Billing: 5 steps to collecting payments

By |  June 27, 2016
Schopen_Art-payment-sign

Photo: Pete Schopen

Recently, I was talking to another pest management professional who told me something so scary, it forced me to sit down and grab the edges of my desk in a death grip: People owed him money.

People owing you money sucks! That’s why I don’t allow it at Schopen Pest Solutions.

This gentleman told me he owns a $400,000 company with more than $40,000 in late payments. I felt so bad for the guy, I wanted to reach through the phone and give him a hug. He’s a hard worker with good accounts, but how can you possibly run a company when clients owe you nearly 10 percent of what your company is worth? The answer is, you can’t. You can’t buy a new truck, you can’t hire a new billing lady, you can’t take the vacation you’ve worked so hard to set up. In 2015, we finished the year at $858,000 and we had only $2,400 in outstanding debt.

Just like in the military, every company has a chain of command that must be followed. The owner has a vision, and it is up to the employees to see that vision through. At Schopen Pest Solutions, I finish every sales call by telling the client (nicely) we expect payment at the time of service. Without fail, they finish by asking me whether we take credit cards. That’s it. Clients understand they must pay, and it’s up to my techs to collect. My guys know that they’ll never enter a house needing to haggle with the client. My billing department knows that a client who doesn’t pay won’t get any more services. At Schopen Pest Solutions, the client is going to pay.

Of course, you still run into Mr. Businessman who can’t be bothered with something as trivial as paying his bill. Or you have the nanny who has no clue why you’d be asking her for payment. The best, of course, is the frazzled mommy dealing with four kids at lunchtime and three of them are crying.

How do we get payment out of them? This is how we handle billing at Schopen Pest Solutions:

1) Every new client gets “the talk” from me (over the phone) about paying at the time of service. This goes for businesses, too. I tell every office manager who hires us that we expect payment at the time of service. Someone at that business has a company credit card.

Note: This includes termite inspections, too. How many times have you run into a sassy real estate agent who demands you be paid out of the closing costs? Forget that! What happens when the deal falls through and there is no closing? I won’t conduct a termite inspection without payment. Period. I have never lost a termite inspection because I demanded payment.

2) I hound every credit card that gets rejected. On the first day, Tami, my hot billing lady — settle down, she’s my wife — calls them. Second day, the not-so-hot owner (me) calls them. Third day, Tami mails them a bill. If they don’t respond to us by the time their next quarterly service comes up, we refuse to provide service. It rarely comes to that, but when it does, we always collect.

3) For key accounts, nannies or exterior services, we keep a credit card number on file.

4) We get our larger businesses (especially banks and funeral homes) to prepay for the year. In December, Tami sends them a letter for prepayment and they mail it back to us, minus a 5 percent discount for prepaying. This helps us with the winter cash flow and eliminates the need to mail one more client a bill.

5) I teach my techs to approach their clients in this manner:

  • Leave your equipment in the truck.
  • Walk up to the front door and introduce yourself.
  • Conduct a quick inspection.
  • Explain what you are going to do.
  • Ask the client how he or she will be paying today.
  • Ask the client to get that form of payment for you while you grab your equipment out of the truck.

By following this simple procedure, we avoid missing out on payments because the client understands we expect payment. Keep in mind we’re not doing this for our regular clients, just new clients.

There are some exceptions to the rule. Credit cards get rejected. Large corporations will not prepay or let me have a credit card number. Checks bounce occasionally. Clients forget to leave a check with their babysitter. Techs get nervous and allow a pushy client to bill that particular service. Things like this happen. But that’s where your billing department must stay on top of outstanding invoices. When someone owes us money, we add a note to their paperwork stating our tech must not provide service unless the outstanding debt and current service are paid in full.

When I was a kid, I heard stories about how Rocky Marciano loaned people money, and kept in his back pocket a little notepad of who owed him and who paid him back. I suppose no one would actually stiff one of the greatest boxers of all time, but you never know.

Apparently, that type of system worked for a one-man operation, but that would never work for a growing pest management business with several routes. Maybe I could hire Mike Tyson to ride along with my techs.


Schopen’s Open Book

Start-up: Schopen Pest Solutions Inc.
Headquarters: McHenry, Ill.
Founder: Peter F. Schopen Jr.
Start-up Date: April 11, 2006
Number of employees: 7
2006 Revenue: $97,235 (one employee)
2007 Revenue: $172,495 (one employee)
2008 Revenue: $203,732 (one employee)
2009 Revenue: $243,427 (two employees)
2010 Revenue: $325,960 (three employees)
2011 Revenue: $425,847 (four employees)
2012 Revenue: $489,887 (five employees)
2013 Revenue: $572,772 (six employees)
2014 Revenue: $687,326 (one part-time and six full-time employees)
2015 Revenue: $858,180; (one part-time and seven full-time employees)
2016 April: $95,950 (more than double April 2014)
2016 First Four Months: $271,525 (more than $71,000 more than 2015 YTD)
2016 Projection: $1,081,306 (eight full-time employees)

Contributor Pete Schopen is president of McHenry, Ill.-based Schopen Pest Solutions and can be reached at 847-529-BUGS or pete@schopenpest.com.

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