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View Full Version : Collections & A/R Issues we ALL have....


musician/lawnman
10-26-2010, 10:01 PM
Riddle me this fellas..... Why the hell is it that if one of us shoplifted a $1 candy bar we'd be put in cuffs, yet clients can default on account balances in the hundreds after signing a binding contract, duck your calls, not answer the door when you know that their home & that's a civil matter? You can lein the house but what good is that likely to do for you? If you were to take a $300 deposit on landscape work & never show up do you think that would be treated as a civil matter? Bet not. You'd end up arrested for fraud & operating a business in bad faith. So why is there no legislature to protect us out there yet? In most cases it's not like we can go repo our products for lack of payment. We can't get our service hours, labor, fuel, maintenence back so how the hell are we supposed to fight back & protect ourselves?

CHEESE2009
10-26-2010, 11:40 PM
I hear ya man.

I did a big tree/shrub planting job for a customer and chased him for my money for the entire season.

(it's illegal to remove the plants from his yard once they are planted - interesting right? Especially when he didn't pay)

It's not like they'd hire me if I wanted to charge up front, even then sometimes you have to charge as you go - which is why we depend on our customers.

We need a way for us to NOT depend on our customers, too much risk is involved - too much B.S!!!!

Forget what anyone tells you, were going to have to ask for a larger deposit from customers before any work is done.

It's a big trust issue...

You start the job and ask for payment after = customer can rip you off

You ask for payment before you start the job = customer thinks you'll rip him off



I say F'em... Everything should be paid for in advance.



If you charge $100/m for lawn maintenance but didn't show up for whatever two-sided reason, the customer will say, "I want it taken off my bill"

- too damn bad! Because from now on my prices don't get divided up into individual visits, it's a one time fee per month.


Just like any other service.. If you have satellite and pay to have tons of channels.. Just because you didn't watch every episode doesn't entitle you to a discount... OTHER companies can do it, now we should be able to.


Set prices, minimum prices, nothing is divided anymore to accommodated the cheap a55 customers.

Hedgemaster
10-26-2010, 11:45 PM
Psssttt...

U want I should send over my dawg to pee on the deadbeat's lawn?




:D

CHEESE2009
10-26-2010, 11:56 PM
Psssttt...

U want I should send over my dawg to pee on the deadbeat's lawn?




:D



I already pee on their lawns... lol :o:p

Steve
10-27-2010, 06:48 PM
I am sorry about all that happening and you are right. It seems that the laws are tilted away from the contractor.

Have you considered taking any of the problem customers to small claims court yet? Or what have you found to be the best way to deal with non paying customers?

stevef1201
10-28-2010, 09:07 PM
When I set up my business I had good advice from the lawyer. Litgation is not cheap but adding the line about paying reasonable atornies fees and cost for collection helped. He has had to take 3 people to court this year. Actual damages were less than 500 dollars but the judge ordered alost 1800 in payments to cover attorny fees and costs. They were pissed about haveing to pay so much more. He also request and got a siezure order for one of them, that means that (I) we could sieze any property personal or real and sell it to cover the ordered payment. Even had one of them call me an a__hole over this.

jymie
10-29-2010, 12:05 AM
They didn't pay YOU, made YOU chase them around to get paid, still didn't pay YOU, but YOUR the a55hole. That is just total audacity to me. I really like putting this in late bill notices:

"If we have to send this to collection, you will be responsible to pay in addition to the amount you owe, all additional collection costs we incur to collect this debt, including lawyer fees. A judgment or lean against your personal property will also occur. So please take this moment to settle this debt to avoid all this unnecessary legal action."

Anyone who I have to stop, I make it a point to stop when ever I see another contractor servicing them to let them know they screwed me so be careful.

Steve
10-29-2010, 06:28 PM
When I set up my business I had good advice from the lawyer. Litgation is not cheap but adding the line about paying reasonable atornies fees and cost for collection helped. He has had to take 3 people to court this year. Actual damages were less than 500 dollars but the judge ordered alost 1800 in payments to cover attorny fees and costs. They were pissed about haveing to pay so much more. He also request and got a siezure order for one of them, that means that (I) we could sieze any property personal or real and sell it to cover the ordered payment. Even had one of them call me an a__hole over this.

In the past we talked about collections on here, but I think most of the time it was small claims and without an attorney.

What made you choose to use an attorney and was this still small claims court?

Looking back at it now, do you think you could have gotten the same results yourself or were the results due to the fact you had an attorney?

