# Financing/Payment Plan



## cfield (Jul 4, 2013)

Ive been looking at quite a few big jobs lately, but it seems people just dont have the $. And its not like Im getting underbid or am overbidding, the jobs just arent getting done. My grandfather and Dad have sold used cars for the past 40years and have done quite well by offering finacing. Am I crazy to think this could work doing tree work.

I was thinking of obviously having a written contract, ask for say 20-25% down and spread the rest out over a year. And maybe only offer it for jobs over a certain amount. I dunno, just a thought to get more buisness and help people out more if possible. It seems once a week I look at a job that a retired couple or an old lady certaintly need done most times in the interest of safety but just cant afford it? Any insight from other Buisness Owners would be appreciated.


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## ATH (Jul 4, 2013)

I wouldn't do it myself...too much risk. How much time do you want to spend in court, and what kind of reputation do you want to have? Look at how much people hate big banks - it is because the repo houses, cars, etc... when people don't pay. But somehow the bank is the bad guy. Sure there is money to be made...ask you family how much of their bottom line comes from financing instead of profit on vehicles. New car dealers it is close to even if not more from financing.

Do you accept credit cards? Maybe highlight to the client "if you open a new card with the offer that is either in your mail box right now or the one that will be in there tomorrow, you can have 0% financing on this one purchase, then cancel the card".

Option 2: Work with a local credit union. Ask them if they would be willing to finance your clients for zero closing fees (you would be their defacto salesman for those loans, so they should be happy to work with you). They handle the credit checks, contracts, and collections.


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## stltreedr (Jul 8, 2013)

I believe you could really increase sales using this method...but I believe that small tree service owners such as myself could not pull it off. A few things to think about:

1.) you would have to have enough money or enough credit to keep you alive until the checks start coming in. Some of your customers that can afford it now will still take advantage of your 0% financing plan. They would be stupid not to.

2.) you would have to raise overall prices enough to cover the no pays. Corporations call this "bad debt" and it is written off after it is deemed uncollectable. what the percentage of bad debt you will incur is unknown, but I will guarantee that it will be higher than what it is for you now.

3.) Market the hell out of it- make sure you have the ability to take out ads, TV radio, etc...

4.) make sure you are able to properly handle the large influx of new work with your current workforce or have a plan to recruit and train new employees.


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## treecutterjr (Jul 8, 2013)

I thought about the same thing. but the downside seemed to big. its hard enough getting people to pay you as it is. with a payment plan you are just out of luck. 
I know a guy here that does like a 50% down, 50% in 90 days, but I don't know how well it works. 

I would be too afraid to get left empty handed. 

And I personally fill like the companies that you see doing those types of financing agreements are charging such a premium for their service/goods that they can't lose anyway.

I think the credit card is the best way to go. I started accepting them with that square payment and I've gotten a lot more business from people that wouldn't have been able to afford it all up front. plus a lot of them pay upfront because I have to make sure the card reader will approve the card before we get started.


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## Lil Red (Jul 9, 2013)

I do both, because I am not a big company and hate to let sales slip through my fingers. It hasn't burned be yet... But I don't just let every person have a payment program either. Usually the bill has to be over $1,700 or so. I try to get them to pay $500 monthly payments as well so I don't have to keep track long or I feel like the longer there is a balance, the less it will become important to them (my silly logic). 

I hate accepting credit cards because the credit processing company takes close to 3% which isn't very cool.

I have thought about charging 5% percent but I am not sure about it, seems like it would make me appear real money hungry... What do you guys think?


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## mtrees (Jul 9, 2013)

I am a Ford dealer and buy here pay here plans can increase income to a point. What you have to find is a perfect balance of not letting to much $$ get on the street. Generally all of our plans revolve around the down payment paying for 50% of the true cost. Hope I was helpful.


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## D&B Mack (Jul 9, 2013)

ATH said:


> Option 2: Work with a local credit union. Ask them if they would be willing to finance your clients for zero closing fees (you would be their defacto salesman for those loans, so they should be happy to work with you). They handle the credit checks, contracts, and collections.



I like this option, pretty interesting and never thought about it before.

In selling firewood, I began to offer payment plans. But I received all money before delivery. I would mail monthly notices throughout the year and the customer had to be paid up 100% complete upon delivery. I would not have done the reverse in the firewood business...too many people would take advantage and I would be spending all my time running down.

Maybe someone could start a credit card business based upon tree service work. Kind of like 'Care Credit' that you can get to use at your vet for a dog or cat. 12 months 0%...


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## Single_Shooter (Aug 11, 2013)

I have thought of this also when we bid $9,800 on a tree (HUGE cottonwood over the garage, the house, power lines, neighbor's house and garage and the customer nearly fainted...lol

But as said already - I would go through a local finance company or local bank or and get all my cash up front from them.

As a side-note/question....if I accept payment up front and get paid in full before service is rendered (payment/pre-payment plan over time) would I have to become bonded? I know people that own construction and landscape companies and they had to get bonded because they have to get paid up front to cover material costs.

I also started using the square but have yet to have a customer who has asked to pay by credit card.

And before you start charging an up-charge to cover credit card fees check your state laws!!! I found that there are some states who have made this practice illegal. They expect you to raise your total costs to everyone to pay for those who want to use plastic...or eat the expense yourself. This likely comes from politicians who have never had to make a payroll or owned a company in their lives.


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## ATH (Aug 11, 2013)

Single_Shooter said:


> ....And before you start charging an up-charge to cover credit card fees check your state laws!!! I found that there are some states who have made this practice illegal. They expect you to raise your total costs to everyone to pay for those who want to use plastic...or eat the expense yourself. This likely comes from politicians who have never had to make a payroll or owned a company in their lives.



Yep...if you get a lot of folks paying with CC, quote the price with that figured in then discount cash customers by 2 or 3 percent rather than up-charging credit card customers. Same net effect, but makes people feel like they are getting something rather than being charged extra.


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