[familylawncare]

New for this year, we have instituted a "pay it forward" program for lawn services. Primarily this was in response to several residential accounts not paying last year, and resultant hassle in trying to collect.In essence we are billing for next months service on the 15th of preceding month. Our service aggreement spells out that in the event more or less services are performed during the billed month, we will adjust next billing. Another advantage, consolidates billing into monthly, provides cash flow.Several long time customers are screaming and do not want to sign agreement. As bad as I hate to lose them, feel we must keep all on same billing cycle. Anyone else tried this?

 

[anotherturfgeek]

I have some accounts both ways. 1 thing that may help is offer a 2% discount for paying early. My customers love it! I have 2-3 that pay with-in minutes after it hits there e-mail inbox like clock work.

 

[SeedPro]

What happens if you go out of business. Are you going to "pay it back"

 

[familylawncare]

How do you figure? Sounds like a well thought out comment.

 

[SeedPro]

Was a simple question. You want paid in advance for your work. If you go out of business will you pay those people back their money.

 

[Champion-Lawn]

We billed on the first of the month prior to any services being completed. It was tough for residential clients at first, however this was all we offered and after the 1st month of service they didnt seem to care. Some people thought this was crazy because "whos going to pay you for service, before you do anything for them?" well they pay. See people hold your service MUCH MORE VALUABLE when they want it, and you have yet to deliver (around the time they are calling and asking for this or that) that is when your service is at peak value for a client. On the other hand your service is far less valuable in the minds of clients once they have received the service.

 

[familylawncare]

Thanks for your comment. Still have a few customers who want to argue the concept. Mostly elderly folks who paid each visit. I do have sympathy for them, and do'nt want to lose them, but to make system work every residential customer will have to be on same billing schedule. How do you handle new in-season customers? I had figured to pro-rate remainder of month they start then get on regular schedule.

 

[kootoomootoo]

What happens if you go out of business. Are you going to "pay it back"

no chance....Landscapers never go out of business.

 

[Champion-Lawn]

We took a tool from our property management experience and would collect funds up from at contract signing, this is going to sound odd but follow me.

Say someone called on the 15th of the month, and wanted us to come maintain the property we would have them sign our agreement and collect the first months payment that day. We WOULD NOT PRORATE the first month, we would however prorate the second month, for a simple example say the monthly charge was $100 we would charge the $100 the first month, and prorate the second month based on the cuts the previous month, so for instance we cut 2x @ $25ea we would charge $50 the second month and the third month it would be back to the $100 on the first.

Hope that makes since, problem is its tough for customers to understand at first.

If you are doing a flat rate price for each month because you are spreading it evenly over 12 months we dont do any proration, its just the monthly amount collected on the first of each month prior to service being rendured.

We do the proration as above because like renters people try to get into something for as CHEAP as possible and we have been screwed so many times we had to do something to prevent that, and this is the best thing we could come up with.

 

[SeedPro]

no chance....Landscapers never go out of business.

And they never answer legitimate tough questions either.

It's the one weak point in the pre pay argument he doesn't want to answer.

I even have it in my frigging will that all pre paid customers Must be paid back money they paid for services they did not receive as a result of my early demise.

 

[360ci]

I'd never do that unless I was desperate to get good clients. I have GREAT clients now, even the ones that can't pay right away tell me up front. I only had two cases last year where two clients were behind in payments. One of which was my fault because I mailed the invoice to the wrong address the second time. The first one my brother delivered, but I had the wrong house number written on the envelope and I later assumed that that homeowner just threw it out instead of passing it next door.

I advertise honesty and expect nothing less in my clients. I have a great judge of character from hiring and firing hundreds of people over the last decade. I can tell what a person's all about before the end of their second sentence. If I get a bad vibe, I up the price enough to know that they won't phone me back. If I get a good vibe about them I'll make it work for me and make it worth both our while. I don't really believe in luck, as I've always been good with reading.

Let alone the fact that I couldn't honestly take money from people in which I haven't done any work for. To me, that's theft, and if you came to me with that proposal to pay you a month ahead of time for services you haven't performed, I would get someone else. Perhaps if you drew something up in writing with an outsourced lawyers signature on it stating that I'm guaranteed these services performed or my money back, but I wouldn't take anyone's word on it, not even from a relative.

 

[Champion-Lawn]

360ci,

You have a very valid point.

We do 30 day net on our invoices, so if we completed work for a month and mailed the bill out at the end of the month we would have a 60 day cash flow lag. Not anything that cant be overcome, however I think people start to feel comfortable with paying up front because we have a credentials package (basically our business lic., contrator lic, Applicator lic, BBB, and much more) this is basically for them to see that they are dealing with a reputable company, do reputable companys rip people off? Im sure there area, however less likely in the clients mind then someone without a logo on their truck. People pay for their rent for a month ahead of time, people put 30-50% for future landscape installs, you pay for fast food before they hand it to you, you pay for an attorney's retainer fee before he does work for you, etc...

Everyone does it different, just what we found that works, nice discussion thanks

 

[Champion-Lawn]

360ci,

You have a very valid point.

We do 30 day net on our invoices, so if we completed work for a month and mailed the bill out at the end of the month we would have a 60 day cash flow lag. Not anything that cant be overcome, however I think people start to feel comfortable with paying up front because we have a credentials package (basically our business lic., contrator lic, Applicator lic, BBB, and much more) this is basically for them to see that they are dealing with a reputable company, do reputable companys rip people off? Im sure there area, however less likely in the clients mind then someone without a logo on their truck. People pay for their rent for a month ahead of time, people put 30-50% for future landscape installs, you pay for fast food before they hand it to you, you pay for an attorney's retainer fee before he does work for you, etc...

Everyone does it different, just what we found that works, nice discussion thanks

 

[Az Gardener]

I have done pre bill since day one. Pre bill does not translate into pre pay more like on time pay as an avg. Like was mentioned before if you wait 30 days to bill, your best case scenario is 45 days after service you are getting paid. Not so tough to overcome if your volume is 8-10 k per month. but what happens when your volume increases to 50-60-K per month or more? Then it becomes a little more difficult. This thread illustrates what happens when you try to change your policy with existing clients.

I rarely make wholesale changes across the board. I would make it policy for new clients and also choose my worst 20-30% payers and implement the policy on them. After the dust settles 60 -90 days or so go to the next 20-30 % This way if you see a significant number of clients dumping you you have lost the worst payers and you have an opportunity to change course if needed.

This is a precarious time to be a business owner and I would be very cautious about making changes that could potentially cause me to loose clients.

Just for the record I think not pro rating the first month, but doing it in the second month is just goofy. Sounds like a government type system to me.

 

[360ci]

Don't forget to pay your taxes one month in advance before it's due.

 

[vinny69]

no chance....Landscapers never go out of business.

oh no people never end up in the hospital or in accidents etc