I am sure others wonder if it is worth it or not.

stevef1201
10-30-2010, 07:47 PM
One guy only owed one month. his wife told me when I showed up to mow that they didn't me anymore as they had bought a mower. I said ok. (this stuff happens) and she said that they would send me a check. I sent (over 3 months) 6 letters and knocked on thier door about 20 time. So I turned it over to the lawyer. Judgment was for me of course, original bill was only 120 dollars, lawyer fees 250, cost 200. my loss of pay for being in court that day 300. cost of serving with court order for seizure 150. Then the actual seizure and sale of personal property was 150. We sold everthing that we could get our hands on to cover all of the above cost. She was really pissed when she had to turn over her engagment and weeding rings. Cry cry cry, buckets of tears. told her if she payed her damn bills she would not have this problem. (found out later that they forclosed on for not makeing payments on house, had thier car repossed.) Very glad I was the first to go after them

Steve
10-30-2010, 08:37 PM
She was really pissed when she had to turn over her engagment and weeding rings.

This is really fascinating! How did you go about seizing such personal property?

I would think that would be very difficult?

musician/lawnman
10-31-2010, 01:07 PM
Yeah no kidding, I want to know too.... Steve, how did they/you go about seizing the property? Nice to here a positive result & that one of us actually won one.
I spoke with a lawyer (happened to pick up a new client 2 days ago who convieniently an attorney) about this subject, he said his guess why if they don't pay us ends up as a civil matter not a criminal matter is that the court stem would be simply over run by companies all over the country filing suits against every deadbeat out there. So the courts simply rule that a civil matter to keep from having to deal with most of these cases. Lousy huh?
This crap gets me enraged to no end. Makes one want to retaliate somehow & cost them as much money as they stiffed you for. I won't do this because it's wrong, illegal, & would be devastating to your companies image if you got caught.... but I am not saying I haven't thought about it.
people are great & at the same time some of them are just piles.

Steve
10-31-2010, 06:54 PM
happened to pick up a new client 2 days ago who convieniently an attorney

Do you think he could help you resolve any problems maybe even in trade? I bet you could learn a lot from him. Maybe there are things he could help you with when it comes to contracts that improve the business process?

larson lawn care
11-02-2010, 12:09 PM
Although it is not fair to the people that pay on time or even ahead of time, I think it is time to add a small $1.50 fee or so to make up for the one or two people that screw me every year for unpaid work. It's usually $500 a year. One year was $21,000. That was when I did work for an investment company, it's a long story but I never got that money and there was nothing I could do. I was on a long list and I was at the bottom of people/companies owed millions. The thing about small claims is that once awarded, you still have to collect. I had a guy run into my trailer on the highway (the first day of work the next year after I got screwed out of $21k, so I was really hurting) I got his insurance info but turned out he didn't even have the insurance... it was canceled a week before. I was awarded $10k in court but couldn't collect because the private investigator from my lawyers firm didn't get enough info from the guy. I was told to follow him and find out where he works and banks, but he lived too far away for me to mess with. I have brought small claims of $250, $240, $975 to court but of course all I did was pay first to have them served by certified mail then after that didn't work, a sheriff which of course costs more and was unsuccessful. It has always been a waste of my time and loss of more money to bring them to court... it's BS!

Steve
11-02-2010, 08:10 PM
One year was $21,000. That was when I did work for an investment company, it's a long story but I never got that money and there was nothing I could do. I was on a long list and I was at the bottom of people/companies owed millions.

OH WOW! I am sorry about that happening! Can you tell us a little about it. What kind of job it was and how they initially found you? Looking back now, what lessons do you feel you learned from the experience so you never repeated that situation again? I bet you have a lot of advise from this as to what others need to look out for before they start a job.

Bob E
11-03-2010, 10:02 AM
Luckily, I haven't had many late pays this year, but there are always those potentials on your receivable list. One thing I will try when someone refuses to pay is to go to the local police department and file a criminal complaint of 'Theft of Services', similar to what cartage companies do when someone is caught putting trash in a dumpster they didn't rent. This way, the police show up at the house and the (former) client has to explain themselves and hopefully pays up. If they do get arrested, I would enjoy getting a copy of the arrest record and mailing it to all of their adjacent neighbors for a little dose of humiliation.

larson lawn care
11-03-2010, 09:30 PM
OH WOW! I am sorry about that happening! Can you tell us a little about it. What kind of job it was and how they initially found you? Looking back now, what lessons do you feel you learned from the experience so you never repeated that situation again? I bet you have a lot of advise from this as to what others need to look out for before they start a job.

