# How Common is Asking for Payments Up Front?



## NEhomer (Dec 3, 2016)

This seems absurd to me but the plow guy I just let go sent us a letter last year before the snow season asking us to pay for 6 non-refundable plowings. He said that he needed the revenue to get his equipment in order.

Is this like asking your clients for a small business loan or am I missing something and it's actually a common practice?

I especially don't get the non-refundable part.

We never sent him the advanced payments and he plowed anyway. As I said I'm not using him anymore bit I was curious of what you pros thought.


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## snowplower1 (Jan 15, 2014)

It is common to give the option of payment up front. Really only with driveways though. It is not common for it to be nonrefundable. personally It's better to pay throughout the year


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## Randall Ave (Oct 29, 2014)

If he's a real business, he has the capital to get his equipment in order.


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## SnoFarmer (Oct 15, 2004)

On all seasonal Residential drives, 2payment plan.
1st payment, nov 1st,
Or at time of signing a contract.

2nd payment feb1st
Or services stops.

No refunds,
I don't care.....


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## TMLGC (Sep 22, 2013)

Another landscape company in my area that is very established and been around over 20 years require all their residential customers to prepay for the 1st 3 storms. Not sure if that is to make sure he does not get any deadbeat people or if he does it to help with cash flow in case of a very slow start to the season. I know he had several guys he guarantees 40hrs year round.


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## Randall Ave (Oct 29, 2014)

Was there a contract, and what was in it. But I would never say I need money to fix up my equipment before the season starts.


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## framer1901 (Dec 18, 2005)

On 95% of our residentials, we bill 100% on November 30th, figuring to be paid by end of December.

A few reasons - your more apt to get stiffed by residential customers; I only want to send you one bill, not 2,3 or 4.

We don't monitor real close who's paid and who hasn't though - If someone needs to pay it out in three or four months, I'm plenty fine, I just hate folding invoices and stuffing envelops for small $$ amounts.

Cash flow is always nice but when someone needs it to get their equipment in order, that should be buyer beware.


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## Defcon 5 (Mar 20, 2014)

On seasonal Resi accounts I had a seasonal pre pay option..If payed in full for the season by November 15 you received a 5 % discount...It's amazing how many people jump at that discount..


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## theplowmeister (Nov 14, 2006)

Since I do seasonal contracts only I get paid up front.

do you have insurance? you pay up front for that.
How about rent or mortgage you pay a month up front for those.


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## areoseek (Mar 13, 2013)

All of my contracts are paid up front. No refunds implied


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## ktfbgb (Jan 31, 2016)

Defcon 5 said:


> On seasonal Resi accounts I had a seasonal pre pay option..If payed in full for the season by November 15 you received a 5 % discount...It's amazing how many people jump at that discount..


Same. All of my Residential's are second or third homes. They are hardly ever there, and just want to pay one price up front for the season. That way if they do decide to come it's always taken care of. They also like knowing that if there is a fire, gas leak, the cleaners come etc. there is always access. I get all money up front as I have enough to do with billing out and collecting for the commercial.


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## SnoFarmer (Oct 15, 2004)

And getting the money up front ensures I can get new lights for me plow.


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## Mr.Markus (Jan 7, 2010)

Defcon 5 said:


> On seasonal Resi accounts I had a seasonal pre pay option..If payed in full for the season by November 15 you received a 5 % discount...It's amazing how many people jump at that discount..


I do this with both resi and commercial...


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## NEhomer (Dec 3, 2016)

Thanks for all the perspectives...interesting stuff. That's why I asked if there was something I was missing and I was.



theplowmeister said:


> Since I do seasonal contracts only I get paid up front.
> 
> do you have insurance? you pay up front for that.
> How about rent or mortgage you pay a month up front for those.


Yeah I do, however, I don't pay for insurance and then endure a period of time with no coverage. I was mostly balking at the non-refundable part. I can see why a seasonal contract may be easier and to garner a few payments up front even. I would just feel compelled to return payments beyond the work I actually did unless it was a flat rate for the year.


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## areoseek (Mar 13, 2013)

NEhomer said:


> I would just feel compelled to return payments beyond the work I actually did unless it was a flat rate for the year.


defeats the point of seasonal contracts. we hope for an easy winter so we can pocket the change.


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## 1olddogtwo (Aug 6, 2007)

NEhomer said:


> This seems absurd to me but the plow guy I just let go sent us a letter last year before the snow season asking us to pay for 6 non-refundable plowings. He said that he needed the revenue to get his equipment in order.
> 
> Is this like asking your clients for a small business loan or am I missing something and it's actually a common practice?
> 
> ...


I see both side of the coin......

I think collection upfront is the way to go, I should say I don't do driveways.

