will they pay w/12 month billing

Discussion in 'Lawn Mowing' started by Outback Designz, Dec 13, 2003.

  1. Outback Designz

    Outback Designz LawnSite Member
    Posts: 89

    Thinking of offer 12 month billing next year. Like to have money coming in during the winter. Do any of you have ideas to help me convince customers that this is the way to go. Friend of mine that was in biz tried 12 month billing. They said lot of customers balked on the idea. Not seeing how it would benefit them. What do you all think. Thanks, Kevin
  2. MudslinginFX4

    MudslinginFX4 LawnSite Bronze Member
    Posts: 1,170

    Most of my residential customers are not on this plan, simply for the reason you said, they don't see any benefit from it. However, I won't touch a commercial property unless it is on the 12 month plan so those usually hold me through the winter. One thing that may be able to help you is offer your customers like 5% off or something if they will do the 12 month plan, and also let them know the reasons why you want too.
  3. T.E.

    T.E. LawnSite Senior Member
    Posts: 799

    This is one of those areas that has both pro's and con's. I have full service customers, that I have proposed this option too. The answer from some of the older people is why put off paying what I owe? I tend to think that this is from the old school of keeping everthing paid for as it is purchased. I have had customers old enough that they remember when payments were for houses, or cars. The thing I have trouble with it is the same money whether 12 or 9 payments. I feel I should be able to budget my money for the winter. Just my thoughts Tony
  4. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Posts: 4,041

    Hi FoxLawnCare,

    Here is a quote from this post that may give you some ideas.

    "Could not have said it any better Jim .... if it was not for Monthly billing I would be out of business

    For us it's 42 cuts per year .... we give this to each new customer n then send back out in the fall before we go to bi-monthly

    Monthly Billing Structure:

    General Cash Flow is a concern for the immediate and long-term health of any business. A true understanding of the yearlong commitment with month payment breaks down to 42 visits per year. What we wish to do is spread the cost of “per visit” through out the year so in the wintertime we have steady cash flow.

    Mr. & Mrs. Smith have a nice home in Merritt Island and wish to have lawn service, they have received a bid for $ 105 per month. This breaks down to $30 per cut ($30 x 42/12 = $105). This means in the Summer Months when they receive 4 cuts they still only pay $105 not $120 and in the Winter Months they may only receive 2 services yet still pay $105. We must keep in mind that there will be 3 Summer Months when they receive 5 cuts ( $150 those months) and 2 Winter Months when they receive 3. November thru March they will receive bi-weekly service and April thru October they will receive weekly service, yet what they are truly paying for is 42 visits per year.

    These are only examples but it breaks down the bidding process. Using our hourly rate in relation too the estimated time needed to perform a task or job than multiple these by 42 and divide by 12, which gives what we will bid the monthly price at.

    ANY Extras they want built into monthly cost is the same if they want hedging 6 ... 4 ... or 2 times yearly we fiqure the time x our rate n divide by 12 .... if they want weeding weekly or mothly (which takes more time) its the same ....on n on n on fore any extra services

    Have I been burned by this .... Yes .... but it is only a very small % maybe 1-2 new ones a year .... generally it's from me not picking up on the "signs to look fore" .... do they own or rent .... condition of property before I took it .... finding out a little about them .... is the home neat .... do they drive a beater ... are they a realitor, lawyer, banker, insurance agent, own 10 7-11's or Shell's .... etc

    They say "oh come back next spring" n I say sure but understand the price will be this much more n the above example is why"
  5. Turf Medic

    Turf Medic LawnSite Bronze Member
    Posts: 1,073

    Are you trying to charge them for 12 months or are you charging them just for the months that you are cutting and letting them pay with 12 equal payments. If the latter is the case I don't understand why that would be such a tough sell. I would approach the customers with the benefits of, it would allow them to budget easier, having 12 smaller equal payments, the utility companies have been doing this for years. You might want to set up some sort of automatic payment for your customers, either bank transfer to your account or credit card payments. This would allow your customer to not only budget but be able to forget about it, not having to deal with a monthly mailing would be a plus for me.
  6. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    i have some on a 10 month plan. it's hard enough to get them to pay on month #1, and month #10, when u may not be there, i see it even harder to get them to pay on month #11, and 12. ex: 10 month plan, first payment due march 1st, last payment due dec .1st. now, if the weather doesnt permit, you don't show up in february, but there is a payment due march 1st. when they get the bill feb 15th, what do u think i hear? "but, u weren't here...." and, if i finish leaf cleanup in october, they get a bill on nov. 1st, and then on dec. 1st, and what do u think i hear?" but, u weren't here in november, why am i getting a bill?" when i sit down with them to sign the contract, we go over everything including the above, but, this cr@p still happens. i will continue the 10 month plan with the few who don't cause problems, all others will pay for thier service at time rendered or by the first day of the following month.
  7. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    ecm, 5% off, for spreading out the payments? no way! this is a CUSTOMER CONVENIENCE!. there should be a 5% interest rate.
  8. SamIV

    SamIV LawnSite Senior Member
    Posts: 324

    Converted all of my customers to 12 month billing. Makes life easier for all involved. Will not take on a new client who will not go 12 month billing. This is for basic mowing services only. Anything extra gets added with that month's billing. I live in the south and work all year long, but frequency of mowing is less in the winter months. As repeated in Team Gopher's above, this helps with cash flow during the winter months.

    I get paid all year long. Also do irrigation installs during the slow period. Actually bring in more revenue during the winter.

    *Think we all need to thank Team Gopher for his professionalism. Don't have a clue as to where he finds the time for all his posts*

  9. MudslinginFX4

    MudslinginFX4 LawnSite Bronze Member
    Posts: 1,170

    Bobbygedd, I'm sorry, my post came out a little wrong... I only offer 5% off to select customers who pay in advance such as the month before on next months services. Most of these customers who use this offer are on the 12 month plan, even though I have very little residential customers who do that and I don't offer it to commercial accounts.
  10. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    A thought may be to "Budget" your income into a savings account

    Let them pay as normal .... yet distribute those funds to your business so as to spread payment out in 12 equal payments ;->

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