This is a column by landscapers, for landscapers. In it, you’ll find knowledge, views and insights from professionals just like you, who are currently working in the industry
How do you handle late or non-payers?
South Pacific Landscapes
Interviewee: Julian Peach
Location: Hawke’s Bay
Staff: 20
We haven’t had many late payers as our clients generally aren’t using borrowed funds to finance projects. A lot of our clients are high-end and have the cash to pay for jobs. They don’t tend to be late payers, so, fortunately, we’ve largely managed to avoid those situations.
There have been a couple of occasions where, after numerous phone calls to clients, I’ve had to initiate proceedings with the Disputes Tribunal. Both times, the day before the hearing, the clients phoned and paid the amount they owed. So, for a $75 application fee, we got our money.
Going to the Tribunal is a last resort. If a client misses a payment, we will send them a statement up to three times. Then, we’ll phone and try to meet them face-to-face. I had one instance where I brought my accountant to the meeting and, by the end of it, the client had paid up!
To minimise late payments, you need a clear understanding with your client about when you expect payment, as well as a clear understanding of the amount they owe. It is also important to maintain robust record-keeping and instigate progress payments. I prefer to send my clients smaller invoices on a more regular basis than hit them with one big one, which is also better for cashflow.
Tuatara Landscapes
Interviewee: Glenn Coulter
Location: Northland
Staff: 6
We typically don’t have any problems these days; however, earlier in my career, I had a few difficulties and I learned from them. One of the things I learned was that you need to make your payment terms and conditions clear to your customers, so they have a good understanding of what is expected of them before you engage in any work.
Secondly, I’ve learned that quotes need to be detailed because they set the customer’s expectations from the start.
Being clear and transparent is key to avoiding payment disputes and it can help catch any problems – before they get to a stage where people are withholding payment from you.
If it looks like you’re going to go over budget, you need to be very open with customers about what’s happening, what has caused the cost escalation and what the new price is likely to be.
Doing that removes surprises at the end of the job and allows them to reduce costs in the later stages if necessary, which means you’re more likely to keep them on your side.
I use a job management software called Simpro, which keeps helps us keep tabs on the cost of jobs as they progress in real-time.
Ellis Landscapes
Interviewee: Erik Ellis
Location: Canterbury
Staff: 2
I’ve always been careful about who I work for and I tend to trust my gut when it comes to taking on new clients. If I don’t like their vibe, and I’ve got enough work on, I usually turn them down. Saying that, you can never totally guarantee you’ll take on a good client.
We’ve only had to go to court once in 30 years of business, and that was for a client who came well-recommended! But then we found out later they’d had similar issues with other trades.
I’d recommend charging for a consultation because it sets clients up with the expectation that engaging us would cost them money. As a general rule of thumb, I’ll ask for a deposit of up to 50%, depending on the nature of the job.
I’m also very proactive on progress payments; either once a month or as I finish parts of a job. I want to ensure I’m not spending my own money on labour or materials.
It’s important to remember that, while contract law can protect you, once you get into a dispute, the client has time and your money on their side!