I like to pay upfront, or overpay future bills like gas, electric, etc. Get it done, move on to the work at hand.

I just don't get the 3 pushes or refund, as someone mentioned......it's a loan.

No if he asked for full payment and no refund, I could understand that.


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## FredG (Oct 15, 2012)

With the guys that went to jail around here for collecting monies for services and disappearing you might have a little problem collecting resi's up front in Upstate NY. The media never let up either making it hard for the honest. I agree if the guy states he needs it for startup I would be a little nervous. IMO be kind of hard to catch up if you need reconditioning money or material for start up.


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## cjames808 (Dec 18, 2015)

We require 25% down on all commercials at signing.

Have a 100 unit condo who says the check is in the mail. Signed 5 weeks ago.

Guess who is on a "stoppage" for non payment? I'll wait until the residents call the pmc and complain.

Then I'll explain we take credit cards. 

$$$$ account too, junior manager just fudged up her largest account.

I'll drive thru with my blade up. Maybe a board member will flag me down. Dunno.

Sucks but I'm not putting our crew there without a dime. Already have over $$ into staking, measuring, and a dry run.


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## Philbilly2 (Aug 25, 2007)

Maybe the industry has changed... 

If someone asked me for payment for work rendered before they even step foot on my property, I would laugh them off my property. 

You have a contract right?


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## ktfbgb (Jan 31, 2016)

Philbilly2 said:


> Maybe the industry has changed...
> 
> If someone asked me for payment for work rendered before they even step foot on my property, I would laugh them off my property.
> 
> You have a contract right?


I think what most of are talking about are seasonal contracts. I don't see this working for per push or anything. I do know a lot of guys that are charging per push on Residential's are now requiring a retainer to get on the route. The retainer is non refundable. My Residential's are seasonal, and pay everything up front. I do have the option to set up automatic monthly credit card payments but I don't advertise that. I have it in case someone wants it but have never been asked. I don't think commercial seasonal contracts would pay up front. It is common around here to get a percentage up front for the seasonal price, and then set monthly payments after that. I do the same kind of thing for residential remodeling. I require 50% of the contract price up front before ordering any materials to start the job.


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## cjames808 (Dec 18, 2015)

I had the materials on order waiting to be paid and picked up for this place. We are on contract with detailed terms required from both parties.

Once I heard "it's in the mail" twice I'm taking a different view of the company credibility. We have another smaller contract with them that is paid in time, different main managers it seems. 

Im going to monitor the property in the mean time and make a phone call when the time comes. 

We are honest and have integrity.


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## Philbilly2 (Aug 25, 2007)

I get a seasonal contract, guess I never got paid before the season started. Had to have equipment on site, salt dropped and tarpped, then on Dec 1st I could bill for the 1st month even if we did not do anything but monitor. Then wait my 30 days and January 1 saw a check if I was lucky.

Yeah, guess residential is a different world then on contracting too. I would tell you to take a hike if you asked for 50% down. 

If I went to one of the schools or hospitals that we do work in and asked for a nickel up front, they would laugh me out the door.


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## areoseek (Mar 13, 2013)

ktfbgb said:


> I think what most of are talking about are seasonal contracts. I don't see this working for per push or anything. I do know a lot of guys that are charging per push on Residential's are now requiring a retainer to get on the route. The retainer is non refundable......QUOTE]
> correct. And I like the retainer idea. I may use that for next year.
> 
> asking someone to pay for any "per-push" visits in advance is ludicrous, outside of a retainer like you've mentioned. it's all in the phrasing.


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## ktfbgb (Jan 31, 2016)

Philbilly2 said:


> I get a seasonal contract, guess I never got paid before the season started. Had to have equipment on site, salt dropped and tarpped, then on Dec 1st I could bill for the 1st month even if we did not do anything but monitor. Then wait my 30 days and January 1 saw a check if I was lucky.
> 
> Yeah, guess residential is a different world then on contracting too. I would tell you to take a hike if you asked for 50% down.
> 
> If I went to one of the schools or hospitals that we do work in and asked for a nickel up front, they would laugh me out the door.


Yes the commercial contracting is a different ballgame. My contractors license is only residential. I am in the process of upgrading to a dual residential/commercial license. Same with my commercial snow plowing and even the small contracting work I do for property managers on HOA's. They would never pay a dime up front and if you asked they would probably drop you as a contractor. Just two totally different markets. And maybe its a regional thing but for residential contracting I have never lost a bid due to my 50% up front requirement. I actually started out not charging anything and doing traditional draws. After being asked by a lot of customers if I want anything up front to start, I decided to give it a try. Let me tell ya I will never go back to the other way for residential. Its really nice having a cushion prior to starting the job, and that way the customer has skin in the game as well and it kind of helps prove that they have the available funds. Ive never been stiffed by a customer yet but if that did happen at least my material suppliers and payroll would be covered for the job.


