Announcement

Collapse
No announcement yet.

Collections and Contracts

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • Collections and Contracts

    Hi all,

    I am trying to figure out what the industry norm is as far as billing and collections are concerned.

    I finished my first year full time and was profitable and satisfied with my success. However I did have two lawn clients that didn't pay. Luckily I stopped service before it got out of hand. I take full responsibility for the losses as I was so eager to get customers I would take on just about anyone as a client. In the end 99% of my clients have been great. It is just that I need to institute a company policy next season for payment terms and want to get an idea of what everyone else has found successful. (and yes I will be alot more selective with the clients I work with next season)

    What I am trying to figure out is:

    a) If you have a month to month customer who is not on a contract do you still have them sign a work order or a copy of the estimate before you provide any services?

    b) Do you offer an incentive for the client to pay early (Pay by the 15th and save x%) or do you penalize them with a late charge if they pay after a certain date?

    c) Do you stipulate a due date, require payment due on receipt, or allow for 30 days payment?

    d) If you have a slow pay or no pay client how do you handle it? Phone call, letter, collections agency, tell Santa Claus


    Thanks in advance,
    Jay

  • #2
    Jay,

    It sounds like you are doing a great job with your billing right now.

    How did you handle things when those 2 customers stopped paying? Did you or are you looking to do anything to recover that money or did you determine it was not worth it.
    - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
    Download your Free trial of Gopher Lawn Care Software.

    Comment


    • #3
      Jay,

      It sounds like you are doing a great job with your billing right now.

      How did you handle things when those 2 customers stopped paying? Did you or are you looking to do anything to recover that money or did you determine it was not worth it.
      Thanks Steve, yea most local guys I talk to say I am lucky to only have two no pays. Funny thing is one paid all summer, but is late on the last invoice. I know its not much money (only about $200) total but it is the principal.

      I have made phone calls and sent a letter. I dont want to threaten collections or small claims court, but that is always an option. I suppose my next tactic will be to offer a discount on the amount owed if they pay by the end of the month. I may end up with nothing, but you never know.

      I think next year I will choose my clients more carefully along with trying to get them on an automatic payment plan of some type. I am looking into what is possible on that front now. I may also offer a small 2-3% discount if they pay before the 15th of the month.

      I am open to any advice.

      Jay

      Comment


      • #4
        Send a false letter looking very official like it was from an attourney stating that if the amount due in invoice #_ is not paid by __/__/__ then further steps will be made to retrieve collections in a small claims court.

        and include a copy of the invoice

        usually people will pay because they dont want to deal with the troubles of court so they finally just hand it over.. that is something you can try.

        I dont offer incentives for paying customers..thats what they are supposed to do..however if they pay for 2 months or over in advance i give them a 10% discount but im not sure if ill be keeping that this year..maybe lowering it to 5% or something of that nature..

        I dont service any customers without there name on paper. Even temporary Customer have a temporary agreement that states when services start and stop and has most rules of the regular agreement. Its just sort of a backup plan to have incase they think they wont have to pay.

        I assume it takes 5 days to ship my invoices (a bit generous) so i state the due date on my invoice. i ask it to be payed 15 days after the invoice is recieved..gives them 10 days to pay and 5 days to send. If it dosnt arrive in 5 days of due date its a 5% charge of the invoice

        for every week over that its a 10% charge and once it hits 3 weeks furthur action will be taken

        I only really had one customer that is slow on payments and i just emailed him and called him until he finally payed up but it was never over a weeks wait.
        Just Kut Lawn and Landscape
        "Where Service is Always in Season"
        Reach for the stars so if you fall you land on a cloud.

        Comment


        • #5
          Send a false letter looking very official like it was from an attourney stating that if the amount due in invoice #_ is not paid by __/__/__ then further steps will be made to retrieve collections in a small claims court.

          and include a copy of the invoice

          usually people will pay because they dont want to deal with the troubles of court so they finally just hand it over.. that is something you can try.

          I dont offer incentives for paying customers..thats what they are supposed to do..however if they pay for 2 months or over in advance i give them a 10% discount but im not sure if ill be keeping that this year..maybe lowering it to 5% or something of that nature..

          I dont service any customers without there name on paper. Even temporary Customer have a temporary agreement that states when services start and stop and has most rules of the regular agreement. Its just sort of a backup plan to have incase they think they wont have to pay.

          I assume it takes 5 days to ship my invoices (a bit generous) so i state the due date on my invoice. i ask it to be payed 15 days after the invoice is recieved..gives them 10 days to pay and 5 days to send. If it dosnt arrive in 5 days of due date its a 5% charge of the invoice

          for every week over that its a 10% charge and once it hits 3 weeks furthur action will be taken

          I only really had one customer that is slow on payments and i just emailed him and called him until he finally payed up but it was never over a weeks wait.
          Thanks for the great advice. I like the idea about not discounting for the early payment, but instead charging a late fee. I also agree about getting their name on paper. I was way to eager to get clients and dropped the ball alot on that one. I really want to get them on a autopay plan where I just charge their credit cards. I think that will really help with my receivables and help cut down on the late or no pays. I need to check with the state, as every state is different when is comes to the amount you can charge for late fees.

