were considering going to a yearly contract with payments due up front monthly. The total amount for the # cuts / mulch/ leaf cleanup/ and other services to be determined ahead of time and calculated on either a 9 month or 12 month payment plan. This would be new to us and we would still require a credit card as a security deposit. My concern is that this will scare too many people away.

The benefits I see by going to the new plan, is payment is made ahead of time (to some degree). The customer retains a FLAT MONTHLY bill (so they know ahead of time what their invoice is going to be). Of course the down side is if the customer terminates their contract mid season after we have done a good portion of the work and still have yet to be paid. I'm a little reluctant to go this route but its an option we are considering.

Im looking for any suggestions on how we can lower the amount of outstanding debt owed to us at the end of the season.

PS: We have solicited the services of a 3rd party collection agency which tends to result in about 25% return on the accounts forwarded to them. We have 3 step reminder process which tends to take about 6 weeks past the invoice due date before we forward the account to collections. So by that time the customer has had plenty of opportunity and notice to make payment.

Any suggestions or ideas?
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