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Is it rude to have someone on a pre-pay?

Discussion in 'Business Fundamentals' started by StormRanger, Nov 9, 2009.

  1. StormRanger

    StormRanger Member
    from NorEast
    Messages: 72

    Last year I had a customer not pay me till August, they paid the first month of plowing, then I never saw anything from them till later in the year. I just got a VM from her asking if shes still on the list for this year.

    Should I say only if she pre-pays like $100? Then when that runs out, or gets close, take another check for $100? $30 driveway, which needs salt alot.
     
  2. vinny69

    vinny69 Junior Member
    from canada
    Messages: 25

    All of my costomers are prepaid one month in advance,I hold there post dated cheques on file for the whole season.If they truly honest and are willing to pay there bill this should not be a problem plus i don't have to invoice all winter.
     
  3. Premier

    Premier Senior Member
    Messages: 274

    I dont think so, I had a customer call me 2-3 weeks ago, asked for a copy of all last seasons invoices, so she could get me paid (which is good, i had given up) then she asks me if i would do it again this year cu she really liked my service, I told her that i would need LAST years bill paid in full and another 500 down and when that was gone i would need more money upfront. just the way it has to be, i cant afford to not get paid for almost a year!
     
  4. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    we give residential one chance, if they can't pay within a month of invoicing, then they either prepay, or we get a autorized mastercard/visa,
     
  5. JoeCool

    JoeCool Senior Member
    from Canada
    Messages: 214

    Yes, as said already it needs to be done. Not necessarily a bad customer, just that they are not thinking it is a big deal to you. Especially when you are already a provider for the customer there should not be a concern that they don't trust you. Contracts simply need to be clear for the customer or often they will take advantage or simply not put the effort in to making sure it is good with you.
     
  6. Brant'sLawnCare

    Brant'sLawnCare PlowSite.com Addict
    Messages: 1,752

    I have a customer like that. I am still thinking about doing the same thing.
     
  7. Scottscape

    Scottscape Senior Member
    Messages: 662

    sercured payment with visa/mc. If they have an issue explain that is your new policy as just the same as hotel/motels. Also a late fee will help stop this.
     
  8. WIPensFan

    WIPensFan PlowSite Veteran
    Messages: 3,486

    I just put in the contract - payment within 10 days of invoice or I don't plow it on the next snowfall. With good customers you give a little. I've never had to act on this, but it's in there for effect. I'd say not getting paid till Aug. is enough reason to require pre-pay.
     
  9. Garagekeeper

    Garagekeeper Senior Member
    Messages: 459

    We started collecting a "non refundable" prepay for 10 plowings 15 years ago.
    Sure has made it easier on bookkeeping plus your not out chasing your money when the season is over.
    You will be surprized how many of your customers understand.
    The key is that they know that you provide great service and that your there when it snows.
    Remember it's your business and you can set the conditions of your contracts.
    Hope this helps you out somewhat.
    :rolleyes: John...
     
  10. dfdsuperduty

    dfdsuperduty Senior Member
    Messages: 597

    I have been paid for an entire season already house is 3 doors down from mine drive way is maybe 35' long 1 car wide 700 for the season drive way only no salt no shoveling
     
  11. Neige

    Neige Sponsor
    Messages: 2,197

    All my resi are prepay. If they are a new client I will accept 50% up front the other 50% post dated check Jan. 01. Has been working great for me, have 2300 paid, still 400 to go to reach last years totals. Commercials will be in either 3 or 5 installments, depending on the amount. No more chasing my money, and that wasted time.
     
  12. M.McDaniel

    M.McDaniel Member
    Messages: 49

    You can't even pump gas without paying first, so they shouldn't be surprised if you required payment before service. Financial managers recommend no less than 1/3 and no more than 1/2, regardless of what service your providing, to keep a positive cash flow.
     
