Late Payers

Discussion in 'Business Operations' started by FreedomYardServices, May 29, 2013.

  1. FreedomYardServices

    FreedomYardServices LawnSite Member
    Posts: 8

    So far this year, I have had multiple customers who are late every month paying. I bill out at the end of every month and usually give them two weeks to pay. One customers went 90 days, and the others have been roughly one month behind. My question is at what point do you cut them off? Do you guy charge a late fee considering it messes up cash flow? If so how much?

    This month I stopped services to the 90 day customer as well as sent out reminders to the others and have only received two payments.
     
  2. herler

    herler LawnSite Fanatic
    Posts: 5,144

    I let it go as far as I am willing to tolerate never getting paid, and I don't think my tolerance levels are much higher than yours.
     
  3. Caddyshack Lawn Care

    Caddyshack Lawn Care LawnSite Senior Member
    Posts: 732

    As long as you're confident that they will pay I wouldn't stress over it. If you start adding a late pmt fee to the bill, you know they won't pay it and you're sure to lose customers. I'm assuming that most of your customers pay on time though.
     
  4. Chineau

    Chineau LawnSite Member
    Posts: 34

    Do you have anything in writing setting terms ( interest, payment dates) it is best to have this in advance so you know what to do and they know what will happen. I try to get prepay for summer contracts it cuts down on administration after you have done the work. i know every market is different but if you want to last you have to set reasonable terms, it is your business.
     
  5. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    I hate monthly billing for this reason. Though not all customers are retired and sitting home waiting for you to show up and get paid.

    What I do with slow payers is I write balance due date on the invoices. I give them two weeks. Then send an over/past due invoice soon as I reach the dead line date. After one more week I then call them. Then I will cut them off.

    Those that are scammers are then cut off before I fall deeper into their rip off came of trying to suck in the landscaper. Lucky I have not had one of those yet.

    The honest ones and lazy ones will get that check out quickly with the past due notice.

    My first monthly customer turned out to be a slow paying commercial account. Always can never afford to do more then mow and cleanups. As I was in the ending the last week of the second month I got paid for the first month. That was unacceptable for me to do two months work before I got paid for doing the first month.

    So then I sent out the invoices with the 2 week due date. Then with a follow up in short order. Now they are the most one week late past my due date.

    Also when they had a $450 snow removal bill this winter (second season doing snow for them) I got the phone call saying money was tight and they would be late before it became an issue. I thanked them for the warning and said OK to be late with that invoice.

    Hard to strike a balance between giving some one a break and letting someone suck you into deep.
     
  6. caseysmowing

    caseysmowing LawnSite Bronze Member
    Posts: 1,851

    After this month I'm switching to payment due in 15 days after invoice. I'm still waiting on three payments from April. Still haven't deposited the checks from the ones who pay in two days.
    Posted via Mobile Device
     
  7. Caddyshack Lawn Care

    Caddyshack Lawn Care LawnSite Senior Member
    Posts: 732

    Good luck with that. :rolleyes:

    Seriously, I know what you're saying, because it is frustrating. But don't risk losing customers just because a few of them are late paying. When they finally do pay it's a big check and it feels good to deposit those.

    The annoying ones are the ones who will mail you a check June 15 and it's only for the mowing you did in April. I've got no problem at all cutting those guys loose.

    And the ones who really get on my nerves are the ones who try to explain why they're so late. "Gee, I had to pay my cable bill, my car payment, my cell phone bill..." which makes me think "oh, so everyone else gets priority over me?"
     
  8. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    A reality check.

    No pay cable, no TV.

    No pay car, no car.

    No pay cell, no cell.

    No pay electric, no electric.

    No one will live without those things.

    No pay mow. Who cares. Can come home from the beer distributor, sit on a sofa, watch cable TV, turn on the AC, drink cold beer. Drink enough ice cold beer and won't care want happens to the lawn.

    We are not brain surgeons. We do not cut tumors.
     
  9. seabee24

    seabee24 LawnSite Senior Member
    Posts: 619

    Bill weekly, auto charge credit cards, eliminate the problem and move on
     
  10. TuffWork

    TuffWork LawnSite Senior Member
    Posts: 507

    Billing weekly is not feasible. As far as auto charging credit cards goes I've thought about it. How hard of a service is that to implement? Right now I'm using snail mail and cash or check payments.

    Lately it's becoming an increasingly bigger problem. It's two days after the end of the month and I'm still owed a couple grand on the bills I sent out to be due at the end of last month. It's getting pretty tough to consistently pay the taxes and payroll when that happens.

    I'm adding a due date to the bills this month. Something I thought was already done, but my wife handles the billing and the books. I'm going to be sending out a newsletter with this months bills reminding all the customers when they are due, and that I will be implementing a late fee for payments that are past due. I was thinking basically a continued service fee. More or less if I don't get your payment by the time we are supposed to mow you the next month you will be stricken from the schedule. The grace period will be the difference between the end of the month and your first mow for that month. If we do not recieve payment you will be removed from the schedule until payment plus a fee of whatever your first mow would have been plus a $10 paperwork fee. Any thoughts on that?

    BTW I bill at the first of the month for all of the mowings within that month and expect payment by the end of the month.
     

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