28-Day Billing vs. Monthly Billing for Waste Businesses
Key Takeaways
- The 28-day billing cycle, used by 83% of operators, allows for more frequent invoicing and can increase cash flow, but it may cause customer frustration due to varying billing dates and an extra bill each year.
- Monthly billing cycles offer consistent billing dates and are easier for customers to track, but they miss out on the potential extra revenue of a 13th billing cycle and can be less flexible in prorating customers.
- Regardless of the billing cycle chosen, maintaining clear billing standards, keeping credit cards on file, and having efficient invoicing processes are key to ensuring timely payments and customer satisfaction.
Billing cycles can be as short as 20 days or long-term 45-day arrangements, depending on what your company needs. The portable sanitation & dumpster rental industry has a number of different options available when setting up their billing system and it’s important not only to know the difference between these two common practices but also why certain companies choose one over another in order to best serve customers. In this blog, we will discuss the difference between 28-day billing and monthly billing. These are the most commonly used billing practices for portable sanitation & dumpster rental companies because they’re simple and customers can easily understand them.
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What is 28-day billing?
The 28-day billing cycle will allow you to generate invoices as often as daily when the anniversary is reached. Most business owners will generate a billing batch each week for these clients.
With the 28-day billing cycle, there’s a total of 13 billing cycles every year, rather than 12 which is used for monthly billing cycles. 28-day billing helps owners get paid per service, easily prorate customers on a weekly basis, and regulate income which is why it is the industry’s best practice. According to the 2022 Portable Sanitation Industry Benchmark Report, 83% of operators are using a 28-day billing cycle.
Some of your customers may react poorly to implementing a 28-day billing cycle because of varying billing dates and/or the extra bill being kept track of. But, if you are transparent with them at the beginning & add this into your contracts, you will be able to overcome any complications.
Pro’s
- More cash flow for your business
- Keep track of your services more efficiently
- Generate invoices as much as daily
Con’s
- Customers may not be happy with an extra bill
- Billing dates will vary for customers which could cause frustration
- Customers have to keep track of 13 bills rather than 12
Monthly Billing Cycles
Monthly billing cycles can be beneficial for both customers and owners. The monthly billing cycle will send the invoice to your customers on either the first or last day of the month. During this cycle, your customers will receive 12 invoices every year. But, not all customers want to be charged at the end of each month and prefer to be on a different payment cycle so you would miss out on the extra billing period at the end of the year.
Pro’s
- Consistent billing dates for customers
- Office staff can have a set day of the month that bills are sent out
- Customers don’t have to remember the extra bill at the end of the year
Con’s
- Less cash flow
- Missing out on more revenue with a 13th cycle
- More difficult to prorate customers
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What can I do to make sure my customers pay on time?
With whatever billing cycle you choose, it can be a concern if your customer will pay on time. Especially if you don’t keep credit cards on file. Here are some ways that you can ensure your customers will pay on time every time:
- Keep credit cards on file and require the information before delivering any units
- Set clear billing standards for your customers upfront & in your contracts so there are no surprises (especially if you are using a 28-day cycle)
- Have clear and descriptive invoices to show your customers exactly what has gone into their bill and why
- Set up payment reminders to notify your customers when they have an upcoming bill due
- Set up online payments for your customers to make the process as convenient as possible
- Have a process for your team to follow if a customer is late (phone calls, emails, pause on services depending on severity)
- Implement late fees for customers who don’t pay on time (include this in your contracts to refer back to)
- If your efforts do not work to collect payment, you can take the case to small claims/collections and mail the customer a notice
With ServiceCore you can bill in minutes, get paid faster, set up the cycle that’s right for you, and keep your customers & staff happy. If you’re ready to get started, book a demo.
Interested in seeing more billing benchmarks for the industry? Download the 2022 Portable Sanitation Industry Benchmark Report.
About the Author: Karsen
