In order to run a profitable water damage restoration business, you have to get paid. Of course, if you’ve been working in the industry for any amount of time, you know this is not as simple as it sounds. Maintaining a healthy cash flow in our industry is often complicated by outside parties, including the insurance carrier processing the claim, the homeowner, and even the lender on their home mortgage
Even though more homeowners are opting to self-pay, many are still working with an insurance carrier to cover the cost of the loss. For homeowners who are still paying for their homes (and many are), this also means the mortgage company may be involved in the claim process. When the insurance company processes the claim, it is incredibly likely that the mortgage company’s name will be included on the check. Knowing how to navigate this tricky situation is crucial to expediting payment on water damage restoration jobs.
What does this mean for your cash flow?
After a homeowner has filed a claim, the insurance carrier may cut a check that includes their mortgage company as a payee. This means that, in order to cash the check so you can get paid for your restoration work, the mortgage company will need to endorse the check. Unfortunately for the contractors involved, this can actually slow down the payment process.
In some cases, the mortgage lender may not be willing to talk to anyone but the homeowner about the claim. Sometimes, if the homeowner isn’t up-to-date on their mortgage payments, the lender may even require the claim be used to pay down the mortgage. This could be detrimental to your cash flow, especially if the homeowner is unable to pay for the cost of the restoration work themselves.
How to make sure you get paid, quickly.
When a check is written to the mortgage company, the best case scenario is that you will have possession of the check. If this is the case and the mortgage company is local, keep that check on hand! Avoid mailing the check when possible. Instead, take the check to their office and have them endorse it right then and there.
If you have the check but the mortgage company isn’t local, things get a little more complicated. You will have to mail the check to the company to be endorsed. Before you drop it in the mail, however, make sure you’ve made arrangements for the check to be signed and that you’ve taken note of the name and contact information of the person receiving the check.
You might face resistance. For instance, the laws in your area may dictate that mortgage companies only discuss the check with the homeowner. If this is the case, you will need to have the loss victim give you legal permission to discuss the claim with their lender. And, as we mentioned above, the mortgage company may simply resist the claim payment being used for repairs and ask that it be used to pay down the mortgage. If this is the case, you will need to make arrangements with the loss-victim for a self-pay restoration job. Keeping the scope of the job minimal by focusing on drying out the home first before tearing out or replacing may be essential to making sure the homeowner can afford to pay you for your work.
Keeping Cash-Flow Healthy
Diligence is a crucial aspect of keeping the cash flow in your business healthy. You can’t assume that, once you send your invoice, you will get paid in a timely fashion. Instead, you need a process in place that will make sure you are getting paid on time. We suggest setting up a system that not only tracks invoicing, but also keeps track of when an invoice is approaching the payment deadline, and when it is overdue. Make sure this system has room for unusual circumstances, like keeping tabs on a check if it is being mailed to the homeowner or mortgage company for endorsement.
At More Floods, we’ve kept invoicing and follow up simple so that small business owners like you can implement the systems we’ve created in their own business. To learn more about our resources, and how they can help your maintain a healthy cash flow even when complications arise, click here or call 1-866-667-3356.