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Billing net 15?

Discussion in 'Business Operations' started by tnt-g, May 22, 2003.

  1. tnt-g

    tnt-g LawnSite Member
    Posts: 22

    How do you guys set up your billing cycles and when do you expect payment by? I am getting tired of people paying when they feel like it. Most of my accounts pay on time or by the 15th but there are always the straglers. I used to say due upon receipt for payment terms. Now I have decided to do net 15. How do I get the client to pay attention to the terms of the bill in a tactfull manner? Just trying to get the cash to flow in more predictably.
  2. cos

    cos LawnSite Addict
    Posts: 1,253

    Net 15, then another bill is sent. If not paid in 30, they get that bill and the current. If not paid, a statement of payment is sent.

    I just sent out a certified letter and statement for snow. They called and told me a check was going out that day.
  3. Brendan

    Brendan LawnSite Member
    Posts: 25


    I find that most people wait until the due date and then send the cheque. Sometimes I receive payment up to 5 days past the due date, depending on the mail service, weekends and public holidays.

    To over come this problem and to make the cash flow more easy I make the terms 7 days net. This seems to work with the most payments being received on the 12 day.

    You will always have some customers who are slow in paying. To chase them up I re-schedule their work to coincide when they are home so I can ask them to pay the account.

    The above is relevant for residential customers. For commercial customers I try for 7 days net. Some pay within that time, most wait 30 days and one makes it difficult by trying for 60 days. I've finally got them down to 35 days.

    Good luck

  4. Georgiehopper

    Georgiehopper LawnSite Member
    Posts: 187

    I make payment due upon completion of the workt...and I nag the people for payment. They nag me plenty to get work started if we are behind due to rain, so I feel justified in nagging them for payment.

    I have found the longer you allow a customer to hang onto a bill, the less likely you are to get paid. Seems they put things like lawn care and landscaping bills on the bottom of their priority list
  5. Green Finger

    Green Finger LawnSite Senior Member
    Posts: 839

    A lot of my old customers they are billed. Usually pay on time. But my new ones I tell them money is due when work is completed. It keeps the cash flow going. Keep billing, Calling and stop by their house if you have to. I got a few stiffers and they are really slpw.:cry:
  6. Mueller Landscape Inc

    Mueller Landscape Inc LawnSite Senior Member
    Posts: 489

    You could start charging a finance charge for customers who's payment is recieved after the due date. You should give notice to your customers first.
  7. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Posts: 8,745

    we allow our customers 21 days to pay their bill..with a 3 day lean for those late ones coming in. If you are going to charge an interest charge make sure to check with your state for the right amount that you can charge. Like here in Michigan if you are INC you can charge 17% annual interest, but if not only 7% annual.
  8. BRL

    BRL LawnSite Bronze Member
    Posts: 1,211

    This info has been posted here before & seems to make sense: If you are going to charge an "interest" or "Finance" charge, you will then need to become registered with the federal & state governments as a financial institution, and believe me you do not want to go through all of that licensing & regulation red tape. You are not a bank, you are a landscaping service business. Charge a late fee or late service charge, but not interest or finance charge. You are not financing your clients landscape services, or giving them a loan, you are charging them a fee for the privilege of paying their bill late, which is causing you to pay your bills late. And as mentioned, each state has its own laws saying how much you are allowed to charge for that fee, so make sure you check that first.
  9. jason r.

    jason r. LawnSite Senior Member
    Posts: 338

    I have a few that pay w/ cash or check on every visit but, the majority are billed on the last day of the month and are given till the 15th to pay up. If payment isn't recieved I send out another invoice on the 16th with an additional $10 invoicing fee and a notice of cancellation if payment is not recieved by the end of that month. Last month I cancelled service on a repeated late payer and this month I had 2 that got the LETTER sent to them on the 16th. Got both checks on the 18th.:D
  10. edrenckh

    edrenckh LawnSite Member
    Posts: 135

    You are not financing your clients landscape services, or giving them a loan...

    Actually, if they don't pay on time, you are giving them a loan, whether you or they see it as that doesn't matter. Virtually all of my suppliers have a 1.5% on any unpaid balances clause. Elec company, garbage, etc.

    I have been doing what my credits cards would do to me, regardless if it's legal or not. 18% annual interest, $29 late fee - each month.

    If I have to take them to court I charge a $100 collection fee. I am filing two small claims court cases this week. I'll let you guys know how it all works out. Amounts are increased by ~$200 with the fees. They are both in the same county so it's in the same courthouse and will be the same day.

    Basically, if you have it in writing in your contract, and the customer signs, it's legal. If you charge over the usury rate, as long as you are not a bank, I believe that's OK too.

    If you don't have a contract and you take them to court and they don't show, you win the award automatically (and still have to collect).

    A verbal agreement in which both sides disagree, the judge will decide. If the customer has a history of payment, then stops paying, that's as good as a written contract (almost).

    In MN, you can file a mechanics lien on the house if needed. You can certainly file a judgment in all cases.

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