How to "start" a Billing & Collection Policy ?


LawnSite Member
How do you handle chronic late payers. I HATE making collection calls!

I bill at the end of the month - my invoice reads "Due Upon Receipt". I want to get their check within, say, 10 days.
It's not like I'm billing in advance, so I think I'm justified.

Fewer than 25 of my 90 customers pay within 10 days.

How do I "put into effect" a new Billing & Collection Policy ?

I bought this route 5 months ago - there was no formal "billing/collection policy" in place then, I want to "institute" one. I'd like to send out a letter just stating the policy, but what I came up with sounded rude & abrupt. I want to sound friendly, but firm.

I HAVE created a service agreement - which contains my billing policy (developed with the help of many folks here). I do not have any customers "signed up with it" yet - I plan to use it with new ones that come on board.

That's it for now - (gotta be up early - still mowing 5 days a week - it was in the 70's today)

Thanks, in advance.

Will Johnson
Huntington Beach, CA


LawnSite Senior Member
It helps to charge late fees at 18-24% apr. That propably isn't enough to get the chronic ones off their lazy #$@%s so start charging a rebilling fee. This helps defray the agrevation and office costs. I just started charging $20, we'll see if it helps.
Write a letter. Give 30 day notice of new billing policy. Charge interest after 18 day grace period. 99% of companies I deal with do the same for me. Charge 24% per annum,2% per month with a minium interest charge of what ever. If you make a special trip to collect, charge for a vist charge.

Normaly, people hate to pay interest. it's going to take about 2 to 3 months to get people change paying habits.


LawnSite Senior Member
NE Ohio
Next year make all of your customers sign a contract and put a late payment clause in it. This way your protected when you apply it and they question it.


LawnSite Fanatic
Beaverton, OR
This is an issue we discussed at great length last year. There are some good ideas above.

But late last year I was in close to the same position. Although I didn't have it quite as bad. It seemed about 70% or so were paying on time and only 30% were paying late. But that was still a good $4000 or so that was late each month. When you got employees to pay, that means all of "your" money is late. The situation was unacceptable to me so I took some drastic measures. I will discuss them below.

First, I would say part of the problem is your timing of your bills. The earlier you send out invoices, the more success you will have. For clients who we send invoices for we bill on the 15th (and by that, I mean, they go out on the 14th) and they are due on the last day of the month. A LOT of people prefer to pay us in the middle of the month rather than at the first of the month (when their mortgage payment is due). So by having our invoices arrive when their middle of the month paycheck arrives, I find that a good 30% or so, pay us within the first week of receiving their invoices. In other words, they are paying early. Then, another 30% or so pay over the next two weeks. And by the 5th of the next month, almost everyone has paid me.

That wasn't the way it always was though. Even with our billing cycle, I used to have a lot of late payers. So last year we made some drastic moves. First, I collected from all of the chronic late payers (e.g people who were always 30-90 days past due) and then I got rid of them. I sent them a polite letter saying we were terminating service. In my mind, If I am going to have to wait for months to get my money, I'd rather not work for that person at all. I purposely got rid of about 15% of our clients.

For the ones who were consitently late but never got too far behind (e.g. always 10-20 days late) I wrote them letters explaining that I could not continue to do business that way and that future payments would need to be more on time. I also highly recommended to most of these clients that they sign up with our new Automatic Payment Service (APS). And I offered them incentives to do so.

At this time, I also took measures to assure that I would not run into collection problems with new clients. I found a company who handled "Automatic Payments" for business. You know, kind of like how a fitness center automatically withdraws money from your checking account? Well, I found a service who would do that for me. It costs about $1 per client per month. But once they are set up on it, payments come into your checking account automatically on a given day each month like clockwork.

So while I encouraged our existing clients to sign up for this service (which was free to them). I also virtually forced all of our new clients this year to sign up for APS. I did that by quoting two prices with every bid I gave. At the bottom of our bid sheets for lawn care it says, "The price for this service is $_____ per month of you sign up with our Automatic Payment Service and $_____ per month, if you prefer to be invoiced monthly." And I make the second price $15 more than the first.

