Late payment yet I'm still wrong

Discussion in 'Business Operations' started by joee0914, Oct 11, 2011.

  1. joee0914

    joee0914 LawnSite Member
    Messages: 126

    So today I contacted a customer of mine who is late 2 months on payment. He's a nice guy so I wanted to help him out as best I could. We nicely discussed the issue and figured out a solution.

    After we finished with that, he than says to me.. "just for future reference... its a terrible business practice to shut off someone's lawn service for late payments."

    ... i think i bite my tongue so hard it started to bleed.. but i held it together and told him that i think he'd have done the same thing when he's out that kind of money.

    What the $@^& is wrong with people...
  2. JDiepstra

    JDiepstra LawnSite Bronze Member
    Messages: 1,510

    The nerve of some people... I probably would have said "well would you keep showing up to your job if you hadn't received your paycheck for 2 months?" Then enjoy the silence!
  3. seabee24

    seabee24 LawnSite Senior Member
    Messages: 619

    depends on the situation. I personally dont just stop srvice, unless prior we emailed/mailed out 2 letters, and made an attempt to talk by phone at least once. stopping service is my last choice.

    This would be different for every business, and every situation, however consider the following.

    When ever I try and make a choice about what to do, I lay out both "paths" as clear as I can then make the best choice

    1. Path 1 - cut off his service

    Benifit - you stop doing work for a non-paying client, you stop putting out time, and labor expenses for that client, saving your self money

    Con - once you cut him off, more than liekly he dosnt have the money to pay you now, so he will just find another lawn service,

    after he finds new lawn service, they get paid.... you still dont.

    IF you are well known in his stop service, 2 weeks later the neihbors wonder why YOU are doing such a bad job on his lawn?

    2, Path 2 -- keep mowing his lawn.

    Con - you loose money on the time and labor

    Benifit - you keep him as a client, (assuming he has a good payment history with you) he may get caught back up, you keep him as a customer.

    If he doesnt pay, you get a tax write off, and you file a mechanics lein on the house, you will get it at some point, just depends on the time and effort you want to put into it.

    For me personally this is how I look at it.... My crew drives past the guys house anyway my cost for them to mow the property is $15.00 So I only loss $15.00 per week that I service him, If he decides not to pay up. I bill him for $38.00 - he doesnt pay, I take a $38.00 per week tax deduction for write off to bad debit. Thought out the entire season almost 10% of my clients personally will fall behind on payments. given the chance to get caught up, 8 out of 10 will with no problem. 1 out of 10 will pay me and take all winter to do so. 1 out of 10 will $crew me.

    10 paying clients x $38.00 per visit is $380.00 minus costs of $150.00 =$230 profit

    8 clients that are late but get caught up with the $150 cost covering for the two that are late - $154.00 profit plus take a $76.00 tax deduction which will come close to equalling out the same amount of money.

    by doing so I just gave 10 people the option to keep us as a company, I kept them happy, their property looks good, their neihbors hire us, the other 2 I may have to work harder on getting back.

    Certainly towards the end of the season I pull the rains a little harder to get them to pay up. All 10 will get a price increase. the two that didnt pay up we will drop over the winter.
  4. Dr.NewEarth

    Dr.NewEarth LawnSite Bronze Member
    Messages: 1,476

    My company stopped working for residential back at the turn of the century. Too many games and headaches to get paid from some of them...too little to warrant a builders lien or small claims court.

    2010 we started accepting residential again, but I am more selective. Also, we require a visa or mastercard number for security and post dated cheques or cash when they sign a contract. Late payment, BOOM! Chase payment tech puts the money directly into my account. If they give us a problem, I drop them. Life is too short to continually be playing games with goofs!

    By the way,our clients have a written program. We cut rain or shine and still attend the property if there is a drought. Most contracts for residential with my company are for nine months, equal payment and they pay at the beginning of the month before we perform the work or services.

    Now if I could just do the same with HOA and commercial accounts.
  5. Darryl G

    Darryl G Inactive
    Messages: 9,500

    Yeah, the nerve you have not wanting to work for free! Maybe it is bad business practice to shut off a customer, but it's even worse business practice to continue to work for someone who does not pay their bills! I try not to stop service because then they find someone else, and once they have it's easier for them to just blow you off entirely because they don't need you anymore. But if they were 2 months behind I probably would have done the same thing.
    Last edited: Oct 12, 2011

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