Source: www.TurfMagazine.com
Fifteen years ago Kevin Payne, owner of Tendercare Lawn and Landscape, Inc., in Wichita, Kansas, says he ran into a serious cash flow problem. The business was at a high point — selling a lot of jobs — but they weren’t getting paid in a timely manner. Whether it was because it took his office a while to follow through on the invoice or clients were holding off on paying immediately, the fact is they were developing a backlog of unpaid work. And though Payne had plenty of business on the books, that lack of cash flow almost ground them to a halt.
Having faced what Payne calls a battle to get paid in a timely manner, he decided to implement a “half down” requirement on all jobs going forward. In order for clients to even get on the Tendercare schedule, they would have to make half of the payment upfront.
Payne admits this might be difficult for a new business to implement because there has to be some trust factor from the client. But Payne had already been in business for over a decade at the time he implemented this plan. He had built a history in his community and customers knew they could trust him. Today he’s been in business for 35 years and says that he rarely gets any complaints about asking for cash upfront.
In addition to a half down requirement, Payne has also started taking credit cards, which he says has been incredibly helpful with cash flow.
“If a client is behind on a payment, before we start the next application our office will call them and remind them they haven’t paid for the last round,” Payne says. “We’ll kindly remind them it’s time for the next round and would they like to pay over the phone for both rounds so that there’s no interruption to their service.”
Payne has also started offering pre-pay discounts. If clients pay for the entire year in advance, they receive 10 percent off. Though Payne says this discount equates to a lot of money, the benefits to him are “well worth it.”
“We hear a lot of people in this industry talk about how hard it is to get through those winter months when there isn’t a lot of cash flow,” Payne says. “Getting customers to pay upfront gives us immediate cash flow going into the off-season. For us, that’s huge and worth giving the customer those significant savings. It’s a win-win.”
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