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Old 01-02-2006, 04:22 PM
Rick Carver's Avatar
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Anti Collection Tips

Tis the time of the year to tweak our contracts so we may AVOID any problems and loss's this season.
I have tweaked our contracts to death over the years and still add and subtract items from the T & C's.
I still keep in place a few things that have saved me tons of time and money.

One thing we incorporated into our contracts and made part of through the T & C's is a QAR. Quality Assurance Report. Simply put, it is agreed to that within 24 hr's after completion of the job, the customer agrees to sign our QAR. On the contract it also explains we WILL NOT even begin the invoice process for a full 24 hr's after completeing the job which allows the customer to contact us (with several ways to do so) with any concern or complaint! If we do not hear from the customer in this amount of time (CONTRACTUALLY AGREED TO) we will then invoice for the agreed terms.
NOW,,, because of this we were able to experience a huge decrease in collections. A N D,,, when this system was tested IN COURT,,,, the judge wouldn't even take the time to listen to the story because the first issue with ANY CONTRACTED agreement is which part of it is or was broken or not followed!

Now the really cool part,,,,,

Because I only want to do business right, and give my customer every opportunity to be satisfied with us, I offer this QAR for reassurance of our honesty and professionalism,,,,, right? After all we all want to know when our customers may not be satisfied,,,, but we cannot allow ourselves to be taken advantage of,,,,,

Soooooo,,,,,, because the customer didn't contact us in the AGREED CONTRACTED amount of time the Judge has no position other then to find for us through a summary judgement (I think it was called) which means that the customer must PAY ME NOW,,,, and then has to go back and file action against me to recover whatever they think is wrong!!! Also,,,, you may be able to actually file a theft of services complaint criminally against them. Make sure yous check with your lawyers how to set this up for your state etc.
QAR's work both for maint. and installs. But for Maint we just left a leave behind letting the cust. know we were there today,,,, on the seasonal contract with them we state we will do this and that they have 24 hr's to contact us if our cut/bed maint. wasn't right etc. If they didn't then they get invoiced and have to pay.

Other Anti collection tools are things like Double your money back Service guarantee's and plant warranties etc.

Rick
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Compass System Inc.
Hidden Meadows NurseryLLc.
Chesapeake City MD.
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Old 01-02-2006, 05:20 PM
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Rick what is T &C. Maintenance collections is the most difficult part of the business for me. If the amount is small enough $150 to ? is it worth pursuing beyond the basics of constantly calling,certified mail etc.(we have 500plus wkly cuts) Construction projects get alot more complicated because court costs as much wasted time as money.at what dollar amount will you proceed to the level of court. thanx in advance
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Old 01-02-2006, 07:30 PM
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T C's are short for TERMS and CONDITIONS.
Normally they are a list of terms and conditions that in fact make up the contract.

With using the QAR, a couple of things are realized. First off it is much more professional to include this and also explain WHY it is included to your customer. (example) Mrs Jones, thank you for the opportunity to provide you a quote on your work. This is a sample contract to look over and included is a copy of our QAR. With the QAR my company is guaranteeing our customers that we will not even invoice you till you are completely satisified with us. We even allow an additional 24 hr's or 48 or 72 (company specific) to look over the work we completed and contracted with you to do.

Isn't this really the one and only way to decrease and or ELIMINATE collections?

You simply have to understand the courts.
I have a contract to do this for this amount, and finished it,,, NOW the customer MUST sign (in a specified time frame PER CONTRACT) that the work is good. ONLY NOW IS THE ORIGINAL CONTRACT ENFORCEABLE AND COMPLETE!
This is a very BIG POSITIVE for both the contractor and customer! WHY? Because in reality both parties now have a TOOL to get what they both contracted for without a bunch of crap. This is a great communication tool.

What amount will I go for in court?
Well,,,,, I am very hard headed,,,, and walk and talk that LIFE is all about PRINCIPLES and so,,, no amount is to little!

Understand this however,,,,, with this method used correctly you will virtually eliminate any collections because when any issue comes up, it is now brought up IMMEDIATELY after the job is done! Not 30 or 60 days later when our cash flow is being hurt etc. And when it is brought to my attention I WILL make anything (PER CONTRACT) right! Isn't that really what we want to do?

When you call the customer in this collection scenario, and bring to their attention the contract and QAR, and that you expect full and immediate payment or you will turn this over to your attorney and also not only sue them for the amount owed but also for all Legal fees and court cost's. Just make sure you have those conditions in your contract also.

ALSO,,, a good friend of mine taught me this. In your contract make sure you add a FEE for REINVOICING every 20 or 30 days or however many days you want! Just make it worth your while! Tell the customer above that on top of the cost's already mentioned you will be adding XXX for 3 reinvoicings! Just check with your lawyer because some states may be a little different on how you do this.

