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For contracts, do you collect $$$ up front?

Discussion in 'Business Fundamentals' started by PlowOrDie, Nov 1, 2007.

  1. PlowOrDie

    PlowOrDie Senior Member
    from ohio
    Messages: 164

    I have been wondering how most of you collect your money for contracts.

    Do you require full payment up front?

    if not, what method do you use?
  2. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    For contract price I bill it out 5 times through the season.
  3. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,194

    x2. My first invoices are due Dec 15, Jan 15, Feb 15, March 15, April 15. My season starts Nov 10 and ends April 15.

    THEGOLDPRO PlowSite Veteran
    Messages: 3,136

    depends i suppose, my contracts start nov 1st, if im buying salt and the such for the complex i require some money upfront to offset the cost, then i just bill monthly after that.
  5. PlowOrDie

    PlowOrDie Senior Member
    from ohio
    Messages: 164

    Ok, what about residential contracts? Same thing?
  6. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    I used to bill 3 times .At signing Jan 1st and at the end.

    THEGOLDPRO PlowSite Veteran
    Messages: 3,136

    for resi i figure the cost of the contract, say 700 bucks for example then bill them 4-5 times@ 140 a month
  8. Earthscapes

    Earthscapes Senior Member
    from WNY
    Messages: 577

    Residentials- 2 Options; Pay in full or 2 payments(First with signing, 2nd due by Jan 15th)

    Commercial Under $2500- Same as above, Plus salting billed monthly.

    Commercial Over $2500- 6-Equal Payments starting in Nov., Plus salting billed monthly.

    I have 3 per push commercials and they are billed @ the end of each month.
  9. PlowOrDie

    PlowOrDie Senior Member
    from ohio
    Messages: 164

    Hey Earthscapes...

    What would you say you're percentage of hearing "im just going to pay in full right now" is?

    Come March, how many people are you all still chasing?
  10. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    I used to get that a lot. But I told them I will bill them ,"It keeps me honest".A lot of guys collect all the money up front and then the customer is always calling them to find out where they are.
    If you go on estimates ask why they're looking for someone new and that's what you get.
    "I paid them up front and they never show"So you could use it as a sales tool Telling them if I want to get paid I have to work for it.
    Most people are good about paying you get a few here and there. Sometimes it was nice getting a late snowplowing money in May or June .Just my .02:D
  11. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 9,883

    I send out invoices once a month, just like the power co.and water co., based on the amount of services used.
    Times, dates, snow depth, salt or ice melt applied.

    I never have had any problems with collections from business.
    Residential now and then their slow paying in the spring.

    Residential drives that we have never serviced before we will require payment up front or at the time of service only.
  12. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    Earthscapes hit it on the head with collecting.

    There are plowers out there that get the money and don't work. But there are more residentials that get the work and don't pay.

    Collect up front, do the work, and you will be back next year.
  13. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    think ill go with grandview. seems honest enough and very fair.
  14. Earthscapes

    Earthscapes Senior Member
    from WNY
    Messages: 577

    About 80% pay up front. The rest pay by the 15th.
    Contracts clearing state "Accounts that are past due WILL NOT be serviced until account is brought up-to-date". I do get a few that have the checks taped to the door on the 16th.

    Also something to think about, I have been servicing the same customers for the last 6 years, they know how we operate.
    I don't play games with people, I did when I first started out and learned the hard way.
  15. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 28,366

    All of my accounts are billed out at the beginning of the month, and are due at the end of the month.

    For instance, today I sent out the bills for snowplowing for November. All these invoices are due by the 30th, or we don't plow come December 1st.

    Most commercial accounts you'll find pay 2 times per month, whether the 5th / 20th, 10th / 25th, 15th / 30th.
  16. Clapper&Company

    Clapper&Company PlowSite Veteran
    from NE OHIO
    Messages: 4,413

    Seasonl 5 payments
    We bill after every event
  17. jhook

    jhook Senior Member
    Messages: 375

    I bill either monthly (per event customers) or 4 or 5 times through the season. Residential is half upfront the rest in Feb.

    I have actually had more trouble collecting from businesses than residential drives. Some companies like to take their time sending payment, have had a few that went out of business part way through the season all of a sudden doors locked - small places but still.

    Residentials almost always send their money right away. payup
  18. CrownLawn

    CrownLawn Junior Member
    Messages: 10

    80% of my residential pay up front. This helps me not having to chase down payment in spring. All my residential must be paid by the 1st of Feb. Commercial lots I bill monthy and have never had problem with payment. It is amazing when a big storm is "on the way" how many residentials pay a few days before.....payup

    MIDTOWNPC PlowSite Veteran
    Messages: 4,556

    same here. I never hand out bills at the end of the month. Everyone elses bills seem to be more important at that time and money is always tight then so I hear.

    People love the word "equal billing" so a $4000 contract is $1000 in 4 equal payments

    Really generates good cash flow cause then you have the money in on the 15th and most likely you have bills to pay at the end of the month, plus if you have to give someone a little extra time you still have lots before the end of the month. I hate hitting companies up for a bill on a friday. Payday for employees, they are already feeling the pain that day. Monday or tuesday is better.
  20. Jbowe

    Jbowe Senior Member
    Messages: 167


    I won;t bill out anyone any more. 95% of my clients are repeats and I bid them for the entire season when we first start. They pay the fee upfront. Its understood that I raise my prices 5% a year to offset increased costs. That includes commercial. However, I do have a few commercials where I have thier credit card info on file. The way I work that is really very easy. Since I base my fee on a per hr truck charge with an estimated time on site they have a good idea of what it takes for me to do the lot. On those I have a 3" trigger. Once they are plowed I fax them a copy of the invoice followed by a phone call. Some call me back. Then I run thier card for the snow. So even then I am being paid the day of the snow. I find that doing it this way lowers my office costs and since the accounting program I use is also my credit card merchant, once the invoice is made and payment cleared the system does the rest of the book keeping automatically.