Accounts Receivable - Survival

Discussion in 'Heavy Equipment & Pavement' started by RockSet N' Grade, Dec 6, 2008.

  1. RockSet N' Grade

    RockSet N' Grade LawnSite Silver Member
    Posts: 2,454

    I am posting this because I need this as much as anyone else....to readjust my strategy. I have a great friend who I have traded work with over the years who was 90 days out in paying me. I mailed and emailed him today saying this was strictly business, but I need the money by Monday AM in full or I will be filing small claims Monday PM. I have been in this business through two tough cycles and this is the third, but this one "feels" more severe. So, here is my post to me: If you used to bill every 30 days, bill every two weeks or you will not survive. If you do a day job and are used to going home and billing, sit in your truck, make out the bill and collect the money right then and there or you will not survive. If you do any job and do not file preliminary lien work before you start the job, you will not survive. Instead of getting a 50% deposit and then the balance at the end of the job, the new rule is get 50%, then 25%, then 25% on day of completion. If you work on an ongoing job and have to supply materials, the materials will be paid for COD. These are just a few of the things I need to adjust to and implement because I plan on being here doing what I love next year and the year after that.......There are no excuses to be strung out.
     
  2. ricky86

    ricky86 LawnSite Bronze Member
    Posts: 1,704

    And I hope you can stick with it. Most will quit because of a couple of lost jobs. I work at a dealership, and am trying to implement a similar philosophy with our customers. This line of "I'll be in next week" HAS TO STOP. And, I think you realize he aint no friend
     
  3. Gravel Rat

    Gravel Rat LawnSite Fanatic
    Posts: 9,544

    You think you have it bad h*ll the contractors here wait up to 6 months to get paid. My famillies company has waited a year to get paid from people.

    The excavation contractors here have gone to the persons house to ask for money. Or see them in the grocery store asking for money. Chase the people all over the neighbourhood asking when they are going to pay their bill.

    Now that money is getting tight and the bills are piling up people are going on the never pay plan.

    The only way you get paid is harrass the people till they pay. Go knock on their door at dinner time everyday till they pay the bill.

    Small claims court is a waste of time because you end up spending money to get your money.

    It is down to COD for some people.

    Good Luck
     
  4. coopers

    coopers LawnSite Bronze Member
    Posts: 1,224

    Sorry you have to go through that. That is not fun. I agree with your updated practice of getting money sooner. It's not uncommon to bill out at 30 but why suffer. Unless you're huge and have other revenue coming in, you gotta do what you gotta do. 90 days is way too excessive IMHO.
     
  5. Junior M

    Junior M LawnSite Fanatic
    Posts: 13,539

    GR, my family has yet to get paid on directional drill shots we did back in 2000, and 2001. But we cant do anything about it because all the guys have went bankrupt under the business name and came back under a different one so technically the first business owed Dad money and when they went bankrupt it was just forgotten...

    We usually make up a contract saying what we will do and if this happens it will cost you this much more and if its a job that requires some material and alot of time just to get the job started we will work one full day and then get our deposit. Not getting pay does sucks, bad. We always get the check when we leave the job, no hey come back tomorrow and get it unless we make that decision..
     
  6. bobcat_ron

    bobcat_ron LawnSite Fanatic
    Posts: 10,084

    We don't have problems like that here, only if the bill gets higher than $20,000 - $50,000, but we just lien the hell out of the owner or it's written in the contract that payments must be made by specific dates or lump sums no later than a specified date after the contract.
    Only 1 time have we had an issue, and the case was thrown out of court, we won.
    As for me, I am now on a monthly payment system between my brother, or he will pay a lump sum before so he can skip a month, but I still have an income from my Dad's side too that never drys out entirely.
     
  7. ricky86

    ricky86 LawnSite Bronze Member
    Posts: 1,704

    It doesn't matter if the company is large. There is no free money. Excuse me, except "Bailout Money".
     
  8. stuvecorp

    stuvecorp LawnSite Fanatic
    Posts: 5,213

    I usually do the 50-50 thing, for some repeat customers I let that slide but not much. I usually tell them my accountant wants it like this and I get no complaints. I have had just a few problems and it was with other contractors, that 'next week I'll stop by' is a joke, but that is how they operate. One thing that has helped me is my hardscape supplier, when I get projects that are very big or drawn out I ask if my 30 days can be till I get my completion check and they will let it ride but I make sure they get their money as soon as possible.

    It sucks that you have to jump thru hoops to get the money.
     
  9. Gravel Rat

    Gravel Rat LawnSite Fanatic
    Posts: 9,544

    There has been a few companies in the area that owed multiple companies 50 grand or more each. The company that owed everybody money went bankrupt.

    The best way of getting paid is keep bugging the person that owes you money. Every month they are late add 10% of the total to the bill. State on your bill interest charges are added past due 30 days.

    You get the larger companies you phone the office and you always get the run a around. The secretary is just the hand puppet. I know one company that went through quite a few secretarys because they get tired of the stress and lying all the time to the bill collectors.

    The excavation contractors here say the worst thing about the job is the battle to get paid. Constantly fighting with the homeowners for money.

    People shop at different grocery stores to avoid running into the contractor(s) they owe money too.

    You really have to watch now with people so strapped for money they can just walk away from their property or project and claim bankrupt and your left holding the bag. Any large projects you want to get a draw for half of the project or for the materials. If the homeowner doesn't want to pay for the materials stop the job now because you know d*mn well they don't have the money.

    There has been a few houses in the area where the homeowner wasn't paying the bills now the house sits 3/4s done nobody will work for the homeowner unless its cash money at the end of the day.

    It is bad everywhere with people wanting work done and not pay for it. Like I said with people so stretched out for money they can claim personal bankruptsy any day.

    Anytime I do work for a homeowner I don't know its COD. Sure my bills are small with 500 dollars usually the highest bill. I'am not getting stiffed.
     
  10. J. Peterson Grading

    J. Peterson Grading LawnSite Senior Member
    from IA
    Posts: 989

    Personally I like where your heads at Rock. I just got done dealing with a builder that went 60 days, and I got the "we aren't the ones that pay you, the developer is crap" Now we are going ito snow season and the accountant is pushing for a "due in 10 days after billing, and no service if bill is 5 days over due" Hopefully it works, but for the most part we have good customers that pay ontime if not early.

    I am how ever gitting Dikked around by the local university. more about that later.

    J.
     

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