Collections at the end of the Season.

[Totally Green]

08' was my first year in business. We made it through the whole season with only one client failing to pay. Now that the end of the season is here, I have several (previously prompt paying) customers who have failed to pay their final bill. Is this something out of the ordinary or is it common around the holiday season?

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Totally Green Lawn Care, LLC
http://www.totallygreenlc.com

[FaccLndscpng]

Lawn care business tips

This happens to me all the time, last season I had a property manager owe me $1,500.00 and it took him until Feb to finally pay. And as of now I still have some past due accounts but it is just normal and I know that after a few mailings or a phone call it will finally trickle in. The holidays, the economy and peoples ignorance are most likely the causes. Just remember it and either don’t work for them next season or just accept the fact they are late payers and you definitely have to keep on them!

[Steve]

Hi FaccLndscpng,

What kinds of things should a lawn care business owner do to get those bills paid that are lagging from last season and how long should they wait before they take further steps?

[FaccLndscpng]

Well this is what I do, first you get a copy of your invoice with “Past Due” stamped on it, if nothing after a few weeks then you go to a letter and remember to include you “Past Due” invoice (that “Past Due” really scares people its very powerful so always remember to make that stamp BOLD). If this doesn’t work you go to a phone call or stop by the house. Be persistent, that’s the key people will get so sick of seeing your face of seeing invoices in the mail that they will pay to get it over with. People are either forgetful of ignorant, sometimes the original gets lost in the mail and they pay by the second notice sometimes they don’t have the money and are embarrassed but eventually do get you the money. Just don’t forget it, and next season if you still choose to work with them raise your rates for the fact that they are a pain and don’t honor due dates. I have some people that pay their bills so fast that I didn’t even think they got the bill yet, these are the people that you take care of.
Now as for the Property manager that owed me $1, 500.00, I was just persistent with him and knew that I was getting on his nerves, I also knew that he was always in other states with his other properties and that he needed me for next season (he was too lazy to find someone else and have to show them around …) so I knew eventually would pay me, but if another month would have went by I would have been seen waiting outside of his house with a baseball bat! And going to court isn’t always the option because a majority of the money owed is under $100.00. Just chalk it up as timing, holidays, economy, and the fact that you cant dangle the “no more services until your account is brought up to date” factor over their heads, you will get your money just not as fast as you wanted it. Just face it we Landscapers are the bottom of the chain and that people will pay their other bills on time and get to us when their ready not when were ready besides we don’t have any bills right!?

[Steve]

Just don’t forget it, and next season if you still choose to work with them raise your rates for the fact that they are a pain and don’t honor due dates.

Oh this is good!

Can you tell us, how would you suggest going about raising your rates once you get paid? Should you send out a letter to them the next day saying you raised your lawn prices by X%? Or how long should you wait to notify them?

Also, how much of a % should you raise your rates by?

[FaccLndscpng]

A lot of the customers that I have trouble getting paid from are renters and they have tiny yards, a lot of them pay $20 per cut, so after I would finally get paid for that season, the next seasons “Welcome Letter” which I haven’t written out yet, would just explain that we are raising our rates for “the cost of doing business” and I would go from $20/cut to $25/cut, that way if you loose them its one less headache if they still want to have you take care of the property then you make an extra $5 for putting up with them. On this small scale it’s too complicated to raise by (%) it’s just easier to raise like $2.00 or $5.00 per cut. I would usually go through the summer without raising the rates, as most of my late payers show up for the last payment. But you should just raise your rates starting with the new season, but if you had to raise during the season I would say give 30 days notice, like write a letter saying that as of June 1, 2009 you will need to now charge whatever. But I usually do contracts and it’s easier to just honor it for the length instead of going through the hassle of a new contract. And forget about charging late fees; just be glad that they pay their bill.

Sometimes the renter will not “re-lease” so you will have to deal with another renter but they eventually pay because they are afraid to loose their security deposit. Which reminds me; don’t do any work for a renter without talking to the landlord or property manager, renters in Phila come and go, a lot are college kids so they just disappear, drop-out, whatever. I think that one of the reasons that a majority of the bad payers are renters because when I am hired by a home owner I also get a lot of business from “Word of Mouth” and when you get one house you usually get a couple of the neighbors, so as you can guess if “Mrs. Smith” isn’t paying her bills and her house gets skipped this round of cuts all the other neighbors will start to talk and “Mrs. Smith” doesn’t want to look bad in front of the neighbors. Then you can look on the bright side, if the yard is skipped a couple of times, then the customer finally gets their bills paid then you have to charge them for a big clean-up, but try to get it up front because they will probably try not to pay this bill for sure.

[Steve]

Sometimes the renter will not “re-lease” so you will have to deal with another renter but they eventually pay because they are afraid to loose their security deposit.

When you say they may lose their security deposit, how do you mean? Is this a security deposit that they pay to the landlord? If so how will they lose it? Would the landlord have to pay you the fee then?

Also do you have a suggestion for a welcome letter with a rate increase? How should a new lawn care business owner word it? Should this be sent out year after year to the same customer? Or is this only for new customers?

[FaccLndscpng]

Well I am not sure how things work everywhere else, but in Philly a tenant is supposed to care for the property especially the lawn and snow, some landlords will pay for it themselves to keep up appearances but most require the tenant to do it. So if at the end of the lease the yard is a jungle, the security deposit is held and used to get the property back in line, and whatever else went wrong, patch holes in walls… So if you previously spoke with the landlord or property manager, and told them the tenant stopped paying bills and you are terminating services until bills are paid then they will either get on the tenant to pay the bill or authorize you to continue services to be paid by the security deposit ( this is for some cuts not a whole seasons worth of cuttings but a few to finish out the summer or whatever it may be) but as long as you inform the landlord or whoever they usually take care of everything because its their investment, they don’t want to make the neighbors angry, or have a bad tenant who destroys their property, in a lot of ways you act as their eyes and ears. So “you scratch their back and they will scratch yours.”

In the end, when the lease is up, you submit the bill to the landlord or prop manager and they will pay you out of the escrow account. Most of the time, if a tenant looses the security deposit, its due to a lot of things not just the lawn, and if its just the lawn that the tenant owes the landlord will say something like “you must pay all bills or they will be paid by the security” and then you either get a check from the “Landlord Tennant Act” or something like that or you get the check from the tenant.

As for the “Welcome Letter” I will submit one but I don’t have anything ready for it yet… I will see what I have in my archive, and yes I send one to all customers, the letter is a welcome, a “what’s new with us”, an introduction to the contract and so on so it keeps us in touch with our customers.

[Totally Green]

Hi FaccLndscpng,

You've given a lot of great information. One more question. Do you use contracts or service agreements? I don't and it seems to be a problem when I try to collect. Without documentation, it's really my word against their's if they refuse to pay.

[Steve]

As for the “Welcome Letter” I will submit one but I don’t have anything ready for it yet… I will see what I have in my archive, and yes I send one to all customers, the letter is a welcome, a “what’s new with us”, an introduction to the contract and so on so it keeps us in touch with our customers.

Oh that would be great! I'd love to see them!

So this is something that is sent every year to the customers, new and old? And it would include any price changing? Also how do you deal with getting customers to resign their lawn care contract or do you just have it roll over from the last year until they call you to cancel it?