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Slow payers

Discussion in 'Business Operations' started by FLC2000, Jun 3, 2014.

  1. Dr. Cornwallis

    Dr. Cornwallis LawnSite Senior Member
    Messages: 854

    Same here. My elderly and lower income clients are better at paying on time than my upper middle income clients.
    Posted via Mobile Device
  2. FLC2000

    FLC2000 LawnSite Bronze Member
    Messages: 1,969

    I tend to agree with that. After doing this for 14 years I just get tired of people calling for work and expecting it done when they say jump and then taking their sweet time to pay me. Ive offered easy solutions to them like online pay but it just seems its part of their nature.

    I just don't have time to wait around at 75-100 accounts weekly for them to pay me. I want to get in and get out ASAP and standing around while they pay me isn't conducive to getting work done quick.
  3. 360lawncare

    360lawncare LawnSite Senior Member
    Messages: 962

    We bill on the 15th via email and they have 15 days to pay. Works pretty good only have a couple that take the full 15 days to pay.
    Posted via Mobile Device
  4. 32vld

    32vld LawnSite Gold Member
    Messages: 3,983

    I tell new customers that payment is due ten days from the date of the invoice because I need to avoid cash flow problems. Thus I give them a reason that has nothing to do with that I do not trust them so they do not feel insulted.

    I have one commercial customer from my first year in business that always pays up to 5 days into the next month. Small lawn for $40 a week. They do not do much up sell work other then a fall and spring clean up. I made good money this year doing snow for them.

    They never have been later then into the first week of the next month. So I let it slide. This is the way they have always been. Though their slowness got me thinking of how to avoid any more people like them. This is how I came about putting the payment due in ten days line on my invoice.
  5. TPendagast

    TPendagast LawnSite Fanatic
    Messages: 9,997

    Well do like they used to do at gas stations.

    It's 3.00 gal cash and 3.15 credit.

    Except for you, a $50 lawn is $55 by check and $50 with pre approved CC.

    see how they want to pay then?
  6. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,193

    My experience has been that A/R needs to be a process just like all other office duties. When to send statements? when to make the first and second call for payment? When to put a hold on a account? when to file a lien? who is responsible for owning it?

    Our controller is responsible for A/R - we have net 30 terms. Monthly, she gives me a DSO (day sales outstanding ) report.

    DSO = AR/average sales per day.

    Our goal is to have DSO at 26 days or less. Basically, we are turning over A/R every 26 days. We know from past history that if we get above 32 - we are probably dipping into our line of credit due to cash flow issues.
  7. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Messages: 1,755

    How dare you use mathematics in your business!
  8. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,193

  9. oqueoque

    oqueoque LawnSite Gold Member
    Male, from Jersey
    Messages: 3,186

    Raise the price on the slow payers 10%, then offer them a 10% discount if they pay in full within 15 days. If they complain drop them. This might work better at the beginning of the season.
  10. Another idea is a slight price inflation for new customers, followed by a small discount on the bill. You could do this for new customers if you think getting paid faster is worth a couple bucks.

    Say their invoice is for 150.
    Balance due: $150 by June 15th
    $147 if paid before June 10th.

    Worded much better on an invoice, this has helped some of our customers see the checks roll in a bit quicker.

    It is essentially the opposite of a late fee.

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