All too often, accounts receivable, is over looked by new lawn care business owners. When a new lawn care business owner is just getting started, they figure they would rather be working than not working. So as long as they are working, they feel like it is money in the bank. But it is so very important to remember it is not.
Only money in the bank is money in the bank. When you do work for someone and they don’t pay you right away, it becomes a burden. You then have to spend considerable amounts of energy tracking these customers down to get paid. Sometimes you never see payment from them at all.
The way you choose to handle getting paid from your customers can make the difference between your business becoming successful and it sinking. That is a topic we were discussing in the Gopher Lawn Care Business Forum. I asked other business owners how they handle their payment terms to learn the best ways to deal with it.
One business owner wrote “when we snow plow, a new customer needs to give us their credit card number. After each time we snow plow the customer’s property, they are emailed an invoice followed by a receipt when the credit card is processed, no exceptions, and not a single customer has complained about my billing methods.
In order to stay in business we have to handle payments in this way, all of us need to. My accounts receivable has been at zero all year. When you hire me, you will pay me when I am finished. I require deposits on excavation work as well.”
Another business owner said “I have had a couple of prospects that when I asked for a credit card or to leave a check for when the job is completed, kind of squirm of flinch. This has become a test of mine. If they flintch or balk, I walk, no exceptions. I have learned over the years to read body language. If I even get a hint there will be an issue, it will either be payment in advance or I will move on. I can’t afford to run this equipment and work for free.”
For the new start up lawn care businesses, which way do you feel it is best for them to go about billing for lawn care?
Should they do something similar to what we are talking about here for snow plowing?
Should they pay per cut, maybe with a credit card? Should they prepay for the upcoming month of mowing or what do you feel is best?
“Expectation is a two way street. Our clients tell us what they want and expect. I tell them what we can do and what we expect on payment. Checks when we are done. Prepay by month on lawn care if you wish or credit card. I never had one issue this summer even taking checks, that were sometimes very large and I was a bit concerned they might bounce.
Never be afraid to ask for your money. Some clients can read us also and some have the attitude if they can take advantage or squeeze you they probably will. Stand tall and firm. There is nothing wrong with asking for your money.
Accounts receivables should never be over 30 days unless it’s a government contract. Yes those can take 90 due to their process but in this case I simply charge interest after 30 days and I get it. If the company has an issue, then hire someone else. I have only had to walk from two jobs this past Summer.”