High Risk customers = Deposit $

Discussion in 'Lawn Mowing' started by Jason Pallas, Feb 16, 2002.

  1. Jason Pallas

    Jason Pallas LawnSite Bronze Member
    Posts: 1,325

    This year we're instituting a new policy - for customers that have slow paying credit histories with us and for new customers that we evaluate as credit risks. Before we begin service, we're asking for a $200 deposit that will be credited to their LAST months (or 2 ) service.
    This way, the customer is always "in the hole" for $200 to you until the end of the service year. We figure this will eliminate a lot of collection problems later on. Lots of other types of services require deposits, so this shouldn't be anything new to people.
    It sure beats looking at a list of 41 customers that owe upwards of ..... well ....... a whole lot $$, that I still have yet to chase out of them!
    Anyone else have any policies that address this type of thing?
  2. klc

    klc LawnSite Member
    from iowa
    Posts: 27

    seems kind of new and maybe riskey----hope that doesnt give your company a bad rap--- ever thought about getting rid of bad accounts or visiting with them about the problem
    Good luck let us know how things go
  3. Jason Pallas

    Jason Pallas LawnSite Bronze Member
    Posts: 1,325

    Visiting them with the problem - heck I'm practically chasing them. I'd be better suited to be a detective after the lengths I've had to go to in order to track and chase money down somtimes. It was OK when I was younger - but I just don't feel like having to work that hard for my money now.
    WIth some of these people it's a game. I've got some accounts that I've probably called 70-80 times since Sept. and stopped by 25 times. It's ridiculous - they have no concept of how to mail in a check. If you don't get them on payday on the way into the house with their check, you're out of luck - and if they promise to pay you on Friday at 5pm, if you don't get it right then (mostly because they don't show or answer the door), they'll spend that money by 8pm!
    I figure because we've been around for a long time (20 years) and we're not really soliciting their business (they're coming to us), it's not unreasonable for us to ask for a deposit on accounts in areas were we get stiffed a lot or from customers who fit profiles that stiff us a lot.
  4. geogunn

    geogunn LawnSite Gold Member
    from TN
    Posts: 3,010

    jason--if I were a slow payer...the $200 would cull me out.

    that is your point isn't it?

  5. Jason Pallas

    Jason Pallas LawnSite Bronze Member
    Posts: 1,325

    Yeah - that's my point exactly - it sort of pre-qualifies a customer AND gives you some insurance that you won't give stiffed. If they get more than $200 behind in their bill, you just stop. You're even. You drop 'em and move on - the only thing you've lost is having that slot filled by a customer that you don't have to replace.
  6. Per payed invoicing.

    Have them pre pay for the month.

    IE: 4 grass cuttings = how many $ paid by so in so date.

    4 grass cuttings plus application plus shub trimming = how many $ paid by so in so date.

    All your doing is off setting the dates.

    You don't use the services that month then credit it to the next month.
  7. Heavenly Green

    Heavenly Green LawnSite Member
    Posts: 171

    Jason, You know Ive got the same problem and what steams
    me is Ive already earned the money and then to spend hours trying to collect Ive gone as far as sitting in front of there house
    waiting for somone to come home. And then when they did arrive
    still got the run around "Oh my husband didnt pay you I thought
    he sent the check Ill have to talk with him and call you tonight"
    All she did was avoid me never hear from her. They owe me 250.00 and live in a nice house at least 300,000. And yet its like
    a game to these people. I felt like the paper boy this last year
    chasing money.

    So it can be tricky trying to guess who gonna stiff ya. Im on
    board with the set monthly price/ paying upfront for the mo.

    Steve@S&S Heavenly Green Lawns:D
  8. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    Just eliminate them and be done with them. I have a policy, if I think the person is going to be hard to deal with, slow payer, or non payer, I don't do anything for them.
    I figure, if I've got to do something to cover myself then I shouldn't even have them around.
  9. Guardian

    Guardian LawnSite Senior Member
    from Florida
    Posts: 269

    I have used the deposit system for over a year now. I haven't had one customer complain (some are just concerned about when they get it back) For me, it gave me the best piece of mind you could ask for.

    I simply require 1 month's work deposit. For my residential contract customers -its between $119 and $300. If it is a non-contract cust, I still simply charge the equivelent to 1 months work. It is only refundable when we cease to do business. I thought about giving it back after 6 months or so, but I've seen long time customers just "change" (you think everything is the same, but somehow they've become unhappy and instead of talking with you about it, they just decide to stop paying until you get the hint)
    SO, it's simple- If you want to be invoiced, you have to pay a deposit. If you don't like that plan, then leave a check under the mat. If you forget to leave it (somehow they do), we are unable to service yard.
    How many times do you see the DUE date come and go, some money doesn't show & you end up sick in your stomach for days until its resolved? Do I call today? Its time to go back to service that customer-Do I go? Did they even get the invoice? Maybe they just decided not to pay and want to see how many service visits they can milk out of me.

    Thank God these kinds of customers are few and far between for me, but with a deposit on file -I just don't have to worry.

    I don't require a deposit on commercial work for large, established companies. (I have been burned by 2 hotels with Recognizable names -but thats it)

    Like LGF said, pre pay would as well.
  10. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    this is the way i do it now: if u r a "full service acount"(spring and fall cleanup, weekly cuts, fert program) your first payment is due no later than march 1. each payment is then due no later than the last day of each following month. i have the right to cancel service if the payment is one day late. by being paid by march 1st, i am about a month ahead of everyone from the start. but, the payments are broken down this way "for their convenience" . now, for just mow and fert customers: the fert payment is due in full, in advance. so i got a check for 2-300 bucks in advance, if they choose to stiff me on the mowing, i stop fert. now, mowing only: payments are due by the 15th of each month, for that entire month. ex: the fee for the whole month of april(4 cuts) is due no later than april 15th. im done being screwed. everyone signs a contract, no sign, no action. if u r asking me to "trust you", then ill ask u to trust me, pay me for the whole season in advance.

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