down payments

Discussion in 'Business Operations' started by Keegan, Nov 2, 2010.

  1. Keegan

    Keegan LawnSite Senior Member
    from CT
    Posts: 606

    I am writing up several proposals for a property mgmt co. just for fertilizing their grounds. Is it customary to ask for a down payment to start off a season?
     
  2. JD2320

    JD2320 LawnSite Member
    Posts: 132

    Yes, if you want them to give the contract to someone else.

    The answer is No.

    One of the things management companies consider when considering a contract and contractor is whether you are financially stable and asking for a down payment screams you're not.
     
  3. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

    Dont call it a down payment. Just spell out the billing terms and have the first bill be before the first service.
     
  4. Puddle of Oil

    Puddle of Oil LawnSite Bronze Member
    Posts: 1,203

    Posted via Mobile Device
     
  5. domain311

    domain311 LawnSite Member
    Posts: 177

    Completely disagree.

    Started doing it for our maintenance accounts a few years ago and its one of the best things we ever did to keep cash flow going in the beginning of the season. Sure, have had a few people ask questions...less than 5 in 3 years out of 60-70....so overall its great, and this year we had about 15% or so doing pre-pay for the entire year-4 of which were completely new clients that came by referral.

    There is nothing binding in our contracts though either...they can cancel at any time...this makes our customers feel more comfortable and I just don't agree with trying to hold someone to a contract if they are dissatisfied with our service.

    We chase money enough and it doesn't mean we have financial instability to ask for a deposit...its business, and in our business where we usually have to wait weeks if not more to get paid after a job is complete, it only makes sense to me. A lot of our accounts that we prep in the spring cost 2k and up for the first month of their clean up, edging, mulch, weed prevention, etc. With that amount of materials and labor it adds up and the customer should put a deposit down just as if they were doing a regular landscape job like planting or a hardscape. If someone makes a fuss over it, then its usually not someone we want to deal with anyway.
     
  6. lukemelo216

    lukemelo216 LawnSite Bronze Member
    from ...
    Posts: 1,267

    We dont offer a down payment, however we do offer a prepay discount. Usually in the neighbor hood of 10-15%. Otherwise its billing after each service, or they are on a monthly cost which starts april 1 and ends october 1. I have some customers that want quarterly payments which I am ok with too. Only time i do down payment is on landscape work.
     
  7. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    anything over 10,000.00 we ask for 50% up front
     
  8. STL Cuts

    STL Cuts LawnSite Senior Member
    Posts: 493

    Are you serious? 10%-15%??? That's craziness.
     
  9. domain311

    domain311 LawnSite Member
    Posts: 177

    We do 7% full pre-pay and 3% if half pre-pay for the year.
     
  10. JD2320

    JD2320 LawnSite Member
    Posts: 132

    The original poster was asking about "Management Companies"

    Not commercial work here and there.

    Yeah a small commercial maybe ask if they want to pre pay, but the "management companies" I work for and know of are really big companies that would laugh at asking for pre payment or, a down payment. Even if you gave a discount. As a matter of fact it's quite the opposite and they get 30-60 days to pay, and most take every minute of it to do so. These are not "Mom and Pop" management firms though and maybe it's different for you.

    If I wasn't financially stable they would simply not do business with me or my company. What happens if you take their pre pay and go out of business?

    I'm telling you that "asking" for a down payment or pre pay is like showing them a bankbook that reads "zero"

    Offering an optional pre pay is fine but it's up to the client to take advantage, or not.
     

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