One of the most frustrating experiences across any industry is giving a client what you believe is a world-class service, only to run into issues getting them to pay.
This challenge is pronounced in landscaping when you have to pay out of your own pocket for materials and labor. You can end up paying hundreds or thousands of dollars in greenery and hardscaping features, and pay your team for multiple days work - there’s a lot of risk there.
It’s clear you need to collect some degree of payment before work begins to at least cover your own costs. But, should I charge the customer upfront or take a deposit for landscaping services? We’re here to weigh both options.
There isn’t necessarily a one-size-fits-all answer, though. It will depend on how much your costs are for the job, your relationship with the client, your company’s cash flow needs, and a few other factors.
Whatever you decide on how to bill lawn care customers, though, one thing remains constant - you can make life easier for yourself and your clients through the best landscape billing software.
InvoiceSherpa helps you streamline the financial management of your company while getting you paid faster, putting the problem of late payments in the past, and helping you fulfill all your obligations while growing the business. Learn more below!
Keep in mind that not every job requires collecting some sort of payment upfront. If you’re performing a simple maintenance task like lawn care or shrub pruning you’ll only have labor costs - and they’ll be somewhat low.
However, more extensive jobs that require a whole day of labor for multiple employees, or jobs requiring you to purchase materials out of your own pocket, necessitate some degree of cushion.
This offers peace of mind that your costs are covered by either a deposit or the full payment upfront. The question is, should I charge the customer upfront or take a deposit for landscaping? Let’s look at the pros and cons of both options below.
While taking the full payment for a job upfront sounds great in theory, it can be a tough sell for clients. You may find yourself losing jobs because customers simply aren’t willing to do it.
Requiring a deposit can still be a barrier for some clients, but it’s a much easier sell than charging the full payment amount upfront.
You may already be leaning towards one method or the other at this point - be it charging the full landscape job upfront or taking a deposit to cover costs without creating too much friction with the customer.
But if you’re still wondering, should I charge the customer upfront or take a deposit for landscaping, here are the factors you need to consider.
For smaller projects with lower costs, charging upfront may be more feasible and less risky. This ensures immediate payment and minimizes administrative work. You may even consider not charging anything upfront for jobs with minimal costs or no costs at all besides labor.
For larger projects, taking a deposit can help cover initial expenses without scaring the customer away and causing you to lose the job. Assess the total project cost, duration, and complexity to determine which payment method aligns best with your business model.
Your relationship equity with the client should also guide your decision to either charge a deposit or charge the full amount upfront. There are two schools of thought here:
It’s up to you to determine which side of the fence you fall on. That being said, new customers should always be charged a deposit, if not the full amount upfront, to set the tone for timely payments from the start.
Think about where your cash flow cycle sits today. Are you hurting for capital to fulfill your own debt obligations, or interested in making some strategic investments that will benefit your company in the long run? If so, capturing a full project payment upfront is a great option.
On the other hand, if you have ample free cash on hand, you may not feel as desperate to infuse money into your business and will be just fine with covering costs through a deposit.
Ultimately, only you can determine what makes the most sense for your business when choosing between collecting the full landscaping payment upfront or taking a deposit.
Our advice? Simply cover your costs, whatever they are, with a deposit amount. You’ll find yourself having an easier time selling, and you won’t end up stressing about the risk of non-payment.
But either way, we want to quickly cover some best practices for upfront charges and deposits.
Clearly outline your payment policies, whether you require full payment upfront or a deposit, in your initial invoice for the client. Better yet, have this conversation with them before they agree to the project to prevent unpleasant surprises that could steer them away.
Explain the reasons behind your payment structure, such as covering initial costs or securing the client’s commitment. Open communication builds trust and helps clients understand their financial obligations, reducing the likelihood of disputes.
If you decide to collect a deposit, how much is standard? It all depends on the costs associated with the job. We recommend at least 20-50% of the total project cost, as this will be sufficient to cover materials and labor, while also demonstrating the client's commitment to the project.
Don’t make the mistake of charging an excessive deposit - because at that point, you might as well charge the full project amount upfront. High deposits will create friction that could cost you projects.
No matter how you charge for landscaping services, making it easy for your clients to pay is one of the best ways to address late or nonpayments.
You’ll find yourself sending far fewer payment follow up emails and demand letters for payment if you reduce the hurdles the client has to go through to pay. Payment methods include credit cards, electronic transfers, and checks - offering all of these means the client will have an option that aligns with their preferences.
You may even consider setting up payment plans for more costly projects depending on your relationship with the client and your own cash flow needs.
Investing in billing automation software is one of the best pieces of advice we have to offer landscapers, as it empowers you to spend less time chasing down payments and more time servicing clients.
Wait, what is accounts receivable automation - and what are the accounts receivable automation benefits? You’re using software technology to manage everything from sending initial invoices to payment reminder notifications all the way to AR reconciliation in your accounting software.
This saves you time and stress while accelerating your cash flow cycle. But it’s not just your business that benefits - customers will have a more streamlined experience paying their invoices, too!
It’s as simple as choosing an automated invoice system, integrating with your accounting software and payment processors, and customizing your invoices, complete with a late fee notice on invoice to encourage timely payments.
As soon as customers pay the amount will be reconciled to close out the account, offering you unparalleled insights into your financial standing. We have a more detailed guide on how to automate accounts receivable if you’re interested.
You can also learn more about accounts receivable challenges and how automation can help in our blog if you’re still not sold on the concept. Or, you can try it out free for 14 days and experience the difference for yourself with InvoiceSherpa.
Our accounts receivable automation software is the premier choice for landscapers who want to spend more time growing their business and less time chasing down payments or dealing with manual inputs, which are prone to human error.
It’s like outsourcing accounts receivable and getting your own dedicated representative - but for as little as $49/month! Clients have seen impressive reductions in past due deliverables, days sales outstanding, and bad debt reserves. You can too.
You can sync with your accounting software in a single click, which brings in invoices and customer data. Then, you can customize all your automations - from the initial invoice itself to late payment reminders, recurring payments for regular landscape maintenance services, and more. Customers even get their own dedicated portal where they can view and settle outstanding invoices.
Integrate with Quickbooks, Clio, Xero, or any other accounting software. We even have integrations with payment processors and other software solutions that keep your business running smoothly.
So, get started today with the best accounts receivable automation software and see firsthand how it can elevate your landscaping business. A 14-day free trial is just a few clicks away!
We hope you have a clear understanding of when it makes sense to take a deposit and when you may want to consider charging the full amount upfront for landscaping services.
Most often you’ll find that a deposit is sufficient to cover your costs and leave you feeling confident breaking ground on a job, while avoiding the frustration of scaring a customer away by requiring payment before work is done.
Always consider the scale and complexity of a job along with material costs, your relationship with the client, and your specific cash flow needs. These factors will help you make the right choice.
But no matter your approach to landscape billing, InvoiceSherpa can save you time and stress while getting you paid faster, all while offering a better experience for your customers.
You can learn more about the accounts receivable automation best practices and other small business accounting tips in our blog. We have resources on how to calculate accounts receivable on balance sheet, maximum late fees by state, unbilled AR, how to forecast accounts receivable, AR management services, how to send an unpaid invoice to collections, and more.
At this point, though, it’s time to put cash flow problems in the past and stop chasing down payments so you can focus on growing the business and serving your clients. InvoiceSherpa effortlessly streamlines your financial management, and you can try it free today.
So what are you waiting for? Discover the power of AR automation today and transform your landscaping billing process!
July 3, 2024
