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Billing Customers

Discussion in 'Lawn Mowing' started by Meier, Mar 18, 2003.

  1. Meier

    Meier LawnSite Senior Member
    from DFW
    Messages: 269

    OK. I'm just starting out and I'm trying to figure out how to bill my customers. My target customer is residential with a lawn size anywhere from as little as 1,500 square feet to 15,000 square feet. My original plan was to get a deposit of about three mowings, or around $100 on average. After the customer had paid me for 6 months on time every month, I'd give them back the deposit.

    My friend, who hires his lawn done, advised against this. He said there were just too many people that would do it without a deposit. Then again, he's using some guy with lawn mowers in the back of a pick up truck and he pays way too little, in my opinion, to get his large lawn done. He's probably got about 10-12,000 square feet and his guy mows it for $30. The guy also spreads fertilizer for free if my friend buys the fertilizer.

    Then again, if the customer is serious about paying me, a deposit shouldn't represent a problem.

    So far, I've only signed up 3 customers for mowing and I haven't gotten a deposit on any of them. I use Quick Books and I send them a statement once a month after I've already done the work. So far, so good...I've collected 100%.

    But logic tells me it's not a matter of if I get stiffed...it's when, and how often.

    The other thought was to get set up to accept credit cards. I thought about telling new customers that the only way I bill is via credit card, just like your ISP. You give me your credit card number, I come out and do the work. At the end of the month, I charge the credit card and send you a statement indicating the work done and the charge made to the card. Very simple. In order to accept credit cards, I'll have to lose 2.1% of all revenues, but something tells me that would be cheap insurance against uncollectible accounts.

    There are certain people in the world who would not want to give out a credit card number. But I figure most wouldn't mind if they trusted me. The problem I'm running into right now is, that, I'm advertising with door hangers and the trust just isn't there.

    I'm thinking once I start getting calls from the yellow pages ad, I might start insisting on either a cash deposit or a credit card...otherwise, I won't bother unloading the trailer.

    I'd like to get thoughts from other landscapers out there. What kind of uncollectible percentages do you run into when doing work on 100% credit?

    Mace Meier
    DFW, TX
  2. Doh!

    Doh! LawnSite Member
    Messages: 50

    You sound really worried about not getting paid. Just have them sign simple agreements that state your business relationship and when payments are due. Then cut the grass and bill at the end of the month, some lco's prefer the 12 month payment option.

    Im not going to say that you'll never have a problem, but I really don't think anyone will pay a deposit for lawncare. If you have only a few accounts and are just starting out, have them leave a check for you each time (never have them leave cash).

    This is the nature of the business, they trust you to do the work and you trust them to pay. Only have it in writing in case they decide not to. Anyway if you need cash to get going you may offer them something like a discount if they pay six months in advance.
  3. brucec32

    brucec32 LawnSite Platinum Member
    Messages: 4,403

    You will have a hard time finding new customers if you hit them with a bunch of requirements, especially a deposit. For all they know, you just want to rip them off for $100.

    Depending on circumstances, $30 for 10,000 ft of lawn (less than 1/4 acre) isn't that bad. Some of these ZTR mowers can mow 5 acres in an hour theoretically, so even accounting for real world mowing, that's not necessarily a bad price. The best equipment is what sets the market price, not the guy doing it's crummy equipment. The customer doesn't care if it takes him all day to mow it. If someone can get in and out in 30 minutes, $30 ain't bad.

    He may be spreading the fertilizer for free that the customer buys because he is not licensed to spread it for pay, but doesn't want the customer to look elsewhere for "one stop service".

    You will eventually get stiffed, but that's a cost of doing business. You can minimize the risk by billing like cellphone, internet, or insurance companies do. Bill for the month at the first of the month, based on what your scheduled work is, and make the bill due by the 15th or even 30th of that month. That way you're not too far behind the curve in terms of work done vs. work paid for (2 to 4 weeks). Billing at the end of the month didn't work as well for me. Once you've done a lot of work, SOME people will use the large balance due as leverage to "squeeze" you into doing extras for free or even just continuing to mow when they're late paying.

    Requiring credit card payment is again a great way to run off potential customers. Would YOU buy something if the seller only wanted your credit card number? Would you hand out your credit card number to some guy who left a door hanger at your house? Offer it as an option, yes, but not a requirement. It's been my experience that bad debts that go uncollected are far less than 2.1% of sales on residentials, assuming you screen customers at all.

    Screening tips: if someone acts fishy or doesn't bother to ask about price, he may not be planning to ever pay so he doesn't care about price. If the lawn has a for-sale sign in front of it, don't bother, it won't be a long-term customer and you may get stiffed by the owner who no longer cares if you get paid since he sold the house. . If the house is a rental, I would look hard at passing. If the person seems difficult or hard to please even on the phone, beware. If the person is more concerned with the price for the first mow than how often you'll be mowing, beware, he may just want his jungle high lawn mowed down once, and figures he can stiff you and mow it himself from then out.

