Collections & A/R Issues we ALL have....

[musician/lawnman]

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.

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[Steve]

Lawn care business tips

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?

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[larson lawn care]

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]

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]

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]

Originally Posted by Steve

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]

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]

Originally Posted by Steve

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]

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]

Originally Posted by Steve

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.