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RealKidJoker

Cash Flow

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RealKidJoker

I was round looking at a women's solar panels that she had messages me about. She only has 9 but it turns out they're going to be un-reachable.

 

Anyway we got talking and she happens to be a financial coach. She was offering me loads of tips and one was a great idea.

 

For large twice yearly jobs such as solar panels on domestic properties, she suggested taking payments from customers on a monthly basis rather than two lump sums when the job is finished.

 

Say each clean is worth £60, 2 cleans a year would be £120 so this customer would pay you £10 per month and in return you'd clean their panels twice a year. This would mean you'd have a constant cash flow coming in and it might be more appealing to the customer.

 

Wouldn't work with windows as they're monthly anyway. Just wondering if @Solar Steve has maybe thought of this as he's obviously built up a significant client base with regards to solar panels.

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Smurf

I'm no finacial coach but not being funny if ppl can't afford to pay you to do a small job for say £60 then they are not worth having surely?

 

If you are also that worried about cash flow you need also need to build up your client base.

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Smurf

The types that would want to spread out the cost of say £120 cleaning bill over a year is not the customers I would want quite frankly.

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RealKidJoker

No I'm not worried, just wondering if anyone did this as she said it's common with plumbers - pay X amount per month and get X amount of boiler checks per year.

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Declan Mc

I think there is merit in this. Perhaps the OP was just using the $60 figure as an example - I agree it should sound alarm bells if a customer wanted to spread such a low cost over the course of a year. I know that a lot of big businesses are switching to the subscription model - it means predictable revenues and more loyal customers.

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RealKidJoker

Yeah I just used the £60 as an example for easiness to work out :whistle:

 

Say it was 2 cleans (solar panels, driveways etc) at £200 each. The customer would have a direct debit set up for £33 approx per month in return for 2 cleans per year as opposed to forgetting for 6 months and getting hit for a £200 bill, or £500 a time in @Smurf's case :ninja::rolleyes:

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TolishAPurd

I can see it working for some jobs, but I can't picture a job I do where this would be a good idea. I can't imagine people want to see £30 or whatever coming out of there account for something that happened 6 months ago, or due again in 6 months.

 

A big worry for me would be people that run into financial difficulty, that then decide to cut the direct debit. There's a lot to be said for getting the payment in one lump straight away on the completion of the job.

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Smurf

They call me I don't call them so obviously they can afford it or they would not want the work do in the first place surely?...How would you like to pay.. by instalments I don't think so somehow :D

 

Yeah I just used the £60 as an example for easiness to work out :whistle:

 

Say it was 2 cleans (solar panels, driveways etc) at £200 each. The customer would have a direct debit set up for £33 approx per month in return for 2 cleans per year as opposed to forgetting for 6 months and getting hit for a £200 bill, or £500 a time in @Smurf's case :ninja::rolleyes:

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Green Pro Clean Ltd
I'm not a plumber I'm a cleaner so don't rip ppl off so much :D

 

So let me get this right Smurf. Are you saying that my best mate that paid off his South London flat and is currently on holiday in South Africa and will be house hunting in Andalusia once he gets back from vacation is a Plumber?

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peter rogers

i can see were she is coming from

 

 

remember peeps its an idea not a laughin match

 

 

back in the day so many years ago a guy designed a system called wfp everyone says that wont work :P welll

 

i thinkin of one

 

wat about pressure washing say 100 pound job

say u spray for weeds 4 times a year at xx amount

 

divide that out between 12 and customers can keep the home clean for so much a month

 

means we get to do the same job every year or is this silly idea ???

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Declan Mc

I think a lot are looking at this from the wrong point of view. You wouldn't go out and convert existing customers who pay on completion to this form of payment. It would be more for prospective customers with big money jobs who perhaps don't have the cash flow to make a lump sum payment at once and perhaps would put off work until they had the cash. By offering to do the work and accept a regular scheduled payment, you would possibly get preference over someone offering to do the work for less but wanting it paid on completion.

 

Just my 2 cents worth.

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peter rogers

id only do it if i was getting the job yearly ie big pressure wash job or yearly pvc clean or somethin

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Guest Solar Steve

I think it's a good idea, but it is not flawless. Cash flow is a crippler. We have funded some big jobs, spent on getting them done, wages, fuel, cherry pickers etc, then had to wait nearly 60 days to get paid. It makes life very difficult, especially if you have another big job straight after.

 

We've managed until now, but the jobs keep getting bigger and so do the expenses. What I'm going to try and negotiate from now on on large projects is to take a 20% deposit. While this will not cover all of the expenses, it will ease the pain.

 

The monthly payment schedule your client suggests will work in some circumstances. But I think there's a fear factor on both sides. They are paying you ahead of cleans. What happens if the clean is shoddy, you don't turn up or if you go bust? The flip side is what happens if they don't pay?

 

I think it could be a great solution in some instances as well though.

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Guest boarcity

its an interesting concept, and not only for the bigger jobs. id think itd be a winner on the £5-8 touch , "im always skint" [but this cannot be true once you dig in the pockets] type of customer . theres a lot of this type around who have only a tenner on them but i -need -it- for -baccy and have forgotten you are coming.

 

a simple payment plan would suit this sort very well

 

i have many £5 bug hutch type jobs where the customer gets behind a few payments then catches up [[and overpays at least once every 2 yrs to curry favour ]] but then gets into debt for another few months and starts sh//ttin themselves over it . but is a very nice loyal person and so it goes on. offering up a simple organized payment plan might suit these too rather than letting them cancel

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Green Pro Clean Ltd
I think a lot are looking at this from the wrong point of view. You wouldn't go out and convert existing customers who pay on completion to this form of payment. It would be more for prospective customers with big money jobs who perhaps don't have the cash flow to make a lump sum payment at once and perhaps would put off work until they had the cash.

