Billing Ideas: in advance, monthly, 12 month

Discussion in 'Business Operations' started by lawnboy73, Dec 17, 2011.

  1. lawnboy73

    lawnboy73 LawnSite Member
    Posts: 2

    Hey everyone .... looking to see how everyone bills their customers for best company cash flow results. I have been billing monthly for years, but am thinking about having different options to improve cash flow throughout the year. I was thinking about having the customers choose what services they will want performed throughout the year and putting them on a 12 month payment plan to have a consistant cash flow on a monthly basis. Thanks !!
     
  2. arninglawns

    arninglawns LawnSite Member
    Posts: 68

    Our standard billing is monthly in advance. Every year, during the off-season, I offer a 10% discount to anyone who wants to pay for a year in advance. Works out real good, gives me a little extra cash flow in the winter. People give it as gifts to their family members, etc. Also seems to reduce the amount of times people call to skip a service because it hasn't grown enough or whatever reason.
     
  3. tyler_mott85

    tyler_mott85 LawnSite Senior Member
    Posts: 582

    I'm just starting out and plan on only offering yearly service contracts payable in either 12 equal monthly payments, paid in advance, or a 10% discount for full payment. I can see it would be more difficult to transfer current customers over to this system when they are established monthly services performed based payments or adding every new customer into the mix from a certain point on out so I'm hoping that starting out this way will keep things simple.

    Is it an uncommon way of doing it? sure. Will it maybe take me longer to build up my clientele? possibly. But the way I see it the added cash flow during the slow months....especially the first couple months of spring when you have lots of money going out in expenses while waiting on payments....will make it a lot easier in other aspects of the business management. Plus since I'm starting out part time I'm not worried about making a ton of sales just to have money coming in.
     
  4. arninglawns

    arninglawns LawnSite Member
    Posts: 68

    It won't take you longer to build your *paying* clientele. :)

    FWIW, we increased our regular customer base by 68% so far this year over last year doing it that way. Just make sure it's in the fine print on your website and all of your print, so they know what to expect before they call.
     
  5. wbw

    wbw LawnSite Fanatic
    Posts: 5,457

    This is strictly my opinion...I have no basis in fact or experience here.

    1) I think it would be difficult to collect during the off months.

    2) Manage your money better and you won't need consistent cash flow.

    3) Focus instead on increasing your cash flow.
     
  6. lawnboy73

    lawnboy73 LawnSite Member
    Posts: 2

    Thanks for the feedback guys! I was thinking that putting the regular full service customers on a 12 month cycle would be a good idea for us and them because it would allow them to know/budget for their monthly fee while it would keep some cash flow coming in during our slower months of Dec, Jan, Feb. Thoughts on accepting credit cards?
     
  7. Dr.NewEarth

    Dr.NewEarth LawnSite Bronze Member
    Posts: 1,420

    I like to bill at the beginning of the month, before we do the work. We also accept major credit cards. We use contracts.

    I don't like doing 12 payments for a nine month maintenance contract. You lose money doing that.
    I'd rather have nine equal payments. I want the money in my account, not the clients. You lose money letting the client have a deal or a break to pay off longer.

    If they can't afford the cost of service, most of them could be doing their own lawns.
     
  8. jsslawncare

    jsslawncare LawnSite Bronze Member
    Posts: 1,674

    WBW and Dr. Newearth said it best I think. Think long and hard about #2. I don't do contracts. I have several banks, business' or whatever that I bill monthly. I do very little business in Jan and Feb but I manage to make it. I get paided after I cut, every time. No discounts, no one pays early (a few pay late) that's just how it is. I guess I do it how I would want to pay if I were having my yard cut.
     
  9. GreenI.A.

    GreenI.A. LawnSite Silver Member
    Posts: 2,132

    I don't do maintenance, but I offer a few different payment options with my fert customers.
    1. some prefer to pay per service, and receive a bill for what was done that particular day. (6-8 vistists per year)
    2. Some get eight equal payments for the year spaced out monthly during the fert season. Basically I add up all of their services and average it out to eight equal payments.
    3. Some do the same as above but lower the payements and stretch them out to 12 equal payments. This is more common on larger lawns with lower income, and makes it easier for the customer to add on additional summer services if they can start to pay for them in January
    4' We offer a discount for pre payment. I offer two different dscount amounts, one for customers who prepay before February 15th , and a different rate for thos who prepay before April 1st (mostly new customers)
     
  10. arninglawns

    arninglawns LawnSite Member
    Posts: 68

    I don't like the idea of a 12 month equal payment system. What happens when they sign up for 5 mowings in August, then drop you?
     

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