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Going with Pre-Pay for Spring Start-Ups

Discussion in 'Irrigation' started by JimLewis, Jan 23, 2007.

  1. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,841

    Last year we did about 200 winterizations. (I know that's not a lot compared to some of you guys here.) And we just left the invoice on the door, along with a checklist of what we did. Then we just wait for them to pay, which is the way we've always done it.

    But I read somewhere here on Lawnsite that someone was making their customers pre-pay for winterizations and start-ups. I think I am going to go that route.

    Our invoices said, "due on receipt". But only about 50% of the people paid within the first 10-30 days. Another 25% paid 30-60 days. Another 15% paid after 60 days. And there's about 10% that still haven't paid. I wish I could say this is the first year it was like this. But it isn't. I've just been putting up with it too long.

    Well, I am sick of doing business that way. I don't tolerate late pays for our maintenance division, so why should I tolerate it here?

    I am sending out 200 letters Feb. 1, explaining our policy change and enclosing an invoice. And I am not going to do one dang start-up this year until it's already been paid for.

    So there!!! :angry:
  2. bdb

    bdb LawnSite Member
    Posts: 74

    You could make them "feel" better if you do a contract for a start up and blow out paid by "x" and then they will be a preferred customer. And give them other benefits of being a "preferred customer". ie...15% discount on other services performed in the year or what ever you else you can promote with making more money in the end. That will get the money in sooner. And put on the invoice a steep service charge for late payments. So it will be in the best interests to pre pay.
  3. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,841

    That's not a bad idea, actually. I could raise my prices by 15%. But then offer a 15% discount if they pre-pay. So then at least those who don't pre-pay, I am making 15% more for the trouble.

    Hmmm....Something to think about....

    Still, I think 95% or more of our customers would just go along with the mandatory pre-pay thing if I went that route. So why offer anything else? Even with additional fees, percentages, etc., it's still not as nice as just getting paid on time.
  4. PurpHaze

    PurpHaze LawnSite Fanatic
    Posts: 5,496

    Guess the vacation down south has worn off already Jim? :laugh:
  5. jerryrwm

    jerryrwm LawnSite Bronze Member
    Posts: 1,274

    We offered a 5% pre-pay for start, blow-out, and seasonal checks for this coming season. About 20-25% are sending in checks with the renewal contract. Just have to remember to note who paid later this fall when we do shut-downs.
  6. garydale

    garydale LawnSite Senior Member
    Posts: 813

    We have always offered prepay.

    It's a desending discount !0% December, 7% January and 5% Feburary.
    About 40% of our accounts go this route.(Usually seniors)

    We have the same collection problems you outlined. A $5.00 minimum or (1.5%) late fee after 30 days.

    The last two years, we have turned the 60 day accounts over to a collection outfit that gets great results.(www.olddebts.com)The basic fee is about $16.00 per account.

    DUSTYCEDAR LawnSite Fanatic
    from PA
    Posts: 5,137

    i hate latepayers-- pre pay is the way to get paid on time
  8. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,841

    Yah, unfortunately it has. And I am sitting here looking at all these people who still haven't paid getting angry. I wish I was back there sipping some cool drink by the pool instead of worrying about this stuff.
  9. bicmudpuppy

    bicmudpuppy LawnSite Silver Member
    Posts: 2,781

    Everybody likes to get paid...................
    Seems like nobody like to Pay.............
    and the world keeps turning

    Tack on nasty fees for those that are 90+days. Don't do anything else for them unless they become current. I've never actually been anywhere that had any significant luck with collections. BUT, unpaid winterizations seem to get paid with fees on most accounts when they need the water in the spring. Spring turn-ons or repairs seem to become very important when you won't do the turn-off until you get paid for all balances plus the winterization at the time of winterization.

    Offer a "pre-pay" and slowly adjust your prices so that those that don't pre-pay are absorbing the costs of not pre-paying.
  10. kozmo

    kozmo LawnSite Member
    Posts: 70

    "See, I think that's about one of the sleeziest things a contractor can do - entice someone in with a coupon or "discount" that really isn't saving the customer any money at all because the contractor is just going to mark the price up to cover the supposed discount.

    It's this kind of crap that gives contractors in general a bad name.

    If you're going to offer someone a coupon or a discount, make it real or don't do it at all. " Quote Jim lewis

    There is another one of your quotes maybe you should rethink it !!!!

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