Analyzing Late Payers

Discussion in 'Lawn Mowing' started by procut, Aug 22, 2006.

  1. procut

    procut LawnSite Bronze Member
    Posts: 1,853

    Ok, my invoices are due on the 21st, and as of today, the 22nd, I have a handfull who have yet pay. It seems to be the same few stragglers month after month. Which makes me think, why is a late payer late? Do they honestly not have the money? Are they unhappy with quality of service? Do they think they can get away with being late? Do they pay all of their bills like this? So whats your theory?
  2. Kickin Your Grass

    Kickin Your Grass LawnSite Senior Member
    Posts: 479

    They can't afford the stamp after writing the check....
  3. pgiambat

    pgiambat LawnSite Member
    Posts: 70

    I learned this trick from an old guy:

    Show up face to face, chat for 60 seconds, ask for a check "I came to get a check from ya", then stand there and shup up.

    Now.. you have to have a little time for this one, might be hit or miss. I also ask them if they want me to hold them till Friday, I guess it kinda shows them I'm willing to work with them.

    If no worky, attack with a Wal-Mart bag.
  4. bigjeeping

    bigjeeping LawnSite Senior Member
    Posts: 903

    I have 100 mowing customers. They all pay their bills. But I can count on many payments coming in 2 weeks after the due-date. Some even a month late. Why? People are lazy. And of course because we are the lawn guys. We mow lawns for money. Who has any respect for us?

    Once people are a month late paying they get a letter saying we're cutting off service until their balance is paid in full. I know that giving them an entire month of non-payment is risky (under certain circumstances this could actually be 2 months of mowing). But when is going into business a risk-free endeavor?
  5. 1MajorTom

    1MajorTom Senior Moderator
    Posts: 6,074

    some people are born procrastinators. the bill sits on their desk, and they can't get motivated to pay it. some of course don't have the money, and have to wait till their next paycheck, but most just procrastinate.
  6. MDLawnman

    MDLawnman LawnSite Member
    Posts: 229

    This may seem ridiculous but, I only have late payments from high income people. You know doctors, lawyers, etc.

    I service elderly people on a fixed income who not only pay early but are the first to call ME if they need or don't need anything.

    I charge a measly $5 late fee. Next year it will be a $25 late fee. The court here says that is OK as long as it is in my companies policies.

    EVERYONE has problems. My clients are no exception. If they are having difficulty paying the monthly bill they all know they just have to CALL ME. I'll work with them.

    If we think lowly of ourselves people will think lowly of us as a business. Don't let people treat you like dirt. You have bills to pay, kids to feed. Credit card companies charge $39 and up for late fees. Money talks to a lot of people. Maybe it will motivate them too.
  7. DuraCutter

    DuraCutter LawnSite Senior Member
    Posts: 806

    Makes a lot of sense. And you don't even have those "thousands" of empty posts...:laugh:

    I'm trying to get that message out about the lowly part. It's a perception based in part by how you act with your customer. Stand up and the heck with low rates.. charge what you're worth as an lco. Asking to be paid on time is not out of the ordinary. I have all commercial accounts with property management. My office manager has to call them to remind them of our need to get paid often. Happens in every market of lawncare.
  8. olderthandirt

    olderthandirt LawnSite Platinum Member
    from here
    Posts: 4,900

    21st is a bad day to expect payment. Most people are getting paid bi weekly or once a month. change you due date to the 15th or 1st and it will make a differnce with some of the late payers
  9. Az Gardener

    Az Gardener LawnSite Gold Member
    Posts: 3,899

    I try to get my bills out by the 25th, if I do I find that I get paid promptly in most cases. If they don't go out until the 30th they seem to miss the rotation and end up being 2 weeks or more. I think most people sit down at the end of the month 25-29th and write checks to pay the bills. If yours is not on the table then it misses the rotation.

    But I bill in advance so even if I don't get paid until the 18-20th I am still ahead of the game. But if no checkie by the 30-31st, no service unless a check is received or on the patio table out back when we show up.

    I don't think the wealthy people pay late purposely I think they probably don't wright many checks period. Everything is set up on auto pay. I know I am terrible about paying by check, just never find the time (always on lawnsite) everything but the uniform company is on auto pay. Not that I don't have the money or I'm pissed at the service. I just don't have any scheduled time set aside to pay bills.

    BTW when they call for payment I'm not upset at them and happy to give them a credit card # of whatever to get them paid.

    Maybe a survey card asking clients what can we do to make payment easier for you. Then give them some options, multiple choice style. You never know untill you ask.
  10. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,841

    The reason many people pay you late, and not their other bills, is because and they don't have enough money to pay all their bills at once and there's no penalty to paying you late.

    Here's what I mean; You pay your car payment late - there are pentalties, late fees and it goes on your credit report. Same with credit card payments, mortgage, rent, etc.

    But there are certain bills that everyone knows you can pay late without really any consequence. Your dry-cleaning bill, your doctors bills, your gym membership bill, your lawn care guy, etc. These companies are always last to get paid because they don't enforce late fees, penalties, and don't report to credit bereaus. What I mean is, if you are 15 days late, your doctor or lawn care guy isn't going to report you to a credit bereau.

    Most people get paid twice each month. And so let's suppose your invoices are due on the 30th of each month (which is a little more normal). Well, the customer is looking at a stack of bills that are all due on the 30th and they all total $4,000. Except there's a problem. They only have $3,000 left from their paycheck. "No Big Deal", they think. "I'll pay the important ones now, and then I'll just pay these other bills (lawn care, doctor, gym, etc.) in 2 weeks - when I get my next paycheck."

    So that's why you get paid late.

    Once you realize this, then you have to begin to figure out how you're going to deal with it. Some people just consider it a part of doing business and count on always getting paid a little late from a certain percentage of customers. That's certainly one way of handling it. Others get rid of late-payers and keep only customers with on-time payment histories. That's another way to do it. Another approach is to make more severe penalties to paying you late. But history has proven (here on Lawnsite) that late penalties, etc. don't usually end in the desired result.

    24 Hr. Fitness learned this same lesson. They were constantly getting paid late by all of their customers, for the same reasons I mentioned above. So several years ago they instituted mandatory AutoPay. If you want a gym membership at 24 hr. Fitness (at least in my area) you HAVE to sign up for checking account AutoPay. If you don't like it, you can go somewhere else to work out. They were willing to lose some potential customers because they knew the customers they kept would all be on-time payers, guaranteed.

    I did a similar thing about 5 years ago. I've written several threads about it here on Lawnsite. But I didn't make it mandatory. I just made it very lucrative to chose AutoPay. Nowadays, about 80% of our maintenance clients are on AutoPay and I always get paid on time.

    Anyway, I am not saying you have to adopt my solution. It works well for me. It may not work for you. But the point is that these are the reasons people pay late and you have to either accept it or come up with a creative and professional way to change their behavior.

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