In my opinion the whole issue with collections is not about how we can collect better but, is really why are we collecting at all?
HTH
Rick
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Chesapeake City MD.
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Old 01-02-2006, 09:20 PM
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Some good points there, Rick. If I'm not mistaken, Bill Schwab has a "Are you happy so far?" form that the client has to sign off on every few days.

I have a couple questions - so often there's the burden of proof that must be overcome - what do you do to show notification of completion of the project (and the start of the 24 hour clock), and what documentable methods do they have of contacting you?

Re: the re-invoicing fee - we've always just charged the max allowable interest. How do you word your fee to work differently, and how much do you charge for it (ballparkish)?
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Old 01-02-2006, 10:07 PM
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Yup,,,,, Bill is for sure being PRO ACTIVE,,,, him and I both have been around the block way to many times regarding collection crap!

As far as bruden of proof,,,, the QAR is a carbon itself. It has been made part of the original contract through the T & C's. On the QAR in BIG BOLD TYPE a statement reads (among other things)
Per our contract every job/service must have a final inspection by the customer or agent. This job must be completed within 24 hours of completion of the job in order to accomodate the necessary time constraints for our invoicing and to insure any and all warranty activation. This is our customers opportunity to let us know if they are not satisified. If you do not agree with our inspection DO NOT SIGN OFF ON THIS DOCUMENT! Contact our office for immediate
attention. We guarantee 24 hour response to ALL QAR CONCERNS!If our customer does not return this document signed to our foreman or to our office and we have NOT been contacted by the our customer within 24 hr's after we have completed our inspection we will consider the completed job acceptable by our customer and intiate invoicing and warranty coverage to begin. The purpose for this QAR is to insure our customers complete satisfaction with our company!
All customers understand that the job will be completed by XX date or time of day, normally by the salesman or job manager.

Now on the T & C's,,, the QAR is also explained and the reason for it. It does explain that by virtue of the acceptance of the contract that the customer agree to make themselves or their representative available at the completion of the specified work to perform a final inspection of the contracted work and to sign a QAR acknowledging all work has been completed and the contract and all specifications thereof have been met etc etc.

You see,,,, contract to do the work but ALSO make part of the contract, a no misunderstanding agreement as part of the contract, why should there be any collection issue when there are no issues!

My friend who first brought this up would charge like a $25.00 fee for reinvoicing for a monthly service bill of about $150.00 bucks.
But I have heard of folks making a reinvoicing fee for installations as high as $200.00 for each reinvoice. The thing to make sure of is to have this FEE IN BIG BOLD PRINT on your contracts, and maybe even point out that you don't charge a service percentage, but a fee of XXX for admin reinvoicing.
We started charging a $35.00 charge and would actually send another invoice for this along with the copy of the unpaid ballance! ;-)
HTH
Rick
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Compass System Inc.
Hidden Meadows NurseryLLc.
Chesapeake City MD.
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Old 01-02-2006, 10:46 PM
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Rick:

I was wondering when you would begin your appearances here!

In case you have not had a chnce to glance through the"stuff" here, you got by far the best, most professional site in to world right here.

Compass collections are by far the way to go, I kind of created something that worked for our operation here. Every three days, the client gets an invoice. Unless other arrangements are mde and met, we pull off the job that following day unless we are paid to date. It's called Tow company style payment plan....
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In the year 1491, if the Naturescape Landscape Company did the site work in Pisa, Italy, they would not be calling it the "leaning" tower.

Encinitas, Ca. 92024

www.naturescapelandscape.com

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Old 01-03-2006, 12:23 PM
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Bill
Man O Man what a great site here! I have a lot of catching up to do eh?
Looking forward to this board's pros and their ideas. Already read a bunch of neat stuff!
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Old 01-03-2006, 05:17 PM
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It sounds like the QAR works great on one time projects< Iam certainly going to modify our system for each job completion
Is there a solid solution for maintenace collections were you invoice at the end of month for services rendered. When and at what dollar amount should a company stop servicing and what is the best way to collect.
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Old 01-03-2006, 05:31 PM
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This is everything that site where everyone first became aquanted was, and so much more!

So what's with the MD address? Have you moved, or just running a nursery there?
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Bill Schwab
In the year 1491, if the Naturescape Landscape Company did the site work in Pisa, Italy, they would not be calling it the "leaning" tower.

Encinitas, Ca. 92024

www.naturescapelandscape.com

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Old 01-03-2006, 07:22 PM
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If you are contracted for your maint. accounts then use the QAR system,,,, just make sure you include the leave behind in your T & C's.

OR

Make everyone of your customers give you a credit card number. This should be part of your new Contract and in your T & C's explain that the card will not be used untill the customers account becomes 5 days past due.

