The 2009 season was full of snow, with some intense storms bringing out some great situations for snow removal businesses everywhere. No matter how busy the season was, however, there won’t be another season unless clients pay their bills.
With the constraints of the current economy, some clients may be looking to cut costs, and some of those costs may be in withholding payment on a contract. As the season winds down, a client might forget all the snow moved or decide that not enough work was done to complete the contract. When a customer doesn’t want to pay for services, a business owner has lots of options before going to court, and some of them might even keep the customer around for next season.
Regardless of the approach, communication is necessary as soon as a payment is missed. "The idea is to let the client know that it’s about time that the bill was paid, and we want to keep them as a client at the same time," says Greg Bashaw, Fairway Landscape Snow Management, Long Island, N.Y. "We need to discuss it with them and let them know we are in the same position they are. We’re reliant on getting paid on time, just like them."
A relationship cultivated with a client can make hard financial times go more smoothly for all parties, since both the customer and operator can work together to fix the situation.
"It pays to get to know them before it becomes a problem," Bashaw says. "You let them know that it might be a situation they’re under right now, but if there’s a problem we’ll try to negotiate with them and work with them."
Fairway Landscape offers discounts and plans to work with troubled clients, and will still provide snow removal service as long as the customer attempts to make some payment.
"If you can’t pay the bill because you didn’t budget for something, we’ll negotiate it and go drop salt," he says. "We never stop service. We want it where we can keep you as a client. It costs a lot less to retain a client than to get a new one, and that doesn’t even always work out."
Though he sometimes attaches a late fee to make up losses, Bashaw sees some response from the communication with the client before resorting to the courts. One client from several seasons ago went all the way to court in dispute over payments, leaving Bashaw’s company still short $600 of the owed total.
"That’s the biggest mistake that people will make, working for a client that’s not paying," said Missy Reinholt of Createscape in Mukwonago, Wis. "If they’re not paying, they’re cut off."
After a bill gets ignored, Reinholt continues to communicate with her clients, but under a different tone.
"You can sound as reasonable as anything," she said. "I tell them, ‘This is all in your contract.’ If after 30 days it still hasn’t been paid, we’re not setting foot on the property. Salespeople want to be somebody’s friend, but there’s no paycheck if they don’t get paid."
For clients who have been around for a few years or have earned a rapport with the company over a few seasons, Reinholt will negotiate based on their past paying habits. When a client has had issues with keeping bills paid, however, she has no trouble standing up to them and turning the case to her lawyer, even if it means cutting off business with the client in the future.
"Most customers are pretty good about it, so it depends a lot on them," she says. "But if you don’t want to lose the customer – if they’re behind on the payment, why would you want a customer who isn’t paying? If they don’t have the money now, why would they have it later?"
Going to court over each case just isn’t cost-effective for Anthony Martirano of Martirano Landscaping in Beachwood, New Jersey. Rather, he starts out by sending a letter at 30 days and cutting off service after 45 days, with phone calls and visits to keep open communication with the client. In the second letter, he offers to waive the late fees if the bill is paid.
If the client still ignores the bill and refuses to make any effort to pay, Martirano takes the invoice to the New Jersey courts and places a lien against the property. By state law, the action requires only a valid outstanding invoice and $25, and the courts will send a notice to the property owner.
"They have a chance to appear before the court to dispute it, but they rarely do," he says. "I see about a 95 percent return rate on that in just a few days. It’s just something that people don’t want on their property."
To have the lien removed, the property owner has to pay the bill plus interest. A similar injunction can be gotten through a little more work with the Uniform Commercial Code for businesses. For Martirano, the smaller cost makes the action a viable way to remind customers that snow removal operators are serious about getting paid for hard work.
"Some people think that [snow removal businesses] aren’t real businesses. They think we’re just a bunch of guys with trucks," he says. "Being up front with them reminds them we did a $500,000 in business last year, and they need to take us seriously."
Kyle Brown is a freelance writer based in Canton, Ohio, and a frequent contributor to Snow Magazine.
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