yearly payments

Discussion in 'Pesticide & Herbicide Application' started by grassmasterswilson, Dec 6, 2010.

  1. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,537

    what is your discount on yearly payments? i currently bill per app or have it included in a customers monthly mowing invoice. i'm doing a 6 step program. think some of my customers would like this....even if i have to skip the summer app because of heat and drought. figured i would just credit them for the missed app or try to work something extra in.
     
  2. cgaengineer

    cgaengineer LawnSite Fanatic
    Posts: 15,782

    Some people discount prepays 10%.
     
  3. ted putnam

    ted putnam LawnSite Platinum Member
    Posts: 4,539

    I offer 5%. It's more than they make keeping it in the bank. I really try not to encourage it although each customer gets a letter and it is nice to have some instant cash to get things off the ground in the Spring. However, truth be known. I'd rather have the money "trickle" in for cash flow purposes.JMO
     
  4. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,052

    My thoughts exactly!

    I don't like giving away "my money" for early pay.
    I would rather the customer pay as we go...but it also locks in their business and is a great way to start of the spring with some cash flow!

    Come end of March and early April...I am ready so see some green...and I ain't talk'n about grass!
    :)
     
  5. jbturf

    jbturf LawnSite Bronze Member
    Posts: 1,429

    i offer 5% discount for prepayment

    i get your guys prefering billing and steady cash flow

    but i prefer prepays because
    1.i dont have to worry about being paid
    2.i dont spend extra time on office work-invoicing ,mailing etc..
    3.and i save money on stationary and postage
    and collection calls
    4.cash flow early in season to put towards materials/equipment
     
  6. turf hokie

    turf hokie LawnSite Silver Member
    Posts: 2,744

    And the winner is......
     
  7. James Cormier

    James Cormier LawnSite Bronze Member
    from Ma
    Posts: 1,218

    Over the past years Ive offered 5, 8 and 10 %

    Last 5 years have been 8%, I know its a weird number :)

    However I will say I usually collect about 85% of my income this way. Prepaying has been very popular in my area. When I had a major price re structing about 12 years ago I raised my rates on certain items to bury the prepay discount.

    JB pointed out the benefits to this and I agree totalaly. But here is one most important thing about collecting that much money in a short time ( most of mine comes in Feburary) you have to be good with budgeting your money. This can be a challenge when you look at your bank statement in the spring I also try and pre pay for some of my material and try my best to get the same discount I offer to my customers.

    Another benefit is so many people pay in Jan & Feb so when they are getting bombarded with mailings and calls in the spring they are less likely to switch to a different company because of them being prepaid. Ive only had 2 customers ask to cancel and wanted their money back since Ive been doing this.
     
  8. FdLLawnMan

    FdLLawnMan LawnSite Bronze Member
    Posts: 1,182

    James sounds a lot like me. I offer a 7% discount for prepay and receive between 85 to 90% in prepays. I usually send the letters out in early February and give 45 days to pay with a reminder postcard around 35 days later if they haven't paid. Since I have a computer and printer in the truck I think I will leave the invoices on the doorknob this year to save the paperwork at night which I hate doing. James is correct. You have to be good with budgeting with so many prepays at once.
     
  9. ted putnam

    ted putnam LawnSite Platinum Member
    Posts: 4,539

    And he's a winner why? Because you and he do it the same way?:laugh: JK

    Let's do some math.

    You guys and I will gross the same amount for the year...say 200K
    !00% of your customers prepay you for the year and let's say you offer a 7% prepay discount. That's 14K you give up straight off the top to be "hassle free".

    I on the other hand collect about 12% of my money through prepays...24K. Of that 24K I offer a 5% discount or $1200 in discounts. I spend about $500 per year in printer ink, envelopes and stamps. (I do not stamp the envelopes for the customer) I leave an invoice and envelope(if not prepaid) at each customers door. I would leave something at their door anyway, it might as well be a copy of the invoice.

    You give up $14,000 to skip what for me is a minor headache at worst.

    I give up $1,700, have a minor nuisance and don't have to be as hard nosed about the budgeting through the year.

    It's just 2 different ways of doing it.
    It's just that I'm like Rodney, I'd prefer to keep that $12,300 in MY pocket.

    *** It should be noted that I don't keep dead beats on my customer list for long. That's how I keep my collections hassle to a minimum.
     
  10. turf hokie

    turf hokie LawnSite Silver Member
    Posts: 2,744

     

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