Cash Flow

AZ PowerWash Pros

AZ PowerWash Pros

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As we all know, cash flow can make or break our companies. So yesterday I stop by my office and check out QuickBooks and we are waiting on $300K in receivables since Jan!! My jaw almost hit the floor. Running $60-70K a month in payroll I need to have my cash flow caught up the best I can at all times, or I have to dip into my credit line, and I obviously don't want to do that.

Anyway, I sent out emails to all our past due clients and let them know they would receive 5% off their outstanding balance if they paid by Friday. We got so much money in so quickly it was crazy! I am thinking I am going to add this into my expenses when bidding jobs from here on out. And offer this discount to all my clients on the invoice itself.

What do you guys think about that? Does anyone else offer discounts for early payment?
 
Account receiveables......Whats That ?
 
Ty we do 2% if paid in 15 days. It has made a huge difference in our cash flow. I have one account we do at $17,000 a week and they not only went for the 2% but we also have them paying direct deposit into our account. Noting better the almost ever day I get a email that we have received payment into account. We invoice and paid in 2-3 days.
 
Don't have any discounts in place, but right now my A/R is sitting $100k+, although I am a one man show so no payroll to worry about. Most of the money is tied up in one job and waiting on some insurance papers though. Luckily for me, no truck/equipment payments, and the wife's income pays the house bills. A/R I find depends on the company, industry, and how persistent you are. Commercial, bigger companies take longer most times, but you know you are getting the money. Smaller companies will pay right away, but those that don't and you have to chase for money can take up a lot of time.
 
MikeM said:
Ty we do 2% if paid in 15 days. It has made a huge difference in our cash flow. I have one account we do at $17,000 a week and they not only went for the 2% but we also have them paying direct deposit into our account. Noting better the almost ever day I get a email that we have received payment into account. We invoice and paid in 2-3 days.
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I like 2% better! I might try that! Haha

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Ty try a late notice each month, set qb to notify you on past due an follow with a call. I won't allow it any longer, I just cut these people out of my life. I can't chase the money, no time.

Everyone gets emailed invoices, once late a paper invoice generated to controller not pm. It's all automated in process. Don't worry it's not a cure, the only cure is to eliminate habitual clients.

I call it invoice hoppers.


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So, if you pay on time you get to pay 5% more, but if you just wait a few months, well you get a 5% discount? Seems crazy to me. Discount for early payment, and charge interest for late payments. You are setting yourself up for more people to take advantage of your amnesty program.
 
Scott Stone said:
So, if you pay on time you get to pay 5% more, but if you just wait a few months, well you get a 5% discount? Seems crazy to me. Discount for early payment, and charge interest for late payments. You are setting yourself up for more people to take advantage of your amnesty program.
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I see your point Scott. But that is not exactly how it is supposed to work. They are supposed to pay on time regardless on Net 30. And they are rewarded with a 3-5% discount off their invoice if they pay due upon receipt. Gives companies incentive to pay right away instead of net 30. The main issue is that they never pay on time in the first place. I would say 40% of my Net 30 clients pay more on a Net 45. Even though they are in a net 30 contract.

I don't think my way is right or wrong, I am just up for suggestions on how other people would handle something like this. My customers always pay but its just not as quickly as I would like. And I would gladly lose 5% to get their money instantly after the work is completed so I am not fronting all the expenses for 45 days. Any suggestions Scott?
 
yea I've got somebody who owes me $450.... Right up there with your 300k lol
 
AZ PowerWash Pros said:
And I would gladly lose 5% to get their money instantly after the work is completed so I am not fronting all the expenses for 45 days.
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Bingo. Cash is King!
Kind of like offering a credit card and paying the fee the get paid on receipt.
 
I do net 15 for almost everybody. It's been my experience that most will stay within those terms. Luckily I haven't gotten stung yet, but I'm sure its coming.
 
This is a notice at the bottom of all our invoices that was recommended by a collection agent...
I / We understand and agree that any credit granted shall be paid promptly in accordance with terms and conditions, that the credit grantor may add two percent per month to any balance owed, and, in event of default, to pay reasonable collection charges and / or attorney fees. All accounts over 30 days past due will be placed on C.O.D.
 
samstewart1979 said:
I do net 15 for almost everybody. It's been my experience that most will stay within those terms. Luckily I haven't gotten stung yet, but I'm sure its coming.
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I have been on those terms for years most pay within that time with no issues. some are net 30 (larger corporate accounts) . Sometimes I will give discounts for prepay or cod but that's about it. I agree with ron I warned my sow pay and dumped the ones that would not meet the terms. Some called me back and started to pay on time.
 
TERMS:
All payments are due within 30 days of billing
Any payment more than 5 business days late may be charged a 2% late charge plus interest until paid in full at an annual rate of 1.5% per month
The contract prices, specifications, method of billing,
and terms of payment are satisfactory and hereby accepted by customer. This contract is for the 2014 season. EasyPro Property Services LLC.
is authorized to do the work as specified. EasyPro Property Services LLC. and/or Purchaser can cancel this contract for any reason with 30 day notice
The party signing below states they are authorized to bind customer to this agreement.



We also use a factoring company ....
 
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