Just my 2 cents worth.

 

We talk of large jobs, but that has to be relative, £100 job is a couple of hours at the most and no we do not consider that a large job here. £100 divided up into the year is £8.33 per month. Which is about the price of most windies charges for a terraced window clean around here.

 

IMO you would have to be looking at £3 -£500 plus before it would even be worth contemplating.

 

But here's the catch!!!

 

We all have had that customer, 'Yes please clean my windows' 'OK Job done that will be £10 sir' 'Oh, er got no cash on me, can you pop back this evening?, oh East Enders is on, pop back later, oh it looked like sunshine so I didn't walk to the ATM' And they just keep dicking you about till you have spent twice the original price on fuel going back and forth to collect and you still havn't had a brass penny from them.

 

It is those types that I can see being the only ones that would want to take advantage of something such as an installment / maintenance plan.

 

How are you going to collect? Unless you have a business account (shed loads of windies use personal accounts to avoid bank fees) you can't get them to sign a Direct Debit, you would be reliant on them to go online and make that monthly payment. Only other viable options are Paypal recurring payments, or GoCardless both of which can be cancelled by the customer at the click of a button.

 

Lastly, what happens when after the second payment you are still say £250 short of being paid up in full for the year when you payments get bounced as they don't have the funds in the bank to cover it? Are you going to drag them to petty debts? Spend more time and money trying to get money from someone that doesn't have any? Only to have a judge tell them to pay you £10 per month for the next two years? Cause that aint going to happen, they already proved once they cant / wont pay.

 

Here in Nottingham they have what's called the 'Bread and Lard crew' I don't know if this is a common English phrase but it means the folks who live in the big house on the hill with his Bentley and her Range Rover on the drive, all designer clothes, top club memberships and all financed up the arse so when you look in their fridge all there is to eat in a slice of bread and lard! I think that's the ones that would be asking credit terms.

 

I do think it has legs where you could up-sell your services from the beginning:

 

Monthly Window Cleaning £144 per year, annual Gutter Clean £100 Power wash pathway £100 per year (all example prices not set in stone) Total £344 per year. or you can spread that out over the year for £29 per month no interest or charges Mrs Smith!

(But do point out that the power wash and guttering only get done come month 12 once they been paid for!

 

We do have a few customers we have done large jobs for and we have on rare occasion split the payments in to two or three monthly payments but always with at least half up from. I wouldn't personally go any further than that.

 

It is a personal choice for each individual operator at the end of the day.

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Smurf

http://www.lawdonut.co.uk/law/sales-and-marketing/offering-credit-to-consumers

 

Offering credit to consumers

Offering consumer credit can be an effective way to boost sales. But under the Consumer Credit Act, most businesses that offer consumer credit must have a consumer credit licence. If you offer consumer credit, you’ll also need to ensure that your credit agreements are legal and enforceable.

Consumer credit licences

Your business is likely to need a consumer credit licence if you sell on credit to individual consumers (as opposed to business customers) or hire out goods to them for more than three months. This also applies for business customers who are sole traders or small partnerships. You do not generally need a consumer credit licence to offer credit to limited companies, or for business sales which are always worth more than £25,000.

You do not need a consumer credit licence to accept payment by credit card (unless you issue the card yourself). You can allow customers to pay in four or fewer instalments, within a year, without needing a consumer credit licence.

If you need a consumer credit licence, you apply to the Financial Conduct Authority (previously the Office of Fair Trading) and pay a fee. The Financial Conduct Authority can reject your application if they think you are not a ‘fit person’ to hold a consumer credit licence - for example, if you have a record of treating customers unfairly.

Offering consumer credit without a consumer credit licence is a criminal offence. As well as facing a fine or even imprisonment, any credit agreement will be unenforceable.

Consumer credit terms

If you offer consumer credit, you must give customers a credit agreement to sign. The credit agreement must give detailed information about terms such as interest rates, credit charges and so on. Unless the customer signs the credit agreement on your business premises at the time, there is a cooling off period during which they can cancel it.

There are no set limits on what interest rates you can charge, but an unfair agreement will be unenforceable. You may want to take advice on how you can use the consumer credit agreement to protect your business - for example, by retaining legal ownership of goods until they have been fully paid for.

Other requirements of the Consumer Credit Act include providing statements to customers with outstanding balances, and notifying them if they fall behind with their payments. Customers must also be allowed to repay any debt early, generally without paying future interest charges.

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Declan Mc

Well, that pretty much ends that discussion! ;)

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Guest SolarPanelCleaning

Some larger window cleaning firms round here, have customers set up direct debits. I can see the benefit of this.

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Duncs

you do big job for someone you want paid full amount

its like when you lend cash say £2000

you want it payed back in full not in bits and pieces

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KiwiNeil

I have been reading this with interest.

 

In regard to the consumer credit licence would you need this if you were allowing the customer to pay by installments in advance of the service?

 

I can see some merit where a customer who regularly gets their windows done would also like a gutter clean (or what ever). Assuming that a gutter clean is a LOT more than a window clean there may be some benefit to the customer in allowing them to pay for their windows each week/month/whatever with an additional; payment (being enough that they have paid for their gutter clean the month before it is due).

 

Not sure how attractive this might be to customers (being at the far end of the world means a level of disconnection)

 

Would obviously need VERY good record keeping to ensure that the money is all paid AND that the service is provided on time.

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