How It All Went Bad

Discussion in 'Business Operations' started by Team-Green L&L, Jun 20, 2008.

  1. Team-Green L&L

    Team-Green L&L LawnSite Bronze Member
    Posts: 1,776

    I have to share this story for those out there that are like me and don't have a ton of cashflow to protect their assets.

    I did a job this year that sold at 14,200.00 in April. We completed the job and received final payment in our industries most common form of payment, a check.

    I deposited the check and moved on to the next job. This job had $6300.00 in material costs and had a good profit margin. Unfortunately it rained on the site for 3 days and delayed excavation and grading.

    So, I get a call from my banker saying that they took $8900 out of my account because the check bounced. Now because it was too early in the season to have my account built up yet, the second job was delayed, and this grease-ball just bounced me a check, I ended up with upset vendors from material purchases made before I got that phone call.

    So, to make a long story short. I do not feel that an industry that thrives on competitive pricing, little regulations, fuel dependency and labor shortages, while adding the element of the least secure form of payment being the standard, to be a viable business for long term growth.

    I paid all the checks off and spent all my profits of the season doing so and now I am trying to double-time to make up for a lost spring season all due to the "trust factor" that we carry from day to day in this business. I told this story to help someone else from making the same mistake.

    Things I have done from a hard lesson learned:

    1. Since checks ARE the standard in our business I got rid of the credit card machine and got a service that guarantees checks written to me when they authorize them.

    2. Require a credit card guarantee on the contract to prevent recurrence.

    3. Transferred our banking to a bank account that provides an "over-draft protection" amount that exceeds the highest valued check we have received in the past 12 months. This requires credit to do.

    I would advise those who are venturing into the landscape construction field to consider the likely possibility of this happening. It was the first time it happened to us since 2001 (when we started), but has certainly rained on my parade this year.
     
  2. Charles

    Charles Moderator Staff Member
    Posts: 7,952

    You used to be able to ask the bank if a check was good before you deposited it. Now your protection is gone. At least that is what I found out a few years ago when I called a bank about a check. You can't even get a check cashed at the customers bank without having an account there--in most cases. Man, that would be a killer to have that big of a check bounce anytime of the year. Hope you called the police
     
  3. Scagguy

    Scagguy LawnSite Bronze Member
    Posts: 1,522

    Sorry to hear about your misfortune. I hope the scumbag that wrote you the check is sitting somewhere, rotting away in a jail cell. If not, I'd be inclined to see that he gets there and fast.
     
  4. customcurbdesigns

    customcurbdesigns LawnSite Member
    from Tampa
    Posts: 203

    Did you get the money back or no?
     
  5. Lawnworks

    Lawnworks LawnSite Fanatic
    from usa
    Posts: 5,407

    I guess that is why you have need to have at LEAST one month of gross income in your checking account at all times. I don't know you would sleep at night if you don't. They say the number 1 reason small businesses fail is b/c of lack of capital.
     
  6. Mrs. H

    Mrs. H LawnSite Senior Member
    Posts: 708

    That's a lot of money...my stomach sank for you. :( We've had $100 to $150 checks bounced off us. If there is a question, David can usually go directly to the customers bank to cask...usually without a fee. I guess it must depend on the area, Charles, we've not had much problem with that.

    That much money...our bank usually makes us wait 10 for clearance because we usually don't bring checks that large in. Waiting a few days for clearance regardless of the bank's policy is always a good idea.
     
  7. Chilehead

    Chilehead LawnSite Bronze Member
    Male, from Stockbridge, GA
    Posts: 1,926

    I have likewise noticed that banks will not give you information over the phone pertaining to a check being solvent. Have NOT had the trouble yet of a bank not cashing one for me at the issuer's bank. Maybe I'm just lucky, or perhaps it depends on the bank--they all have different policies.
     
  8. zimmatic

    zimmatic LawnSite Senior Member
    Posts: 411

    Here's a story for ya. I had the a "feeling" that a check I was issued wasnt any good. The check was written to my company. I went the bank on which the check was drawn. I convinced the teller to cash the check and issue a "cashiers check" back to my company. That way the check was in theory "cashed" and I recive a guarentee that the payment was good through the cashiers check. Now I havent had the same results from every bank or within branches. I think it depends on the day and person who I spoke to. I have only done this 2-3 times since I have been in business.
     
  9. P.Services

    P.Services LawnSite Fanatic
    Posts: 6,322

    i have done that a few times to. they arnt supose to do it but like you say sometimes you get the new girl that doesnt knowany better.
     
  10. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

    Have had the problem in the past and sometimes now. I now structure all my payments that only 10% of the money is due after the job is done.

    Im not in the landscape business anymore but commercial sealcoating and striping.

    I take 50% deposit to schedule the job

    20% is due after the cracksealing
    20% after the sealcoating
    10% after the line painting.

    Now thats for jobs over 10k. Anything under 10k is usually only a few hour job so its 50% to schedule and 50% when we start the line painting.

    Yes, sometimes it seems silly because the customer ends up giving us 3 separate checks only hours apart from eachother, but ive had a couple large jobs almost put me out of business in the past so im not going to do that again.

    Right now im dealing with a job that i gave in on and took a 30% deposit with the remainder due on completion.

    Job has been done for 3 weeks.....Im waiting on 30k.....Their response? "Everytime you call for the check, we will delay it longer"

    Thats a great feeling to have and a great thing to hear after busting butt for 60 HOURS in 3 DAYS to get this job done in 100+ degree heat on the one weekend a year this business closes.

    NEVER again.

    I will gladly lose jobs over my payment requirements than to be in a pinch again.
    30k is a huge amount of money to me.
     

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