1. Missed the live Ask the Expert event?
    Catch up on the conversation about fertilization strategies for success with the experts at Koch Turf & Ornamental in the Fertilizer Application forum.

    Dismiss Notice

Collections Advice

Discussion in 'Business Operations' started by Meier, Apr 24, 2003.

  1. Meier

    Meier LawnSite Senior Member
    from DFW
    Messages: 269

    I took everyone's advice from Lawn Site on billing accounts. I originally contemplated asking all my new customers to give me a credit card such that I could bill their card at the end of the month for services performed. I'd then send them a statement detailing the charges.

    The bank charges 2.1% for this, which seems cheap to me.

    However, many on Lawn Site indicated that they collected far over 97.9%, and to give up 2.1% would be silly.

    I took their advice and now all my work is done on 100% credit.

    I sent out 9 bills on the 25th of March. They are due on the 24th of April...today. 7 paid on time and 2 have not paid.

    What is the advice from the folks on Lawn Site? I've got new statements going out tomorrow, and I'll be assessing a 2% late fee on those two acounts.

    Should I call the customers today? Or should I wait and call them tomorrow? Or should I just send a 2 week cancellation notice with the new statements and threaten a collection agency?

    Thanks for any advice.
    DFW, TX
  2. strickdad

    strickdad LawnSite Senior Member
    Messages: 544

    as a general rule we will let one go for 45 days past due before we start an inquiry. you may need to "inquire" sooner, depends on your cash flow...
  3. Tidycut

    Tidycut LawnSite Member
    Messages: 67

    A 2% late fee is waaaaaaaaay too cheap IMO. That’s 2 dollars on a $100 bill, big deal. If that’s the only penalty some may put off paying for three or four months. Make the customer think it’s better to pay now than later, make it costly for them… 15% – 20% or a minimum of $15.

  4. Mueller Landscape Inc

    Mueller Landscape Inc LawnSite Senior Member
    Messages: 489

    Honestly, 30 days is to long too. That is almost 60 days credit for the first mow with no interest.
  5. glenjr10

    glenjr10 LawnSite Member
    Messages: 98

    we send bill to everyone on the first of the month. payment is due by the 15th. after the 15th, the account is then past due. a 10 late fee is charged, no matter the balance. a late notice stamped with "PAST DUE" is sent to them.

    i have never been more than 45 days past due, but i keep a close eye on all accounts. courtesy call can be done to remind them of their payment's due date, (around the 13th).
  6. Meier

    Meier LawnSite Senior Member
    from DFW
    Messages: 269

    I agree. When I print up the next batch of contract forms, I will state that a late fee of $10.00 or 2% of the balance will be charged, whichever is greater. Maybe $15. Most people don't expect to have late fees when they sign up. Doubt anyone would bicker over another $5. Probably should just make it $20 or $25. Credit card companies aren't too forgiving, why should I be?

    I can't stand people who don't pay on time.

    By the way, one of the customers drove his payment by the house on the due date, so of 9 statements, 8 were paid on time.

    DFW, TX
  7. strickdad

    strickdad LawnSite Senior Member
    Messages: 544

    check your state regulations on late fees.. our state only allows a 1.5% fee on the balance..
  8. NYRookie

    NYRookie LawnSite Member
    Messages: 240

    In New York state, you can only charge 1.5%, per month. Any more and they call it loansharking. If my customers don't pay within 45 days of the invoice , I give them a call and remind them. I have only had to do it 3 times in the last year. 1 of them was a snowplowing client and another 20" storm was on the way, they payed very quickly.
  9. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Messages: 8,745

    I am glad that people besides myself that knows that you can't charge no 20% a month for interest..it is illegal. Here in Michigan if you are incorporated you can charge 17% a year annual but if you are not incorporate only 7% a year.

    Everybody needs to check to see whether the interest rate they are charging is legal.
  10. CMerLand

    CMerLand LawnSite Senior Member
    Messages: 393

    As in so much of life the devil is in the details. If you charge your customers a "finance charge" then you are limited to the ursory laws in your states that may limit you to 1.5 to 2% of the balance. But youre not a bank or a finance company so stay away from using such terms on your contracts.

    Now if you were to write into your contracts that you will bill your clients a $ 10 or $ 15.00 re-billing fee for any invoice not paid by the due date, then you are now billing for a service provided called "re-billing". Because you have outlined this policy prior to signing the contract then it is an agreed term of the contract and not considered a financing charge but for a service provided.

    Obviously its best to check with your accountant or states laws for the laws in your area.


Share This Page