I started my lawn maintenance business in 2003 with about 20 clients. The next year I began mowing a lawn for a guy that worked for an investment company. Eventually he asked me if I could mow the lawn at their office. It was huge and I had to buy a new mower because at the time I only had push mowers. I would talk with him as I picked up my money and he would mention that company he worked for owned lots of properties. Eventually I asked if I could mow the lawns at these properties. It was amazing, I just started out in business and all I had to do was ask for the business and a week later, I had over 100 properties. The company continuously bought new properties. At one point in 2004 the company wrote me a bad check. They told me to wait a few weeks and they would get me the money... I was paid in full. The next year they had around 250 properties that I maintained. I received 3 bad checks in August and same as the year before, they said to wait a bit and I will get paid. I continued to mow their lawns until the season was over in November. I called and called, I had no returned phone call. I went to their offices (they had a few by this time) and papers were scattered throughout the rooms. I found out they were indicted by the federal government for many fraudulent things. The guy that I initially got the job from was persuaded by his lawyer to not take any calls even from me. The grand total was around $21,000 owed to me for 3 months of hard labor. Before all of this happened I bought a house, new truck and had other credit lines out at the time. Not getting this payment put me in debt for 4 years. I am finally out of the debt, however, I can't purchase much with my credit. I couldn't even buy a tv on credit a week ago, I had to purchase it out right. Although I have splurged a little the past few weeks, I have learned to be very conscious of my spending and I always have a certain amount of money saved at all times. I will never get into debt again, it was the worst thing that has ever happened to me. I am also very hesitant to expand until I have more than enough money saved up and have all of the equipment needed. I work alone and have everything I need and am quite content at the moment. I also try to not let a customer get more than a month behind on payments, but I have my mom (my secretary) in charge of customer payments etc. and unfortunately one or two slip by every year for about 2 months. Sorry for the rambling it is a heated situation for me.

Steve
11-03-2010, 11:33 PM
I am glad you shared it because I think it shines a spotlight on this potential problem others could face.

What is your view now on the lesson learned from that?

Is it important to not have one customer make up too much of the % of your income? Or is that not so much an issue as other issues should be?

larson lawn care
11-04-2010, 12:43 PM
I am glad you shared it because I think it shines a spotlight on this potential problem others could face.

What is your view now on the lesson learned from that?

Is it important to not have one customer make up too much of the % of your income? Or is that not so much an issue as other issues should be?

Luckily I had about 35 customers of my own on top of the investment company so I had something to fall back on the next year but drought hit that year so income was down drastically and I didn't have money for advertising and I was out money from the accident on the highway which I never collected from. Also, I had some equipment stolen; about $1500 worth which I had to replace. The following year I borrowed money from a family member and had door hangers made (which were a horrible idea and produced no income) I played on an indoor soccer team and we named the team Larson Lawn Care and I ended up getting a customer out of it and he told me he saw my door hanger at his house. So maybe it did a bit of branding if anything. But I also put an ad in the yellow pages which took off more than I imagined. I ended up with 90+ customers that year that I handled on my own. The next year I weeded out the ones I didn't want and ended up with about 70-80 customers then down to 65-70 to date. I will never rely on a large chunk of income from one person/company, I will always have a back up plan. It is not fair that the law is not really on our side when it comes to collecting. Like someone mentioned earlier, someone steals something from the store, and they get arrested, but if someone steals from a contractor... we are on our own to collect. The owner of the investment company is in jail for mail fraud I believe and I was on the list of about 20 others to persecute him... but again, it will be up to me to collect and there is no way he will pay me when he owes millions. Sorry to hijack the thread. You can read about the investment company that screwed me out of money if you google DHP Investments and/or Doug Hartman. There is a lot of stuff about it and it is interesting to read.

Steve
11-04-2010, 07:00 PM
I will never rely on a large chunk of income from one person/company, I will always have a back up plan.

Something else we rarely talk about on here is having an emergency fund stashed away. Do you think it is important to have one? How many months of income should be in such a fund?

Is this what you mean by a back up plan or do you mean something else?

larson lawn care
11-05-2010, 11:08 AM
Something else we rarely talk about on here is having an emergency fund stashed away. Do you think it is important to have one? How many months of income should be in such a fund?

Is this what you mean by a back up plan or do you mean something else?

You should always have at least 6 months to a year of "emergency fund" stashed away.

By back up plan I meant I will be prepared if my income is or will be effected. But I have a back up plan for just about everything.