  13. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    no offense
    But as a customer
    There's simply no way in (*&^ that I"m prepaying you.
    part of the costs of doing business.

    if you were doing something special that required materials or equipment on site, maybe a deposit.

    But until the work is done, you don't get paid.
    Now, the OP about the lady who didn't pay. Well, different story, personally I just wouldn't mess with it, but I could see her having to pre-pay.

    But the rest

    NFW

    Cutting your own throat in my opinion to require something like that.
     
  14. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Let her float. Be a good guy ,she'll pay you on time this year.
     
  15. Triple L

    Triple L PlowSite Fanatic
    from Canada
    Messages: 5,987

    When i read the title to this thread, the first thing that came to my mind is you betca... Its like when i go to pick up salt at my supplier... I've never given them a problem and have good credit with them... And then someother guy comes in and has to pay c.o.d.... where as I just sign and walk away, I always end up lauging to my self as im walking out thinking what a looser this company is...Defentially look at the truck to see who it is... but its like that for a reason, it only takes a few bad ones to ruin it for themselves...
     
  16. heather lawn spray

    heather lawn spray PlowSite.com Addict
    Messages: 1,206

    Although not in Neige's league, 50% Nov 1, 50% Jan 15. for resi's. It workstymusic
     
  17. Pristine PM ltd

    Pristine PM ltd PlowSite Veteran
    Messages: 3,794

    exactly how I do it for resi's.

    Commercials though... lucky to get it in 45 days.
     
  18. Neige

    Neige Sponsor
    Messages: 2,197

    Well we used to do it diffrently, but my clients are now used to it. I would loose around 12 grand a year from non payers. Client takes on the contract, sells the house in December. By the time we have it figuired out its Febuary and the new owners say they never took a contract with us, so not paying. Then there are the NSF checks, people going bankrupt, midnight moves, etc. Last winter I lost $600, because two slipped between the cracks. I save tons of time(therefore money) not having to chase my money, and hopefully none will be missed this season. I have costs that begin in August when we send our first letters for renewal with self addressed postage paid return envolopes. Then we stake the driveways, and prepare the runs. It costs me over 20 grand before the first snow falls. It was mentioned in other posts about healthy companys having working capital. Well I have my capital for this season, and I would not have it any other way. Like I have said before I will make exceptions for new clients, just so that they are more comfortable. Being 50 years in business certainly helps. Maybe I should tell them $300 prepay or $400 pay in March, which one do you think they would choose.
     
  19. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    See, now that makes sense to me as a customer.
    Pre-pay (or pay all at once) and you get a deal. That's fair, passing those savings across.

    and clearly this all works for you and more power to you. But as a customer, without some incentive (like you gave above), sorry, I'm going with the next guy. And this probably really isn't directed at your biz. (as you say, 50 years in biz, 3000 customers, etc).
     
  20. Grampa Plow

    Grampa Plow Senior Member
    from Midwest
    Messages: 274

    I had an IHOP pay me $200 to $300 a month from April through October last year. This year they payed less often and as of late October they still owed me over $1,000. I was talking to another plow company who said they had got a call from IHOP about wanting to get a bid. I called the out of state IHOP owner and talked to him at first like I didn't know about his call to other operators. When he told me that he had decided to contract with another company "to save money, because my bills were so high" I got pissed and said:
    #1 if I don't have the money owed in 5 days, we will be going to court.
    #2 in any case, I will stop and talk with whomever you hired and let them know it takes nearly a year to get paid. He had the balls to say I was vindictive. I told him I wasn't telling the guy to plow or not, I just thought it would be a good idea that the guy knew in advance that he would have to wait for his money. I got my money 3 days later.

    I really didn't mind them not paying their bill on time. I charged them 1.5 percent per month, APR 18% a year and I couldn't make that kind of interest anyplace else. But when he went out and got someone else to plow this year, while he still owed me 1K$, I blew a gasket!!
     
    Last edited: Nov 9, 2009