Billing Technique

Discussion in 'Business Operations' started by michael bucher, Apr 27, 2002.

  1. michael bucher

    michael bucher LawnSite Member
    Posts: 37

    Does any one split their client billing up alphabetically, having each groups bills coming due on a different week? I'm toying with doing this, hoping to help the cash flow situation. Any thoughts or experiences would be much appreciated.
  2. lantz

    lantz LawnSite Member
    Posts: 17

    Why would you think of billing alphabetically? The work will be the same as far as accounts recievable. Bill by the job, wk, bi-wk or monthly.
  3. LawnLad

    LawnLad LawnSite Senior Member
    Posts: 738

    I suppose if you had a large volume of customers and it made sense to split up your billing for administrative purposes, you could come up with a plan that makes sense - billing on the 15th and again on the 1st, etc. How you choose which customers to bill and when would be based on your business - type of service, alphabetically, time of month service is performed, etc - which ever would be best.

    My thought is this about cash flow - you're not increasing your cash flow by billing twice a month, you're just altering when you get the money. It's like paying your employees every Friday or every other Friday. We pay every other Friday; it reduces our costs and reduces the weekly talk about pay day which I dislike. People who prefer to be paid every week like it better since they don't have to be as careful with their money - they have to budget.

    This is the same thing with us. I'd rather not have to bill twice a month - just extra paperwork, just like having payday every week. Reduce the number of times you have to perform the task - and it makes life a little simpler. In terms of cash flow, you need to increase your working capital (easier said than done) so you don't feel a pinch in your bank account at various times of the month. Or during the year for that matter. Once you have enough float in your account - you're concerns of cash flow will diminish.
  4. eslawns

    eslawns LawnSite Senior Member
    Posts: 712

    I think it would be fine to do something that way, but I just bill once a month. People seem to send their money when the spirit moves them to. I also try not to let things get so tight that I need to count on checks not being delayed, but that's not always easy to do.

    My father in law is an investment advisor. He says you should have ideally (at the end of the month) a balance in the checking account sufficient to pay all expenses for the coming month. In savings? 3 months. I think there may be something to what he says, but in our culture, we have a tendency to spend and not save.
  5. KirbysLawn

    KirbysLawn Millenium Member
    Posts: 3,486

    No. Buget better or start selling add on's to make extra $$.
  6. Loosestrife

    Loosestrife LawnSite Member
    from PA
    Posts: 80

    We do this. We started billing only once per month, but found that as our business grew, we needed to find a larger block of time to do the billing. We then split the customer base, and billed half at the end of the month, half on the 15th. As we grew even further, we now bill each week. This helps to spread the A/R workload out, and provides for a more even cash flow.
  7. michael bucher

    michael bucher LawnSite Member
    Posts: 37

    Thanks for the input. I have about 250 clients and we are just exploring different ways of billing. The thought behind alphabetically, was to get clients used to having their bill due at a certain part of each month. Example: A - G would be due the first week of every month, H-N the second week.....etc. Just trying to keep the cash coming on a weekly basis instead of once a month. Thanks again.
  8. Why not just call your customers the night before and tell them that you will be cutting their grass the next day and that if they are not going to be home to just leave a check under the door mat for you. That way you can get paid every day. Before you laugh, I have been in this business a long time and know people who operate this way and have been doing so for 20 years.
  9. Dennis E.

    Dennis E. LawnSite Senior Member
    Posts: 349

    1st and the 15th for us. Thats the way we've always done it.
    The invoices that go out on the 1st are for commercial accounts that normally have a 30 day turn-around. By the time we finish out the month,we have the check.
    The 15th billing is for residential contracts. Due by the 1st of the month.Same thing. By the time the service period is finished we (should) have the check. Has worked pretty well for the last 13 years anyway.
    Just my .02

    In edit:It pays to do things on a budget. Spending can get out of control too easy.You have to keep track of all the $$$.
  10. michael bucher

    michael bucher LawnSite Member
    Posts: 37

    No, I wouldn't laugh at the check under the mat technique. I did that when I first got into business and it worked. But I have so many clients now and I don't like my employees handling the checks. Not that they would try and cash them or anything, it just is a hassle trying to get them from them. I do like the idea of the 1st and the 15th Dennis. Thanks!

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