How do you protect yourself on 12 month contract

Discussion in 'Lawn Mowing' started by bedbug, Jan 29, 2007.

  1. bedbug

    bedbug LawnSite Member
    from Kansas
    Messages: 37

    How can a written 12 month contract protect me from a PITA that stops service at the 6th month of the contract?
    Customer charges are 100.00 per month and we have 8 mo season =800.00
    or 100.00 per mo.Using the 12 month contract his monthly charge is 66.66.
    My Question is how do you guys protect yourself from customer early dropout.
  2. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Messages: 4,373

    I only have 12 month contracts on properties that I'm servicing for 12 months, plowing AND mowing.

    As far as protecting yourself, you never will, completely.

    One thing you can do, is if your mowing season is only 8 months, then run the mowing contract for 8 months, then they're not getting a bill in the dead of winter, when there's no service performed.

    Sure your total will be a little higher, but there's no reason that you should have to wait for your money any longer than need be too.
  3. fiveoboy01

    fiveoboy01 LawnSite Silver Member
    Messages: 2,988

    Pretty much true. But you can take steps to make it easier to collect.

    Make it clear in the contract that by cancelling early, the customer will incur extra charges to recoup your losses if they cancel early.

    The purpose of a 12-month payment plan is to spread out the cost for mowing so that the monthly cost is less, NOT to allow the customer to drop you during the winter and get away with not paying what is owed.
  4. Woody82986

    Woody82986 LawnSite Silver Member
    from DFW, TX
    Messages: 2,128

    Make sure that it states in your contract tht if they decide to drop early, they will be charged for the balance of services they have not paid for. So if they cancel in November after the last cut, but still have a $350 balance remaining, they owe you that money in full. The tmes I have had contracts, I have always had some variation of that wording in there. No way are they going to skip out on paying me for work I have already completed.
  5. scottish lscape1

    scottish lscape1 LawnSite Member
    Messages: 65

    We do the same thing with 12 month contracts (spring/mowing/fall/snow) this is for commercial only.
    We also have a cancellation cost. The customer can cancel their contract with a 30 day notice, upon doing so they must pay 2 months of the contract total. When they sign the contract they must sign the cancellation contract as well.
  6. bedbug

    bedbug LawnSite Member
    from Kansas
    Messages: 37

    Maybe something like this could work.
    this agreement may be terminated at any time by the owner or contractor upon receipt by the terminated party of thirty days prior written notice.If owner terminates this agreement,the contractor shall be compensated for all work completed based on a fee per maintenance visit of $........ calculated from the commencement date of this agreement and shall receive full payment of all out standing fees on or before date of termination.
  7. gardenkeeper88

    gardenkeeper88 LawnSite Senior Member
    Messages: 350

    Her is how it is written on my contracts.
    "A 30 day written notice of cancellation is required by ..( Co. name). If this notice is not recieved, the customer is obligated to pay for services through the end of the billing cycle. Upon cancellation all fees, payments, and services performed to date will be tallied up along with a 10% early cancellation fee. Final payment will be due within 10 of final invoice date."

    HOOLIE LawnSite Gold Member
    Messages: 3,981

    I don't do 12 month contracts...8-10 months is fine for me. Like it has been said, unless you actually work year-round, it's an open invitation to cancel.

    The point of the flat-rate pricing for me is to maintain cashflow and more or less 'detach' the customer...I don't want them to focus on a price per cut and call for skips. I just want them to be happy and pay the bill :laugh:

    I start the contracts early, in March, and by the time I have started mowing I've already been paid 2 I'm always paid in advance and the last payment is due by Nov. 1 so I have been fully paid while I have not yet completed all the services...hahaha

    I do have a few that I stretch the payments out longer but those are longtime clients that I don't worry about any funny business...
  9. ProMo

    ProMo LawnSite Bronze Member
    Messages: 1,468

    I use a 90 day cancelation clause. My work is based on 42 visits per year so 150 per month equal 1800 per year divided by 42 =42.86 per visit so I have a line in my contract that states in case of early termination a per visit fee of 45.00 is applied. I usually add a few dollars to the per visit price to show it more cost effective to stay on contract.
  10. bedbug

    bedbug LawnSite Member
    from Kansas
    Messages: 37

    The 12 month contract,do most of you guy use this for commercial and residental?

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