September 11, 2010
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Billing month after monitoring? You will lay out cash to pay Central Station for your customer? Can I pay my insurance only when something happens? Some things are the way they are for reason.
Dusan
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Ken,
Just a word of caution to Mark S. Mark, at one time I had some of this type business and I was happy to get rid of it. If you bill after service is rendered, especially to a commercial client, you will find yourself not receiving payment for at least 60 days from the start of the service each month. Most commercial accounts have a 30 day pay after receipt of invoice. Check the history with this client and see how long it took them to pay the invoices when they were on an annual payment plan. This will give you an idea of how they handle their accounts payable. Consider getting a one month security deposit should you decide to bill after the fact. Another lesson learned was to put each account on a separate invoice. In our case, should there be an issue with one location, it is not holding up the other nine. It sounds like they are asking for some sort of relief which raises a flag in this economy, so protect your self from the get. Has the client been getting a discounted rate for annual payments? If so, that may need to be addressed with the client as well. Not fair to you to take them from one plan to the another riskier plan without some sort of financial consideration. Just my 2 cents.
Bob W.
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Ken;
RE: Aug 20 Newsletter reply about take-over via balance of contract.
We suggest that if a customer pays off the balance of the contract with a cancellation notice, run to his front door and understand the reason for cancellation with every effort to save the customer, or lots of other customers that could follow. Maybe you can reverse misinformation, or maybe the take-over company knows something you don't that could embarrass your firm if you apply raw intimidation..
"....sue for tortious interference of contract, and use 40 times the RMR. Don't forget to demand punitive damages...."
Informed conversion marketers are not intimidated with threats of lawsuits that are very expensive by producing very little or negative return on investment. Spend your money on the customer and marketing, not the courts. Now that the housing market has collapsed, and 25 million RMR customers are highly visible, take-over marketing could be the new norm. Re-think your business model and plan accordingly.
Lee Jones
Support Services Group
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Hello Ken,
In response to Mark S in Invoicing and Billing Q&A August 30, 2010:
There are two issues. First, "billing in advance."
The Central Stations I use always bill for service in advance. If I have to pay in advance, why shouldn't the client? All the dealers I know also bill in advance. To bill your clients for the prior period is to put your own money at risk unnecessarily and, in essence, it discounts your service fee. You're just giving them a "legitimate" excuse for being even slower pay. (What will it do to your B.P. when they persuade you to bill monthly for the prior period, then ask you to switch back to an annual billing cycle, again for the prior period?) You're also losing at least a month of discovery time that a subscriber has moved and "forgot" to tell you.
Hold your ground on that one. "It's an industry standard," I tell my subscribers. I also explain that I have flexibility with billing cycles, but every non-standard deal throws confusion into the billing system with possible unexpected results. It makes your business harder for an outsider to evaluate and therefore devalues it when too many customers have different "special" deals.
Your client may become slower paying the bill, and then you'll just have to follow your policies and instincts on enforcement. But your bill-in-advance policy is an industry common denominator that has to stay in place.
The second issue is the shorter billing cycle.
I have clusters of accounts like Mark's. It makes sense to even out both the customer's and the dealer's cash flow by going to a more frequent billing cycle, but before you say yes, consider that perhaps the client is just in a short-term bind that will pass. I would counter first with an offer of semi-annual or quarterly billing - in advance, of course. Then, if monthly billing is still necessary, be sure to get compensation for your extra costs.
Knowing your customers is part of your job. I've offered to stagger the bills when a single client gets pounded all at once with annual bills for multiple locations. Some can handle it, others will have difficulty paying it all at once. I will tell some valued customers, even before they ask, to split up a large bill if I foresee it will be a burden. (Ideally, you could get them to send a pack of post-dated checks covering the full amount.)
Consider why the client's bills may have originally gotten synchronized to a single due date in the first place. Perhaps the client simply wants to reduce the number of times per year they have to open your file to deal with renewals and billings. On the other hand, an ulterior motive may be that the client wants the option to "pull the plug" on you in a single, clean swipe. (That actually could be a blessing for both of you.) If you get a request to synchronize a group of staggered bills, take it as a warning and make sure they're getting the service they deserve.
I offer monthly, quarterly and annual billing cycles using a separate "rate election form." [I also modify the form by hand for semi-annual billings if the need arises.] The base monitoring rate gets higher with increasing billing frequency and shorter signup terms. The monthly billing cycle is purposely high to deter subscribers from choosing it, but it's available to a subscriber who makes that choice or who, for one of many possible reasons, can't commit to anything else.
We eliminate the penalty rate after a subscriber has been with us for a certain number of years, if for example, they're planning to move and need a monthly billing cycle until their old place is sold.
Another dealer told me in the 1990's that he used one basic rate and simply tacked on $2 for each invoice produced. Thus the subscriber could save $22 by paying annually instead of monthly. $22 went a lot further back in those days.
Also: In 1991 I bought a block of accounts from a retiring dealer who had mostly quarterly billings along with numerous monthly billings. Using that variable rate method as renewals occurred, I was able to convert many of them to 3- and 5-year contracts with annual billing. This dramatically cut the number of invoices per month. The savings in printing, postage, bank fees and bookkeeping labor add up fast. The down side is fewer opportunities to enclose newsletters, promotions and other billing stuffers, and less frequent affirmation that the subscriber is still out there. However, I always got the feeling that billing stuffers requiring any serious consideration just delayed payments; and that anything of importance deserved a separate mailing.
I was also able to reshape a feast-or-famine cash flow curve by prorating new RMR and renewal billing cycles over to new billing dates, boosting those months with lower income and higher expenses.
In another feast-or-famine situation that I hope no one will emulate, I acquired a group of accounts third-hand from a dealer who apparently hated the drag of sending out bills every month. (He must have been the only one.) He billed all his accounts annually, but they were all due on the first of the year! Ugh.
While I'm at it, I'd like to thank all those lazy dealers out there who over the years have provided "free" all-inclusive repair service, inspections and fire alarm certifications as part of a single monitoring fee, and typically with no written contracts. Where are your brains?
Lou Arellano, III
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TO: JOHN ELMORE
RE: MONITRONICS BRINKS/ADT PANELS
John: Monitronics has a “secret” programmer’s code that generally allows for the reprogramming of their panels. If you’ve gone in through the back door of one of their Honeywell panels and obtained their standard programming code, then you’ve gotten nowhere. That code does allow you to program the panel but Honeywell has set up Monitronics panels to refuse changes to fields 41 and 42 (phone numbers) when that programming code is used. By entering this other code, however, most Monitronics panels will accept the new numbers thus making the panel usable.
David Myers
Myers Protection Services
Indianapolis, IN