          Thanks again
          Jay

          Comment


          • #6
            I'm not looking forward to this process. Would you be able to send me a copy of what you present to the customer that gets their name on paper and shows them what they are getting? I would appreciate that and hopefully this could keep me from making a rookie mistake of not holding customer accountable.

            Who do you use to run the payments? I did research on this and found paypal to be the best as I can send monthly invoices out through email and it automatically keeps up with who has paid and who hasn't. It will also send out reminders for those late payers. They charge 2.99% and a $.30 fee for each transaction, but they had a lot of benefits.

            I do not want to waste my time with mailing stuff.

            Matt

            Comment


            • #7
              Thanks for the great advice. I like the idea about not discounting for the early payment, but instead charging a late fee. I also agree about getting their name on paper. I was way to eager to get clients and dropped the ball alot on that one. I really want to get them on a autopay plan where I just charge their credit cards. I think that will really help with my receivables and help cut down on the late or no pays. I need to check with the state, as every state is different when is comes to the amount you can charge for late fees.

              Thanks again
              Jay
              I did the same as you
              i got eager and excited about getting calls and wanted to get my business up as fast as i cold without paying any attention to who i was oging to be servicing.
              That is why my company fell out at the end of the season and i gave up. But after that. I realized that i love doing this and im gonna do it right this time.. i look at the past as a trial and error period. I think i have alot more information and understanding of what WILL hapend and when may happen. And ill know how to handle it already.
              Just Kut Lawn and Landscape
              "Where Service is Always in Season"
              Reach for the stars so if you fall you land on a cloud.

              Comment


              • #8
                I'm not looking forward to this process. Would you be able to send me a copy of what you present to the customer that gets their name on paper and shows them what they are getting? I would appreciate that and hopefully this could keep me from making a rookie mistake of not holding customer accountable.

                Who do you use to run the payments? I did research on this and found paypal to be the best as I can send monthly invoices out through email and it automatically keeps up with who has paid and who hasn't. It will also send out reminders for those late payers. They charge 2.99% and a $.30 fee for each transaction, but they had a lot of benefits.

                I do not want to waste my time with mailing stuff.

                Matt
                Probably the easiest method is when you go to the house to estimate what ever it is that you are there for, have them sign an estimate stating the services they want you to with the pricing with a line stating I/We accept this agreement and date it. I have mine made up to be in triplicate (carbon type so you can write on top copy and it goes on all copies) so that I can give the customer two copies of the estimate, the front page then the second page. I keep the last page as my copy of what I wrote down for the estimate. That way if they need time to decide they can return the top copy with the signature and still have a copy for themselves. Always have the top copy as that holds the actual signature of the customer.
                Last edited by jymie; 12-18-2010, 02:11 PM.
                http://www.lunchesruslawncare.com

                Comment


                • #9
                  Jay,

                  Is this something you can just go to their door and knock on it and talk to them? Before it's notched up to the next level?

                  They might be able to pay you right then and there and you can move forwards.

                  If you keep it friendly, you might be able to keep them as a customer into the new year.
                  - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
                  Download your Free trial of Gopher Lawn Care Software.

                  Comment


                  • #10
                    Jay,

                    Is this something you can just go to their door and knock on it and talk to them? Before it's notched up to the next level?

                    They might be able to pay you right then and there and you can move forwards.

                    If you keep it friendly, you might be able to keep them as a customer into the new year.
                    Good points. I have a pretty good feeling that I will be paid by the one client. Its probably just a combo of being busy and money being tight around the holiday. I will exhaust every possible option before I amp it up with a strongly worded letter or more. The one account is a good one located close to others in the area and it would be a shame to loose it.

                    Jay

                    Comment


                    • #11
                      Keep us posted on what you decide to do and what the outcome is.
                      - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
                      Download your Free trial of Gopher Lawn Care Software.

                      Comment


                      • #12
                        I think the occaisionaly non-payer is just part of doing business. We had two or three this year. Most were for $50 - $200. We get a signed agreement with all of the work we do. We send a bill at the end of the month, no advance pays or anything like that. The only exception is clean ups, we want 50% up front if they are not a recurring customers.

                        I think it shows a level of professionalism and trust when you sign someone up and just let me them know they will get the bill. We don't accept payment up front or give discounts. We do charge late fees, but only when someone really gets behind. Before we do we usually place a call and let them know if they go ahead and make the payment this week, we'll waive the fees.

                        Comment


                        • #13
                          I think the occaisionaly non-payer is just part of doing business. We had two or three this year. Most were for $50 - $200.
                          How did you handle collections on such customers?
                          - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
                          Download your Free trial of Gopher Lawn Care Software.

                          Comment


                          • #14
                            How did you handle collections on such customers?
                            Couple of emails and letters. Phone calls as well.

                            A couple the phones were disconnected and the other said they just couldn't pay. Lost their job, losing their house. I didn't want to go to the house, afraid i might get pissed and get arrested. I let my wife handle the collections. she can be the "bad cop". That way I can be the friendly face and no awkwardness between the client and I

                            Comment


                            • #15
                              If you are thinking they may lose the house, should a lien be put on it for the amount owed? So you have to get paid before it is sold and since it may be sold soon, you might get your money sooner rather than later?
                              - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
                              Download your Free trial of Gopher Lawn Care Software.

                              Comment

                              Bottom Ad Widget

                              Collapse
                              Working...
                              X