Giving a discount for cash payment

21 years ago

I have a small landscape design/build company here in Brooklyn NY. I am in my second year of business and finally getting to the business part of things. My question is, how do I determine what type of discount to give for cahs payment? Most of my projects are in the $4k- $15k price range. I have 3 parttime employees whic I use as needed. I know that I pay about $9.50 per $100 of salary to workers comp. I also have liability insurance, storage space, car etc as expenses. Is there a reliabale formula to compute what type of discount I can give for cash? I know that I will save on WC etc. If I pay the workers cash on cash jobs but what else do I need to know to decide if maybe 5% off for a cash payment will work?

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Comments (5)

Shag
21 years ago
Sounds to me like you're getting into dangerous waters (read: illegal/unethical) by paying your workers cash when clients pay you cash -- doing that to "save on WC" Don't get caught. Better yet, don't do it. I do not give referrals to landscape installation companies who are not paying WC and not running their businesses legitimately.
GreenieBeanie
21 years ago
Whatever discount you offer, whatever you save in WC, is not worth the ultimate personal cost to you should one of your employees get hurt on the job.

And for God's sake, don't let your WC Insurance provider find out you're doing this!
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patrick3852
21 years ago
I got injured working for a company that was not paying WC. I had to have surgery on my knee and had to pay out of pocket for it. I was out of work for 3 months, which I also had to pay for. I sued the company and turned them into WC. I easily won the case. The $25,000.00 plus it cost them was hardly worth the small cost off paying Workmens Comp's annual fees, which for that business was about $2300.00 annualy for their entire staff of about 20 people. It is Illegal and can easily sink your ship. If someone gets injured on the job and you don't have WC or insurance, they will sue your client. How many jobs do you think you will get if that happens. Word of mouth works...
veronicastrum
21 years ago
If you're really thinking of foregoing WC, please re-read Patrick's post and ask yourself where you would get the $25,000. It's amazing how quickly what appears to be a minor injury can turn into major dollars.

Most people who offer discounts for cash do so based on the time value of money. The idea is that it's better to have $1.00 in hand today than to have that same $1.00 in thirty days. Most businesses offer 2% or 5%. The higher percent was more common when interest rates in general were higher.

V.
MountainLandscaper
21 years ago
This guy has posted questions on other green industry forums.They are all about cheating on his taxes for his business and hiding cash pmnts.OR hireing under the table....He's pretty much gotten the same response as here.I think he probably works for the IRS.Oh is just a real screwball. Don't waist your breath on him.