Are accounts with net 45 payment policies even worth it?

Hvlc

LawnSite Member
how do you define a slow paying client?
anyone that runs past 30 days frequently and takes multiple efforts to collect from

I had one tell me he waits 90 days for payment from his clients and I’ll get paid when he does. I waited for my final payment and discontinued service

I expect most commercial clients will take 30 days, I build that into my margin. Residentials are another issue, I’m not a collection agent.
 

SilverPine

LawnSite Member
45 for commercial isn't unheard of. We deal with a management company whos minimum is 45 and sometimes longer. The trade off is they have to pay a bit more than everyone else. Its not terrible for maintenance, but it sucks waiting for construction money.
 

Dr.NewEarth

LawnSite Bronze Member
Location
Vancouver Canada
Every-one, please, go search your individual State/Provincial laws. Always use a written contract.....A handshake isn't worth the paper it's written on...... I've incorporated the average cost of filing a "builder's lien" (attorney, filing fees, etc.) into the annual over-head for the company. Historically I've experienced that there will be one flaky property manager or hoa that doesn't pay on time, or withholds payment for some strange reason. The recession hit Vancouver in 2011, after our Winter Olympics boom. I have never seen so many accounts go into default. In British Columbia we have a maximum of 45 days from the invoiced date to file a lien for non-payment. (and we cannot charge interest, lien costs or legal fees back to the client. ouch.) Regardless of where you are, if you don't have a written contract you can't file a lien or even go to small claims court. Peace. PS, keep in mind, you will be on the property management companies "merde list" and will probably be blacklisted by them if you have to exercise your legal rights. Ramble over.
 

snomaha

LawnSite Bronze Member
Location
midwest
I have a commercial account that represents roughly 9% of my total gross but about 19% of my year round client's income that is always 2 to 3 months behind on payment. Thinking that they should get the axe for Christmas this year.....
Greg Crabtree has a slide deck showing how long it takes to get cashflow positive based on:
Service based business
10% true net profit
40% combined state and federal income tax
Bill for monthly services at the end of the month with net 45 terms.

You aren’t cash flow positive until 34 months in the above scenario.
 

Youngandfree

LawnSite Silver Member
Location
VA
I have a commercial account that represents roughly 9% of my total gross but about 19% of my year round client's income that is always 2 to 3 months behind on payment. Thinking that they should get the axe for Christmas this year.....
Is this client paying as they said they would, or do you require payment at time of service and they are always that late?
 


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