    With only 3 customers the least of your problems is non-paying customers. Until you have a full schedule and aren't sitting around waiting for jobs, you're really in no position to dictate terms to customers. You also need to just have a little faith in people. They want their lawns mowed. If they dont' pay, you don't mow. Do like I said above and the most you're ever out on a customer is a month's work if they don't pay.

    But you have to earn their trust too, by showing them you can do a good reliable job. Save the deposits for chronic late-payers in the future. Besides, I know a few tricks to get people to pay even when they don't intend to.
  4. Meier

    Meier LawnSite Senior Member
    from DFW
    Messages: 269

    ++++It's been my experience that bad debts that go uncollected are far less than 2.1% of sales on residentials, assuming you screen customers at all. ++++

    That sounds good to me. If I can collect over 98% of what I'm due, I'll be tickled.

    How are you screening customers? The only 'credit check' I've been conducting is to search county web sights (after they've already signed up) to see if they own the home. I figure the longer they've owned their home, the better.

    By the way, I am getting a signed contract that specifies payment terms and late fees, etc.

    DFW, TX
  5. Lawn Cops

    Lawn Cops LawnSite Member
    Messages: 103

    I agree with Bruce......I think, actually know that it I was a prospective customer I would not be interested in giving you my credit card number. I would forget that idea until you are very large.....plus what will the credit card service charge you for processing your credit card bills/reciepts , I memory serves me correctly with a very low volume in can be as high as 8%.

    Bad accounts will be a given at some point but like he said screen your accounts and get a signed service agreement and keep good records of your services and dates (I actually take digital photos of the front yard before and after each service). If you end up having to collect a bill that will help you out more than anything. I am actually going to our small claims court this week to go after a lady that owes me $120.00 since last December. I have all of my documentation and I feel thaere is no way that I can loose the case...yea I am out some of my time but I will eventually get my money.

    Concentrate more on getting new accounts with a service agreement.
  6. Barkleymut

    Barkleymut LawnSite Bronze Member
    Messages: 1,117

    I've been in Biz for 5 years now. I would guess I have written off about $250 to bad debt. This is on about $300,000 worth of billing. I would never consider accepting credit cards. I want customers who have too much money. Not those who are looking to leverage themselves to the max. Have a simple signed contract that states at the end of the month you get paid for the work you have performed within 15 days. You will likely have to extend this to 30 days for commercial work. There is some good advice on this thread. I couldn't imagine getting paid for every cut. Way too many checks to keep track of. Getting an advance for work not yet performed creates another headache for me. My policy is really simple: I will work for you until you are 30+ days behind on your bill (unless you are a huge customer and I can't live without you:D ). After that I will return and require a cleanup fee after you have paid in full.
  7. bruces

    bruces LawnSite Senior Member
    Messages: 648

    My customers all have to have lawns! :D

    Really, you're making this way to complicated. I would run you off of my property if you had the nerve to ask me to prepay for lawn mowing. Worry about getting business, if you get more than you can do then you can start with your prepayment requirements, etc.

    I've had very little trouble getting paid, way less than 2%.

    Really, as far as screening, use common sense, look at the property, talk to the people, it doesn't take long to figure out if someone is ok or not.
  8. brucec32

    brucec32 LawnSite Platinum Member
    Messages: 4,403

    I guess screening is a mix of common sense and experience. For example, I had a guy call me out to a huge expensive house, but I noticed his car was a bomb. After asking some questions, it turned out that he didn't own the place, but was one of these house-sitter people they let stay in a vacant house for reduced rent. His only job was to pay his utilities and mow the lawn or have it mowed, and my instincts were not to rely on this guy who can't afford a $300/month car payment to replace his clunker to stay current on a $400/month lawn maintenance bill on a house he doesn't own. I had zero leverage against him if he didn't pay. Even a signed contract would be worthless if he moved out and I couldn't serve him with a summons.

    So I passed. It obviously wasn't going to be permanent, anyway, since he was just there temporarily. There was a "for sale" sign outside before the summer was over.
  9. MDMowing

    MDMowing LawnSite Member
    from Midwest
    Messages: 58

    Asking for a deposit is not a good idea. If I was your customer, I would not want to give a deposit. You get the money when the job is done.

    We bill once a month. I have been in this business for 8 Years+ and in 8 years we have only had 4 accounts go bad. 2 accounts were turned over to collections agency, while another account was taken to court ( which we won hands down) and the other account (just last year) the lady paid after we showed her a copy of ALL the invoices from the year so far. All of these accounts were eventualy paid, and in any event you can always right off these accounts as a lost on your taxes.

    We don't accept credit cards. Checks or money orders. Sometimes my customers will pay in cash, which I make sure they get a receipt on, even if they have an invoice.
  10. Thompson Lawns

    Thompson Lawns LawnSite Member
    from OK
    Messages: 21

    Concentrate on getting the customers!! I just figured out how much I lost last season due to non-payment it was .001% This seems low enough risk to me. Take care of the customer and they will take care of you!

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