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Customer Payments

Discussion in 'Business Operations' started by Meier, Jul 17, 2003.

  1. Meier

    Meier LawnSite Senior Member
    from DFW
    Messages: 269

    It seems that every month I go through the exact same issue. I bill once a month on the 25th. I give my customers a full month to pay...payment is due on the 24th of the following month.

    Here I am with only 6 days worth of mail left between now and the due date and I've only been paid on 50% of the billing I sent out on the 25 of last month. This is totally normal, I'm finding.

    I don't care if customers wait until the last minute to pay me. In fact, I haven't been stiffed yet, though I've had to send out some letters threatening to file leins. I just hate the idea of seeing my customer list grow shorter because someone won't pay.

    Anyway, it's the same old story every month. Customers wait until the very last minute to pay.

    I know many will call me crazy for allowing customers so long to pay. I do assess a 2% late fee if a customer hasn't paid by the due date. My feeling is that if a customer hasn't paid within a full month, after I have done all the work during the previous month, there's just no excuse. I have collected a little in late fees so far this year, but most seem to pay right on the deadline. So far, no one has argued the late fee.

    My system seems to be working out ok, I suppose, but I was just wondering if others see the same thing...customers waiting until the last minute to pay?

    DFW, TX
  2. jason r.

    jason r. LawnSite Senior Member
    Messages: 338

    Just sent out a cancellation letter last night on a guy who's a constant late payer. Always got my money outta him but I'm sick of waiting on this one check every month. I charge him $200 a cut, so it takes a while to do. Have tried working with the dude about the constant late payments 2 months ago. Last month I got the check in just before the due date. This month his check wasn't recieved by due date (15th) once again so on the 16th I cancelled service. Everybody makes a mistake but when they show no regard for paying the invoices I send out, they will be replaced. From now on, I'll give everyone a second chance but no one a third chance!
  3. scott's turf

    scott's turf LawnSite Senior Member
    from NH
    Messages: 949

    If they are two months late and pay the entire bill with late fees I have no problems with them. This month I have made about $100 in late fees. If it is a new customer I will not let them get too far behind without a notification though.
  4. BSDeality

    BSDeality LawnSite Silver Member
    Messages: 2,849

    try moving to a net-15 billing period. I think when people see the "hey, i can put this off for a month" net-30 billing they just put it down and forget about it.
  5. GLAN

    GLAN Banned
    Messages: 1,647

    Do you have a cash flow problem that worries you when it gets to 30 days?

    If your collecting a late fee. Your getting money based on the credit allowed by you. Not a bad deal for you.

    We accept credit cards for payment. They go beyond 30 days, fine. No worries. 15 days after the first 30 a statement is issued. Not paid, so now it's 60 days. We're still working and an invoice and statement is issued and a phone call. The 60 day late invoice not paid by the 15 another statement is issued with a letter to interupt service if payment not received in 7 days.

    Gets that far, service is interupted. Then they usualy pay, but no credit is given for a missed week.

    Goes further. We call and repeat the above process. Then after 90 days a registered letter is sent demanding payment. When the registered letter is sent it is also explained that monthly late fees and interest is added within the guidelines of the law.

    If we need to. By the end of the season we may have the need to file in small claims court. Though I have only had to go to court once in 27 years.

    The interuption of service is when they realize they are being bad ;)
  6. mtdman

    mtdman LawnSite Gold Member
    Messages: 3,143

    Anything more than 1 month past the due date their service gets stopped. I call, I send reminders before that. If necessary, I pay a visit.

    But, most of my people are veterans, and I pretty much know when everyone will pay and don't have any really late payers. The same people send the $$ in right away, the same folks send it in at the due date, the same people send it in at the end of the month. I usually get paid by the end of the month 100%. I always put due on the 15th of the month, but legally in Michigan you must give 30 days before charging finance fees. (I found that one out when I tried to charge late fees to a client that happened to be a lawyer!) If you have a cash flow problem, it hurts when you have late payers. Where I'm at now, I don't, so I try to be a bit more flexible with my fees.
  7. Cooper Landscaping

    Cooper Landscaping LawnSite Member
    Messages: 214

    I'm gunna have to go with BSDiality one this one- I would think your best bet would be to change to net 15 as opposed to net 30. this way even your late payers pay by the 24th. In my opinion you would wind up having less of a problem about people forgetting to pay their bills.

  8. Meier

    Meier LawnSite Senior Member
    from DFW
    Messages: 269

    ++++ would think your best bet would be to change to net 15 as opposed to net 30. this way even your late payers pay by the 24th.++++

    I thought about that but decided I wouldn't have the guts to charge the late fee if they were late after only 15 days. With 30 days to pay, I have the guts to charge the late fee. I've been charging and collecting late fees this year, so people aren't complaining.

    I wish Quickbooks had a 25 day due date available. All I can choose with Quickbooks is either 15 days, 30 days or due upon receipt. 25 days would be ideal for me.

  9. mtdman

    mtdman LawnSite Gold Member
    Messages: 3,143

    In my quickbooks you can set the net due to any day of the month. Go to lists, other lists, and click on terms. Then select your terms name, and a box will pop up showing the options. You can set it for any day of the month. Set the due for the 15th, charge late fees after the 30th.

    And you need to check the laws in your state. Like I said, in MI you can't charge late fees until after 30 days.
  10. Team Gopher

    Team Gopher LawnSite Platinum Member
    from -
    Messages: 4,040

    Something you might consider is this.

    Some Gopher users will make separate customer groups. One customer group will be billed mid month, the other group will be billed at the end of the month. Payment terms can be set to anything you'd like, maybe "Upon Receipt." The late fee can then be used as a tool.
    If a customer sees that you have a policy on late fees and you implement it, they may pay you faster. You always have the option to waive the late fee if you are paid within a time frame acceptable to you.

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