OR

Make the credit card payment the only way to pay, and guarantee that you will not hit the card untill 24 hrs or 48 hrs after the service has been completed,,,, this will give your customer time to inspect the work and contact you with their concern etc,,, use the QAR method with this also,,,,

Bill,,,,,
I am running the nursery and I am building a new facility here also. I have started a new company(s). This spring I am out the gate with a new maint company and different Idea for this market.
I agree with you about this site.
Really feels right ya know what I mean??? ;-)
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Old 01-03-2006, 07:26 PM
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Yep, I sure do. I want to get a maintenance division going here, but I have to target the commercial markets. Too many illegal aliens doing $10.00 yards to even justify why we would charge $100.00 for the same job.

Yep, sure does feel right! Don't be a stranger ya here?
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Bill Schwab
In the year 1491, if the Naturescape Landscape Company did the site work in Pisa, Italy, they would not be calling it the "leaning" tower.

Encinitas, Ca. 92024

www.naturescapelandscape.com

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Old 01-03-2006, 07:40 PM
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Rick,
How receptive were your customers to the credit card option of payment?
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Old 01-03-2006, 07:53 PM
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Matt
Good question.

This is a touchy subject. You either have to commit to the idea or not! Then stand by your decision.
Give your customers the explanation that with all the insurance's going up, fuel,and now POSTAGE,,, that this new COMPANY POLICY will HELP in holding down price increase's. This helps on admin cost's, postage yada yada,,, etc etc.

What I did was seperate my customers who paid like clock work and the chronic late payers. The late payers had no choice but the others did have a choice.
You will be surprised how easy it is. Don't forget, this is your operation, you own the good with the bad. Your job is to always work for getting to only the good part.

Rick
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Old 01-04-2006, 10:08 AM
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Rick, I used to take cards but I gave it up. Giving up that 2.5-3% of the TOTAL sale really bugged me because it came right off the top, which means it really took a big chunk out of my actual profit (10-20% for some businesses). A customer gives me a payment for $15,000 and I have to give the bank $400-500 for processing it. Ouch!
Also, your customers might be different than mine, but demanding automatic payment 24-48 hours after completing a job or a phase of an ongoing project would really ruffle some feathers around here. Many people are quite busy with work, kids, vacations etc. and would find it hard to immediately drop what they are doing to meticuously go over the work I just did.
Of course, even though many of your methods seem heavy-handed to me, I could see the need for them if you've been burned repeatedly. Knock on wood, but I admit I've been lucky in that area. In 20 years I've lost maybe $2,000 to non-collectibles and most of that was on planting jobs so their non-payment essentially voided their one-year guarantees. So, currently, sacrficing that 2-3% off the top or becoming more "corporate" and less "personable" in my customer relations seems draconian...but I know my attitude could change with one PITA customer . It's amazing how only a few bad apples can change one's faith in mankind.
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Old 01-04-2006, 10:40 AM
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John
I see what your saying. I agree with you more then you may realize.
I did put into place systems to eliminate collections and to improve cash flow.
After litigateing collections one to many times a CCP judge gave me a kick in rear end and told me to start thinking more professionally and quit taking chances etc etc. Was some good advice.
I was doing a lot of things wrong with contracts and such and he called me out on them.
The QAR methodology helped me tons!
Credit cards for maint was another easy thing to help with collections and cash flow, especially with the slow payers. I understand what your saying with project work and again I agree with your thinking.
only thing is this regarding our customers busy schedules and family lives etc.
MINE IS NO DIFFERENT. ;-)
SOOOO, if at time of contracting to do say, a 15 G project I make it clear and part of the contract that customer MUST make themselves available to inspect the work, like say in 24 hrs or even within 5 days,,, (that's all company specific not QAR specific) what would any customer object to for paying me what is owed at this time? If they contracted for the job then they must have the money, and when I am finished the job and my ADMIN is on the ball with final invoicing then why would I not EXPECT full payment when I am finished and the job is acceptable etc.
I know how much it cost's me to allow another person to hold my money for another month (30 days etc) and I know what positive effect on my cash flow management prompt payment has. Also, I only want what is best and most cost effective for my customers, which is a tightly ran company.
For sure some of the stuff I have done and suggest seems pretty harsh,,,, I know it,,,,
But
I always ask myself why does it take an install customer so long to pay me after I am done? Did they have the money when they contracted, and now they don't? I mean seriously, why should it take a home owner another 30 or 60 days to pay me?
I have been told the main reason is because we (owners) allow for it and then we set up for it.
One last thing with credit cards,,, if you contract for install only use credit cards for the last piece of the installment or final payment etc. OR use it for just the down payment with a condition on your contract that final payment is do at XXX time after completition and if not the customer by virtue of signing this contract agrees to the contractor that final payment may be taken from the credit card on file etc etc

Rick
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