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Next day credit cards vs extending credit

Discussion in 'Lawn Mowing' started by DFW Area Landscaper, Sep 9, 2005.

  1. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    I am consistently amazed at the percentage of declines I get on next day credit cards.

    I haven't documented it, but I would guess that about 5% declines is normal.

    Think about that for a minute.

    One of four things is happening when the banks decline charges:

    1.) They don't have thirty bucks in their checking account
    2.) They didn't make the minimum payment on their credit card bill
    3.) They have exceeded their credit limit
    4.) The card was reported lost or stolen

    Of course, when the card is declined, the customer comes off the schedule immediately. We try the card again the next day. If its still declined, we send an e-mail. If no response, then we call. But the most we risk is a single cut.

    I do get the lost or stolen excuse more often than not, but I am guessing that these customers are tellilng a little white lie to avoid embarrassment. It is very rare that a customer will say something like "Yes. I know. I get paid on Friday and the funds will be available then."

    The point of this post is just to say that I don't want my customer base owing me money. No thanks. Been there. Done that.

    My bad debt write off for the first two years, when I was extending to credit to anyone who lived in a house, was around 8%. This year, I have written off 0.004% to bad debt.

    I really encourage everyone to give serious consideration to next day credit cards.

    DFW Area Landscaper
  2. z_clark

    z_clark LawnSite Senior Member
    Posts: 369

    I agree w/ all that DFW said. We are doing next day credit card charging as well. We also get about 5% decline.

    We are in the business of landscape maintenance, NOT BANKING!

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    A 5% decline rate is probably not too bad. Another reason for a decline...the card has expired.
  4. Howard Roark

    Howard Roark LawnSite Senior Member
    from Texas
    Posts: 806

    Perhaps you're getting debit cards and not credit cards? I could see those being declined more due to being hitched to a checking account.

    Is there a way to know which you are getting?
  5. imdawrlus

    imdawrlus LawnSite Member
    Posts: 49

    5% is A LOT when it comes to stuff like this.....thats one in 20.....
  6. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    Yes. 5% declines is a lot.

    Expired cards are not included in the 5% figure. Dealing with expired cards is on top of dealing with declines.

    This has been somewhat eye opening for me, though I suspected this was the case before I started processing next day credit cards.

    Rest assured, if you are sending a bill at the end of the month to these people and waiting to get a check in the mail, these are the people that will cause problems for the lawn mowing company. They will make the minimum payment on their credit card bill before they will pay the lawn mowing guy. And everything else gets paid before the credit card bill...light bill, car payment, mortgage, DirecTV, Verizon, water bill...all these have much higher priority than the credit card bill. The lawn mowing company is absolute dead last on the list of creditors to be paid.

    The thing about all these other industries is, if they suspend service, the consumer has a fire under their azz to get it taken care of. When the lawn mowing company suspends service, they can still shower and watch TV in their air conditioned home. It is a non-emergency. Then, when they finally do pay the lawn bill, they will think the lawn mowing company is trying to over-charge them for mowing a jungle on the next visit.

    As an industry, we need to migrate towards next day credit cards. I've done it both ways and I can say without a doubt next day credit cards are 10,000 times more sensible than extending credit to anyone who lives in a house.

    Hopefully, one day, when people call and act outraged that the lowly lawn mowing company would dare require a credit card for service, I'll be able to say "I understand how you feel, but I don't know of any other companies in the area who don't require them either." As an industry, we're a long, long way from that. But three of the largest residential lawn mowing companies in my area now require credit cards for service. We are slowly moving in the right direction.

    DFW Area Landscaper

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