So basically, if new customers want to be invoiced, they pay a $15 penalty. Although if they ask about this penalty I don't call it that. I just tell them I offer a $15 "discount" to those who sign up for APS.

The results have been great. Accounts receivables were very low this year. We signed up 39 people so far on APS and about 90% of new clients sign up for APS. People are not stupid. Most people don't like automatic withdrawals (I know, because I hate them!) but for a $15 savings, most people will put up with it.

I think this is the wave of the future. You will see more and more business being conducted this way in the coming years. People are already familiar with the concept. It is well worth checking into if you are having problems with traditional billing. I expect that within 5 years we will have 90% of our clients paying us this way.

One nice benefit is that I don't have to send out an invoice to these people on APS (unless they specifically want one). So that's less stamps, less stuffing envelopes, etc.

If anyone is interested in doing this, you can look in your local yellow pages under "Billing" services or companies. If you can't find one locally, I can refer you to the one we use. They do work for people across the nation.


LawnSite Bronze Member
Hey Will --

You said you "bought the route" recently. We have had a little discussion here lately regarding the subject of buying accounts.

Can you tell us a little about the arrangements you made? How much of a fee did you have to pay? Are you happy with the agreement you made? Any lessons learned?


LJ lawn

LawnSite Senior Member
i like the idea of the automatic billing,but what happens when there is a disputed bill for whatever reason? most people i talk to have a problem with going with any sort of a contract,i think the automated billing would be a hard sell in this area.we thought of giving coupon booklets a while back ,sort of like a car payment book.but there is no incentive to pay on time with that either.i think i'm going to try the late fee notices this year though.


LawnSite Bronze Member
San Antonio, TX
Prepaid customers is another the cost for the entire year give a discount for total payment of the entire season if paid in full before the season begins..


LawnSite Member
I'm going to do a letter - it was just that when i wrote it, I sounded pissed off (which I was when I wrote it). A couple edit jobs & I'll be good to go. basically, I'm saying I need to be paid within 15 days of the invoice date. A late charge may be applied for any late payments.

Thanks for taking the time to write as muich as you did. I DID do a search - and found quite a number of posts (Jan/Feb 2000). What I was hoping for was someonw with a letter they sent that sounded nice, was to the point (PAY ON TIME!) and worked.

New customers will go on a "service ageeement" (I put one together - cut 'n pasted from Ed Kreiling & others - plus some ideas from a couple sharp web sites). That should help, in the future.

Whick thread is the discussion under? but anyway... The fellow I bought from had moved 70 miles away 6 months earlier - his cousin was doing a terrible job & customeres were complaining & quitting. My old girlfriend called me when she heard that he was "trying to sell the route" (consisting of about 60% weekly, 30% biweekly, 10% monthly accounts almost all small residential, most within a few miles). Was told the route grossed $85,000, netted half that. (right!)

I got:
A cryptic (and I mean that!) list of 85 accounts - a feww with no phone numbers, some with mis-spelled names, etc. No records of receivables, invoices, books, nothing.

Most accounts had not been raised in years, if ever.
Gross was about $4,000 for basic maint.
A Carson 6 x 8 ft trailer, filled with mower, edger, blower, trimmer, handtools, ladders, lots of parts, (timers,valves,1800's, etc)
A storage facility (10 x 20') at $110/mo.
The name "The Kind Gardeners" (prior owner ran it as a 2nd job - he drives a freight engine at nite)
The workers (2 of them) stayed on. INVALUABLE !!

Since then, with extra work that seems to just keep roling in, I've grossed 7-8k each month (last month was 7), netting about a third of that. Of course, the business pays for my truck loan, auto insurance, cell phone, gasoline... so I'm getting by OK.

Paid $6,000. took over the route - he kept the "receivables" (which he billed out Aug 1 for work done in July.

Whew! I'd write more, but I can';t type too well- cut my finger bad yesterday - can't type well without it!