[State of the Industry] Making ‘Past Due’ Past Tense

When times are tough, collecting for services can become a problem and a drain on time and resources. Glenn Carter, president of Carter & Company Pest Control, Lancaster, Texas, says he’s seen more bankruptcy notices in the last two years than in the last 25. And after getting burned by a few customers, he was looking for ideas to help reduce past due payment. He and several colleagues in other types of service businesses came together to brainstorm solutions.

“I gathered a group of successful people from similar service businesses such as heating and plumbing and started to meet once each month to discuss current issues facing our companies,” Carter says. “All of us were experiencing problems with collections, so we spent one meeting brainstorming about collections.”

With a few exceptions for long-standing customers that haven’t been a problem, he has instructed his technicians to collect payment at the time of service.

“Our technicians ask customers how they would like to pay for service and it is working well,” Carter said. “In business, there are always hills and valleys, but sometimes you just need to tighten the belt. I’m a fighter and we’ll work our way through this valley, too.”

Bob Sraga of Quality Pest Control in Severn, Md., has created past due notices with cartoons on them and sends them out to customers who are late with payment.

“The cartoon aspect seems to be working well with a quick response,” Sraga says. “I think it reminds people without offending them and the response has been almost 100 percent.”

LATE FEES, CREDIT CARDS. Rodney M. Bullock of Eagle Pest Control Services in Louisville, Ky., began adding late fees onto customers’ past due invoices last year when a few customers were chronically late with payments. He offered customers different billing options but that didn’t help, so Bullock decided to begin a late fee program for all of his customers. The policy is on all contracts and pointed out to all new customers.

“Now, some of the same customers are still late but the late fees cover the cost for all of the extra billing. We lost no customers to this fee and everyone seemed to understand when we started it,” Bullock says. “If they don’t pay as agreed, we send a reminder bill 10 days later. If payment is not received, then the fee goes into effect.”

Jeff Phillips, general manager, Blue Chip Pest Services, St. Louis, says a large number of his customers automatically pay for services with credit cards, which has reduced issues with receivables.

“While we’ve offered this for a while, we’ve made a bigger push to get people to do this over the last few years for several reasons: cash flow, postage and office time (for) processing payments,” Phillips said. “Customers are charged after the service is completed and posted in our system.”

STRATEGIC COST-CUTTING. In addition to cracking down on late payments, pest management professionals are also looking at other areas to reduce costs to help them ride the recession storm out. Joe D’Ambrozio, president of J. D’Ambrozio Pest Management Services, Paramus, N.J., says he’s evaluating how he’s advertising, keeping a close eye on inventory, “going green” and networking more than ever.

Instead of placing advertising in telephone books, D’Ambrozio Pest Management Services has used online advertising exclusively for the last two years.

“I know that stats show that 72 percent of people use ‘yellow’ books, but we have a generation who use the Internet for services,” D’Ambrozio says. “We were asking people how they found us, and on the Internet or through a referral was usually the response.”

D’Ambrozio also says the firm is careful not to overbuy products so it can keep the revenue rather than having it tied up in inventory.

“We also are watching our inventory control very closely and inspecting each vehicle to make sure our technicians have just enough onboard to do the job,” he adds.

Over the last two years, D’Ambrozio also has pumped up the company’s green service offering, and charges customers more for this service program.

“People are falling in love with the green opportunity,” D’Ambrozio says. “Our local paper did a full page article in the Sunday edition about our going green program several months ago, and we are still getting calls today.”

He also found that networking is a cost-effective way to increase business. Self-proclaimed “networking nut” Glenn Carter also believes visibility and getting involved in the community improves business. He’s one of seven that started “Rise and Shine,” a group of business people that meet from 7 a.m. to 9 a.m. once a month to network.

“The average group is about 130 people from different businesses, although one time we had well over 200, and the mayors of eight cities are involved,” Carter says. “I really love business so I run a lot of business interchange groups.

“I try to help people succeed every way I can, and the return just happens,” he added.