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## ponyboy (Dec 19, 2006)

Even some nationals pay up front it all depends on your contract 
I get monthly installments usually start November 1st ends march 1st 
It all depends on what you put in your contract 
I'd say you are crazy if you don't get money upfront 
I'm small guy 10 trucks and 5 skids cost me in average $1000 per vehicle and salt upfront and calcium so total about $30,000 to lay out each November so yeah I take upfront money


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## TPCLandscaping (Jan 19, 2012)

Randall Ave said:


> If he's a real business, he has the capital to get his equipment in order.


thats not always true... I'm looking at a pretty tight bank account because I'm trying to keep 3 very good employees going until snow starts. My seasonal accounts are helping keep things going, even though we are still doing fall cleanups.

back to the original post, i would say that it sounds like the guy was trying to get you to pay a seasonal price, with the option for paying for more plowings if there is more than he expected. I do all my residential as per push, and commercial are kinda a mix (seasonal and per push).


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## MSsnowplowing (Nov 1, 2012)

If it's a seasonal it's common to get a percentage down with the signing of the contract and then the balance spaced out in payments starting in November.

For per storm, I don't know anyone who gets a percentage, it's usually billed after each storm or end of month.

That's why it's nice to have a mixture of seasonal and per storm.


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## JCONTRACTING (Dec 5, 2016)

As long as it isn't per push I always require a percentage up front and then payments to begin November 1 and ending on May 1.


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## Jacobmb (Dec 3, 2013)

Firstly, I know what not having enough capital to get going felt like. Either you trust him and you want to give him your business or you don't. He could be giving you any reason under the sun to collect upfront, imo his reason is irrelevant. The question is if you trust he will do the work competently and therefore willing to contract upon his terms.

My residential clients have 3 options for payment. Keep in mind the contract is for 5 months and unused time is not refundable, therefore neither are the payments. "There will be no refunds issued for unused time or services set forth by this agreement. This contract may not be canceled".
Clients may:
Prepay upfront before Nov 15th to earn a discount.
Provide 50% upfront with 50% payment by Jan 30th
Provide 5 Post Dated Cheques

Commercial Properties have 1 option. 
The contract is for 5 months and upon cancelation, the payment period becomes the cancelation period and post dated cheques for the following periods are refunded.

Provide 5 post dated cheques: November 15, December 15, January 15, February 15, March 15. 

For example, if they cancel January 1st, I keep the December 15th payment (which has already been deposited) and covers them until January 14th. Service continues until January 14th and then a final salt invoice produced and at that time the cheques for the 3 remaining periods are returned. Take it or leave it.

OP, keep in mind terms and conditions are whatever two parties can agree on. If non refundable prepayment in full doesn't work for you, I don't blame you. That being said, I have clients jumping at me in September and October with full prepayment for the season of snow removal.


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## NEhomer (Dec 3, 2016)

Well I appreciate your input and everyone else's. That's why I was asking what I was missing. One thing I've learned is that there's a whole lot more to this plowing thing than most people bother to think about~


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## plow4beer (Nov 16, 2016)

SnoFarmer said:


> On all seasonal Residential drives, 2payment plan.
> 1st payment, nov 1st,
> Or at time of signing a contract.
> 
> ...





Defcon 5 said:


> On seasonal Resi accounts I had a seasonal pre pay option..If payed in full for the season by November 15 you received a 5 % discount...It's amazing how many people jump at that discount..


On our seasonals, we do 60% Nov 1rst, remaining 40% due Jan 15th. Never gave the option for a discount for all 100% up front....Not sure if any of them would do it for 5%? And doubt I'd want to give any more than that up anyway...5% of some of them equates to a lot of alcohol.


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## SnoFarmer (Oct 15, 2004)

plow4beer said:


> On our seasonals, we do 60% Nov 1rst, remaining 40% due Jan 15th. Never gave the option for a discount for all 100% up front....Not sure if any of them would do it for 5%? And doubt I'd want to give any more than that up anyway...5% of some of them equates to a lot of alcohol.


No discounts.
No way, no how.

I do this to make money, not sure why others do it.

Without a profit,
WithOut making considerabley more than you spend, you will end up in either bankruptcy of your business
Or it is a hobby that you support by other means.

Yea Yea, You have. 5years to show a profit.....

All of my clients have paid in full
.
It's snowing.
The trigger has been met.
Time to spend the money.


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## Ramairfreak98ss (Aug 17, 2005)

When we still did residentials,mew charged either a $50 deposit or one plow charge so people can't plow out with a cheaper guy or kids going around them we'd show up and don't get paid to plow


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