I will be ready to get new customers and add new services if something were to happen like a drought, I have other services ready to be offered like garden maintenance, shrub trimming, and something that I haven't done yet... building vegetable gardens. If I got hurt, I'm ready to have someone take over/help with the labor; I have a system of operations plan developed both labor and secretarial. If my truck breaks down, my friend is overseas and his truck is ready if I need it. If my equipment breaks down, I have equipment ready to back-up my main equip. If software fails and data is lost, I have hard copies of everything. I have a back up plan for just about everything now.

That incident cost me 4 years of my life. I struggled to eat and keep utilities on during the winter months. I had to eat a lot of ramen noodles and tostinos pizza's. There were times that I had to take cold showers in the winter time because my gas was cut off... not fun. I eventually had 7 other people living with me to help pay the bills. It sure feels good to be out of that mess but I am much much stronger because of it.

Steve
11-05-2010, 07:14 PM
You have been through a very difficult situation that I feel most people never even think about.

As you have your backup plans in place, what say top 5 or top 10 issues do you feel most business owners simply don't plan for?

Which problems do you feel they could quickly avert if only they had a plan in place for themselves?

And why do you feel most business owners don't plan for worst case scenarios?

larson lawn care
11-07-2010, 09:09 PM
You have been through a very difficult situation that I feel most people never even think about.

As you have your backup plans in place, what say top 5 or top 10 issues do you feel most business owners simply don't plan for?

Which problems do you feel they could quickly avert if only they had a plan in place for themselves?

And why do you feel most business owners don't plan for worst case scenarios?

This is a shot in the dark, but issues small LCO's may not plan for are:

-Drought: It is good to have money stored away for situations where your expected income may be affected.

-Unexpected expenses: Again, you need money saved to compensate for an unexpected vehicle break down, equip repairs etc. For the past few years, I have had customers pre-pay for the season. This helps very much with unexpected expenses and other financial situations.

-Gas prices: I'm sure many have become much better at this but charging the customer accordingly in case gas prices go back up to an insane price. Or simply telling the customer that in the event of gas prices going up, likely you will have to add a fuel surcharge to their bill.

-THEFT: I've had stuff stolen and I'm sure you have too. I've had about $2,500 dollars worth of equipment and tools stolen from me. Now I have an alarm on my truck, locks for everything which stay on at all times when not in use, and an alarm on my garage which houses all of my hard earned equipment.

-Customer loss: You must plan for customer loss, that way you do your best to keep the customers happy. I try my best to think like the customer and cover all angles. Of course you can't please everyone but you can try if you want to. I make sure to explain everything in detail to my customers through letter form. I let them know my plans for the future as an LCO, and I let them know that I am going to keep them satisfied or do what ever I can to do so. I want them to grow with me as a company and with my customer service, I'm sure they feel like they are.

-Upselling: Plan to upsell, especially when expected work is effected due to drought, too much rain etc.

-Plan to answer questions: You have to be knowledgeable in the field you work in. If you don't know the answer to a customers question, you better find it out. I've learned a lot over the past 7 years of lawn maintenance because I would get asked questions by customers, I didn't know the answer so I researched it. Over the past two or so years, I have been able to answer almost every question that I was asked in detail.

-Too much rain: Some customers don't mind if you leave some mud tracks throughout the lawn, but some do and they will be mad if you mow after a heavy rain. Plan to ask your customers and each new one's what their take is on the situation. I've heard of too many people firing their lawn company because of this.

Issues with the customers are something you should see coming especially if you have a plan in place for each situation. I try to explain right off the bat, problem situations that could occur. That way if something does happen, they know that you are aware of it. Otherwise, if you didn't tell them in the first place, they may not even tell you and just fire you. I will mention things like: since my mower is so wide and the terrain is uneven, there may be areas where the mower digs into the ground. Eventually, I will learn every area and be able to prevent it. I will ask them their take on too much rain, should I mow or wait a week? If they need me to wait, I'll tell them I will try to get by sooner if possible. I'll tell them I can't prevent all of the grass from getting into the mulched garden areas, but I will try my best to prevent it and I will do my best to get it out of there. I'm sure I can go on with this but the point is, I take problems that other customers have had in the past (which I fixed for them) and I tell every customer I have and every new customer I get these situations so if/when the problem arises, they don't have to call me and complain and they know I will fix it. They will know you are on top of your game and you are serious about what you do.

larson lawn care
11-07-2010, 09:20 PM
I've gotten pretty good at reading people and knowing if they are responsible, organized, and honest. I have on numerous occasions declined work due to fear of not getting paid. Obviously I don't want to have those customers and I am glad I am able to know or have good assumptions, and feel good about not taking on the work. This is in addition to the things companies may not plan for. Plan to have and notice these personalities in customers and potential customers and don't take on the work. I'm not saying don't take on every customer that portrays these characteristics but be well aware that if some one is unorganized and irresponsible, for example, they have stuff piled up in the backyard, their screen door is hanging on by one hinge, a tree is ready to fall down on the side of the house, just walk away.

