What a Prepaid Package Owes the Customer

The prepay offer is the easiest sale you make all year. Pay for the season now, take the discount, and the money lands in March when you need it most. Money collected in March for work spread across a season is not income in March. It is a list of visits you still owe.

The math that makes the offer work is real. Cash in the spring buys equipment, covers payroll before the route fills up, and removes the collections problem for the whole season. A provider who prepays his own supplier with it has turned a discount into working capital.

The problem shows up in the second half. August payroll gets covered by August sales, and the prepaid customers sitting on the August route produce no revenue that month, because their revenue arrived in March and went out in April.

The customer who cancels in May is not the problem. The one who goes quiet until November is worse, because a cancellation closes the obligation and silence leaves it open while the money that came with it is already spent.

What keeps this straight is counting visits rather than dollars. Track what has been delivered against what was collected, and know at any point in the season what portion of the cash on hand has actually been earned. That number is the only one that tells you what is safe to spend.

Price the package against the obligation instead of against the cash. A discount built on the assumption that every customer uses every visit is priced for a season that does not happen, and one built on the assumption that nobody does is priced too high to sell.

The customer's side of this is simpler and it is worth putting in writing. What the package includes, how many visits, what happens to unused ones, and what happens if either person walks away in July. A package sold off a postcard and confirmed by text has none of that recorded anywhere.

A milestone-based agreement treats a prepaid season the way it treats any other job. The customer funds the contract before work begins. The money is held until each milestone is complete, and that portion releases to the provider. Each visit becomes its own release instead of one payment covering a season nobody itemized.

Rules about advance payments and prepaid services vary by state, and some states regulate them directly. This article is about what people commonly do, not about what any law requires. For what a specific state's rules actually say, see the deposit guides in the knowledge base.

You already spent the March money. The visits are still on the calendar, and every one of them is a payment you made to yourself six months ago.