[Credit & Collections] Cash or Credit?

Credit, that ever-increasing staple of the American household budget, is becoming the payment of choice for more and more consumers each year. And as more people reach for the plastic instead of the green to pay their bills, many PCOs are finding that accepting credit card payments has helped them increase their cash flow.

Accepting plastic payments opens up doors to automatic and electronic billing, which frees up employee time — and money.

Before switching to a credit card-only payment plan, Jeff Springer, president of Des Moines-based Springer Pest Solutions, had two employees working full-time just on accounts receivable.

“It wasn’t how much we were losing,” Springer said. “It was how much labor resources we were spending to collect our money.”

Springer had always accepted credit cards as a form of payment, but says it wasn’t until he made credit payments mandatory that plastic payments really kicked into gear and let him drop his accounts receivable.

He started the program in 1999 on his company’s termite services, mandating that customers have credit cards on file that he could charge the day before the every-other-month service was done.

CUSTOMER SERVICE WITH CREDIT. “We did it for their benefit,” Springer said. “The bottom line is, if you’re not happy with a service or product, you can call your credit card company and get your money back. If people don’t have a credit card, a debit card or a debit check system, we don’t do business with them.”

Springer said he and his technicians use that as a benefit when selling the service to their customers, and that customers respond to it.

“Most pest control operators, they think it’s going to cost them money or cost them customers. You’ve got to turn it to where it’s a consumer benefit, which it is,” Springer said. “If you don’t perform the service to the customer’s satisfaction, all they have to do is call and have the charges reversed. It absolutely holds you to a higher standard.”

He said that one of the fears some PCOs cite when refusing credit cards — that mandating credit cards will cause them to lose customers — doesn’t hold water.

“This eliminated past dues, which in turn lowered my cancel rate and lowered my accounts receivable,” Springer said. “It did not impact my customers. The only impact was on my employees. Technicians do not like asking for money. To get a tech or a salesperson to ask for this credit card took me about a year.”

PART OF THE PROCESS. Court Parker, chief operating officer for Bug Busters USA, Acworth, Ga., said he had experiences similar to Springer’s. New customers can pay only by credit card. Like many others, the  company had long accepted credit cards, but only recently started promoting it.

“The added value (is) having your PMPs not ask for the money. You train them to service; they’re not always the best at asking for money,” said Parker. “It helps, it helps a lot. There’s not that quiet silence of awkwardness.”

Parker said that, to encourage his technicians and sales reps to push the credit card payment options, he pays them an extra $10 per sale if they convince a customer to pay with plastic.

“You’ve got to make people want to do it. You just make it part of the process,” Parker said.

PLASTIC, PLASTIC, PLASTIC. Convenience is something that credit cards are all about. Rich Hays, a business developer with Bottom Line Processing, a Sarasota, Fla.-based company that sells credit card processing equipment, said credit card payments are easier to track than checks or cash.

“(Pest control) is one of the few industries out there that still has people wanting to pay by check,” Hays said. “Everybody’s plastic, plastic, plastic.”
He said residential service companies like pest control companies have two good options when it comes to making themselves available to credit card payments.

The first is a software program that allows a company to set up automatic and Internet-based payments. The software also can record all of a company’s credit card transactions and download them directly to its accounting software.

The second option is a wireless credit card machine that technicians can carry with them in the field. While this offers some advantages — namely a lower transaction fee — to physically writing down a customer’s credit card number or phoning the numbers back to the office, the machines can be costly for a big operation, Hays said, at $800 a piece. And, he said, it might be easier for a company to use just one card reader at the office instead of having lots of service technicians run the numbers in the field.

NO REASON TO CANCEL. Four years ago, Rentokil shifted to automatic billing as part of its year-round pest protection program. The automatic billing limits collection problems, and makes it more difficult for customers to cancel their services, said Bill Dickerson, Rentokil’s corporate sales director of North America.

He says that, under the old system, a typical residential customer would have four chances to write Rentokil a check. And each time the checkbook came out, or the bill arrived in the mail, was a chance for the customer to second-guess the need for Rentokil’s services.

“It gave them an opportunity to cancel,” Dickerson says. “No. 1, convenience for the customer is something they appreciate. And it eliminated a big potential for bad debt we were experiencing. It’s just a lot more convenient way for us to do business.”

The author is assistant editor of PCT magazine. He can be reached at cbowen@giemedia.com.

Make Credit Cards Work for You

Tips on how to convince your employees — and your customers — to stop worrying and love credit cards

• Make asking for and paying by credit card a habit
• Reward sales reps and technicians for selling credit card payments
• Allow customers to pay online
• Advertise that you accept credit cards and accept all types, including American Express and Discover