Steve
11-08-2010, 06:27 PM
I have on numerous occasions declined work due to fear of not getting paid.

When you are looking at a property and it is a wreck and the renter/home owner doesn't look like they will be able to pay and you are worried about it, how do you best go about getting yourself out of the situation?

Also, do you ever find that yourself asking the potential customer what happened to their previous lawn care provider? Can that at all tell you if they had a problem paying them or not?

If you don't know the answer to a customers question, you better find it out.

When you are out in the field and you get stumped by a question, how do you suggest telling the customers you just don't know and you will have to get back to them? Is there a way to do it where it is ok?

larson lawn care
11-09-2010, 12:49 AM
When you are looking at a property and it is a wreck and the renter/home owner doesn't look like they will be able to pay and you are worried about it, how do you best go about getting yourself out of the situation?

Also, do you ever find that yourself asking the potential customer what happened to their previous lawn care provider? Can that at all tell you if they had a problem paying them or not?



When you are out in the field and you get stumped by a question, how do you suggest telling the customers you just don't know and you will have to get back to them? Is there a way to do it where it is ok?

To get out of a potential bad deal, I will often either tell them that the lawn is in too bad of shape for me to handle (which is usually the case if the person is unorganized) If they do not have a large enough gate for me to get my 61" mower through, I will tell them that my mower won't fit; although I do have a few smaller mowers, time is an issue and if I can't use my most efficient machine, accepting the job could really be a pain especially if you don't end up getting paid. It's not just these particular customers that I won't use a smaller for, if I am in an area where I have a lot of work, I may decline as well. If the job is somewhat out of my route, I will tell them that I it is a bit off route for me and I don't want to end up unreliable for them. I've bid high before to hopefully deter the potentially bad customer. This way, I will make more off of them if they do accept and it could make up for the customer not paying in the future... which in my experience has never failed. Before I didn't think about the customers characteristics but a trend started and after people wouldn't pay each year, I began to see matching characteristics of these people that did not pay their bills.

I don't ask who was taking care of their lawn previously, unless I can tell if a professional mower was on the lawn. Then I will ask usually to make sure I don't make the same mistakes as them. However there are things you have to look out for. Of course they won't tell you they didn't pay them. These people will sometimes talk very bad about them, usually cursing them out to me. I'll pry at the situation and determine if they will be a good customer for me. If someone tells me the last lawn company quit on them... this is a sign as well. I will make sure to ask lots of questions. I wish I could do a credit check (although I hate the credit system) and find out how much they have in their bank account, and even find out all of their expenses and monthly income... wouldn't that be wonderful!

When a customer asks me a question I do not know the answer to 100%, I will tell them everything I do know about the question asked, I will tell them that I am not an expert in the field, my expertise is with mowing mainly, and I will tell them that I can find the answer out for them. Or I will tell them who they can ask or where they can find the information from.

Steve
11-09-2010, 06:30 PM
Then I will ask usually to make sure I don't make the same mistakes as them.

This is very interesting too. How do you go about first off, knowing that there may have been previous mistakes another company made and then second off, finding what they are?

Do you simply say to the customer, what mistakes have other companies made on your property?

We don't talk about this often, but why do you feel it is important to know of the previous mistakes made by other lawn care companies?

larson lawn care
11-10-2010, 12:26 AM
This is very interesting too. How do you go about first off, knowing that there may have been previous mistakes another company made and then second off, finding what they are?

Do you simply say to the customer, what mistakes have other companies made on your property?

We don't talk about this often, but why do you feel it is important to know of the previous mistakes made by other lawn care companies?

If they are calling me to give them an estimate, something must have been wrong. So I will ask... "who was taking care of your lawn before?" and usually they will tell me what they didn't like about them. If not, I will ask... "was there something you didn't like about their services.

I have to know the previous companies mistakes so I don't make the same ones, or any actually.

Steve
11-11-2010, 12:56 AM
That is a very good point. And from the answers they give you, I bet they can really help you figure out if this customer is one that pays or not.