In the landscaping industry, most people bill once per month after the work is completed. This means that if a company starts working for a customer June 1, they cut the lawn weekly the month of June, they will send out an invoice on the first of July.
This is all well in good in theory, for a customer that immediately pays their bills. However, unfortunately this is not usually the case for most customers.
So say you bill a new customer on July 1st. You then continue to cut the lawn the first week in July. The check has not yet come in, so you cut the lawn once more in July. You have now provided 6 weeks worth of service and have not been paid so you pull the plug. The customer may never pay the bill and guess who eats it? You then spend time and money trying to chase down these people for the money owed, and don’t even know they aren’t going to pay until you are 6 weeks deep.
To solve this problem, we started invoicing customers on a weekly basis. We require a credit card on file to start services, and we charge it each and every week. This has pretty much solved our collections issues. It also tremendously increases our cash slow, so not having enough money for payroll etc is also solved. It has really been great- although credit cards are expensive I think the benefits out weigh the costs.
Another method which is probably better than the conventional method but not as good as the weekly billing, is pre-paid billing. This requires customers pay the month in advance for services. This method cuts down your risk much further as you may only do a couple cuts before you stop service. However, there are complications in that you need to put everything into a monthly package and if you do not cut the lawn for some reason you have to refund the customer. Also, if a customer wants to skip this also makes it complicated.
