Cash Flow issues..How to get paid quicker.

Discussion in 'Business Operations' started by fivestarlandscapes, Sep 4, 2012.

  1. fgwalways

    fgwalways LawnSite Member
    from texas
    Messages: 9

    Ya, pre billing with credit cards in popular. Depending on the age of your customers pay pal might be great.
  2. spitfire3416

    spitfire3416 LawnSite Senior Member
    Messages: 554

    I didn't really read everyones comments on here, so forgive me if I repeat anything.

    1) Offer a 5% discount for customers who pay for a year in advance. Great way to start the season off with some money behind you.

    2) Offer packages. Start w/ just offering weekly cutting, spring/fall clean up, and fertilizer year round for your basic package and then offer more services as you go up. Next, in addition to your basic package, you could offer weed control of the lawn/beds plus hedge trimming twice a year. The great thing about offering packages is that you can lump everything into one big price and divide it out over the course of a season, thus increasing what you bill out monthly. So you're essentially getting paid for future work. Plus it's a great way to sell extra services. Just make sure you price it right from the beginning!

    3) Start paying your employees at the end of the second week of every month. For example, employee A works 40 hours a week at $10 an hour. By the end of the second week you pay him $800. Third week you pay him $400, fourth week you pay him $400. Repeat cycle. Now you're probably asking yourself "Why the hell would I do this?" Well, I'll tell ya why. In my experience, the fastest a customer can really pay you by mail is a week. About 3 days out and 3 days in, right? So lets say you only receive about 10% of your money by the end of week one. That's another week you need to cover in labor expenses, in addition to the month you've already been paying out and no money coming in. Now you have to pay a fifth week of labor and you're still waiting on most of your money. That second week is HUGE. I would say I receive about 60% of my money by the end of the second week. Now you're in much better shape to cover your labor costs. And I'm sure most people would tell you that labor is probably there biggest expense. Oh and also in case your wondering why not just pay every other week. Well some months have 5 weeks and that just throws everything off.

    4) Auto Pay.. Bill goes out.. money comes back in a fraction of a second. Can't beat that.

    5) E-mail/Online billing. People are MUCH more likely to pay faster when receiving an e-mail or simply going on your website. It's just more convenient in todays society. Plus think of all the people who receive bills and just throw them on the desk/table getting lost in the clutter.

    6) Diesel Mowers. Save on fuel costs like you wouldn't believe.

    7) Electric Weed Whackers. No gas what so ever.

    If you start offering the pay in full, the packages, auto pay and email/online billing you'll probably increase your cash flow by 50%. Theres a good start.
  3. Darryl G

    Darryl G Inactive
    Messages: 9,500

    Be sure to get a deposit that at least coves the cost of materials before even scheduling a job.

    Mark up all materials at least 15%.
  4. meets1

    meets1 LawnSite Gold Member
    Messages: 3,857

    We offer online payment. We have smart phone with readers. That works great for us at shows, even in the nursery, or with me while out estimating, sold the job, say we want a deposit, they wip out credit card and scan it right there. I also offer intuit payment on every bill that is sent out. We have a 5% retention rate on payment with that method. I use some business checks but it amazes me that we receive so many checks in the mail yet, let alone using the mail, envelope, stamp, etc. I send all bills out via the mail, some prefer email bills as quick books offer that as well.

    Landscape jobs, retail items are marked up much more than the 15% someone mentioned above. All landscape jobs are required a deposit.
  5. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Messages: 7,961

    What does this mean?
    I too offer Intuit payment. I encourage use of the IPN
  6. easy-lift guy

    easy-lift guy LawnSite Gold Member
    Messages: 3,372

    My accounts pay me in advance for my monthly accounts and COD on weekly accounts.
    No exceptions, and I have never had to look back for my receivables.
    easy-lift guy
  7. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Messages: 2,764

    I was thinking the same thing.
  8. meets1

    meets1 LawnSite Gold Member
    Messages: 3,857

    5 % of invoices are paid this way for me.
  9. TCW

    TCW LawnSite Member
    Messages: 35

    Definitely more to it than just cash is that $400/day calculated? Even though you cover all of your fuel, wages, and tangible expenses, does that also include your monthly costs? If the figure on the paper says $400 but the bank account say $0 at the end of the month, which one are you going to believe? This is where a good relationship with a CPA is crucial- they can show you the big picture instead of the day-to-day snapshot.

    I have a Bachelor's and Master's in Accounting so it's become second nature to me, but when I mowed in HS I got caught up in the mindset of "I used $XX in fuel today and billed $XXX today, so I made a profit!" when in reality I forgot about that mower payment or insurance premium that was due each month, and never accounted for that in my daily costs.
  10. tricountylawncare

    tricountylawncare LawnSite Member
    Messages: 12

    Almost all of my customers pay me at the time of service. What I do is either send them an email or text them the day before I am scheduled to come to remind them I am coming and almost all of them leave a check or cash in an envelope under the mat. This works great for me and I don't have to worry about cash flow. I have 1 customer that likes to pay online through my website but the rest seem happy to leave payment under the mat the day I'm coming. Occasionally one will forget to leave it but they always double up the next time. It is a very good feeling getting paid every day for the services you did that day and not having to wait and worry about getting paid for several services you have already done.

    I just recently got the credit card scanner for my smartphone through Intuit but I have not used it yet. I have a feeling it won't get used much since most of my customers are not home when I come by.

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