Whether your client plans to pay cash or you expect to receive payment through their insurance provider, getting paid on a timely basis is crucial to your profitability as a water damage restoration business. Failure to place payment as a top priority is taking a big risk. As a small business, healthy cash flow is essential to keeping your business running and maintaining a high quality of service. Without full and timely payment for the services you provide, it is impossible to maintain your equipment and hire a professional and well-trained staff.
Timely Payment Requires Active Pursuit of Payment
When it comes to getting paid on time, it is the responsibility of the accounting department, project manager, or business owner to actively pursue payment. Your water restoration business should have a protocol for invoicing and collecting set in stone. This includes differentiating between cash and insurance payment procedures, creating a standard invoice for your company and setting up timelines for follow up on unpaid invoices.
If an invoice has not been paid, it should not be unexpected or surprising to the person in charge of invoicing and collecting payments. Instead, this person should be actively checking up on unpaid invoices, long before they are overdue.
Cash Payment Best Practices
While the exact procedures in place may vary from company to company, there are a few best practices we recommend that every water restoration company observe. First, it is important to understand that cash payment, although convenient, is typically not as profitable as payment through an insurance carrier. As a business, it is not unusual to offer a price below insurance-level pricing as an incentive for prompt cash payment.
Secondly, cash paying customers should always be required to pay up front. Before the first day of work begins, provide a clear invoice and explain that work cannot begin until full payment has been received.
Insurance Payment Best Practices
Receiving payment through the homeowner’s insurance carrier presents a unique set of advantages and disadvantages. An insurance carrier will often require a detailed and accurate estimate of the job cost. You should be prepared to make tweaks to every estimate to ensure it is both competitive and profitable.
It may take longer for insurance carriers to process payment. Because of this, it is important to invoice the insurance carrier directly, not the claim representative, within 48 hours of providing the estimate. Always invoice before the job is complete and follow up on the invoice on a regular basis until payment is received.
When you run a water damage restoration business, organization and understanding of best business practices is essential to remaining competitive and relevant in your industry and procedures for timely payment is just the tip of the iceberg. To learn more about the business practices essential to every successful water damage restoration company, click here to download our Industry Insights Paper compiled by More Floods, or feel free to contact us for more information.