The Business of Lawn Care: Billing and Payment Options
If you own a lawn care company, you know it’s about much more than yard work. In “The Business of Lawn Care” series, we discuss topics related to managing and growing a company in the lawn care industry.
Billing is not the most exciting part of owning a business, but it keeps your business operating. This blog post will discuss several decisions to make regarding billing frequency and payment methods.
The first decision to make is what payment methods you’ll accept. With so many options available, it can be overwhelming. But keep in mind that offering more payment options ultimately makes it easier for customers to do business with you.
Despite processing fees associated with credit card payments, it’s still worth accepting this method. Doing so gives your business more credibility, because consumers have come to expect the convenience of a credit card payment option. When businesses go from only accepting cash and checks to also accepting credit cards, they experience an increase in sales volume.
The best payment option to encourage your customers to use is an Automated Clearing House (ACH) payment. This method eliminates credit card processing fees by facilitating a direct transfer from your customer’s checking account to yours. Another advantage of ACH payment is that checking account numbers change less often than credit cards.
It can also be a good idea to accept Venmo and PayPal payments, as these are especially gaining popularity among Gen Z and Millennial consumers. Just be sure to account for these transactions as you would for any other payments. Beginning this year, the IRS will require third-party payment platforms to report payments exceeding $600 a year. A tool such as QuickBooks or CRM software can help you manage billing and facilitate transactions through various payment methods.
When it comes to billing frequency, there are five common models. The first is “pay as you go,” which involves leaving an invoice or billing the customer after each service. This model is the traditional approach in the lawn care industry.
The second most common billing method is “prepay,” where customers have the opportunity to pay in advance (typically with a 5% discount) for an entire season of services. Companies have historically billed at the end of the year for the following year’s services. This model is hard on cash flow, which is why some opt for more frequent billing.
An increasingly popular and profitable emerging billing model is the “subscription” or monthly billing model. Like popular streaming platforms, lawn care companies can effectively offer monthly subscription packages for their services. This model is successful because it’s already familiar to consumers.
It may sound counterintuitive, but the ability to cancel anytime can lead to higher customer retention. The convenience of a monthly subscription is especially valuable to homeowners as they manage their personal budgets. It also provides a regular touchpoint for your company to communicate with customers and ensure they are satisfied with your services.
Whether you embrace a monthly subscription model or another billing frequency, choose the option that best suits your business and customers. A clear payment collection process ensures that you can continue providing the services that got you into the business in the first place.
Beth Berry
Vice President of Turf and Ornamental Sales
