How Contractors make sure they get paid for a job

Managing

Filed in: Business Development

Contractors: Make Sure YOU Get Paid for the work

Hopefully you are not dealing with a situation of non-payment from a homeowner who hired you to perform work for them, but if you are experiencing this problem we are going to talk about how you can make sure to get paid and not get burned. We understand the pain and struggle of dealing with bad clients who act like what you do for a living they can just treat like a cheap commodity. So let’s make sure you set yourself up for success before you get the call.

If you currently have a situation of non-payment from a customer who owes you money and you have completed the work per the agreement, you will need to take some immediate legal action, if possible. We do not offer professional legal advice, and we suggest that you contact an attorney who helps contractors with mechanics liens and lawsuits.

It is unfortunate that many honest hard working contractors get burned by their customers, and sometimes these situations are caused by self inflicted circumstances. We want to help you consider some key factors for success before starting the work, BEFORE you get them to sign the agreement, etc.

Setting Up a job for Success

You will find it interesting when it comes to paying money to get something done will cause people to do some ‘funny’ things.

Unfortunately we have seen this happen to many contractors and home service providers. It all starts when a homeowner calls you out for a bid on a project. Obviously you are happy to get a new call from a homeowner looking for bids on a project they want done, but you need to be patient and ask they right questions, just hold back on the excitement for a minute and ask the right questions to make sure the lead is qualified.

Tips for qualifying leads:

Create a custom lead intake form that asks all the right questions.
Question 1: Make sure they have the right budget for the job.
Question 2: Make sure they are ready to hire NOW.
Do not schedule a meeting unless the caller has answered the questions satisfactorily.
You CAN charge a small fee for meeting with them and providing your estimate, a fee they could get back if they hire you for the job. This will help filter out the serious from the cheap price / window shoppers.
When you are on the phone with a lead try to give them an idea of cost and gauge their response to make sure you are both on the same page

As for qualifying the leads you NEED to ask the right questions from the start. Do NOT waste your time, gas, and money going on bids and estimating jobs when you don’t know if the lead is a qualified buyer, who can afford your service and has unrealistic expectations. Your business will be in much better shape if you are not wasting so much time chasing unicorns.

Sending the quote & Job Scope

So, by now you (or your sales team) have ‘qualified the lead’ and have met with the potential customer and it’s now time to prepare and send the quotation of work. This is where you can make or break getting the job so you need to be careful. In our experience, the most common reason for ‘not getting paid’ is due to the lack of explicit details and documentation in the quotation when it is accepted by the customer.

‘Funds trapping’ can arise from lack of detail, things that are NOT included with the quotation can come back around to be ‘reason’ for non-payment by means of ‘customer scope creep’, implied work included when it was not listed and the client ‘thinks it should have been included’. Do NOT send the quote until it is perfected and has listed everything you WILL & WILL NOT do.

Here are some tips for sending a good job quote:

Be as detailed as possible without turning them away from too much info.
Include the scope of work that you will do in detail.
Include the items that you will NOT do in detail.
Include the payment schedule that is best for YOU.

Remember, YOU are the professional, do NOT EVER apologize for your prices.

By not backing down on your price and providing as much detail in the quotation process as possible you will command respect from the potential customer. Before sending the quote make sure that you have substantiated EVERYTHING. You need to think of every possible potential problem that could arise during the work and include those things in the budget.

Now, go back and perfect your quotation process before you send another bid!

Stand out from the others

Once you have been through the lead qualification & bidding process and have perfected the quote and it’s scope & terms you will now send to the potential customer for review. For some contractors this can be a nail biting time while waiting for a response from the potential client. You can make best use of this time in several ways, continue to send perfected bids to other leads to keep your sales pipeline full, and implement an email follow up sequence.

Sitting around waiting for a customer to reach back to you won’t get you anywhere. If they want the job and respect you as the professional they will contact you back, either for additional questions or to accept the quote. Your time is best spent on continuously making more bids and keeping new leads flowing into your sales funnels. Hopefully your inbound lead system is working and you have plenty of other sales calls to make.

Now, while you are doing all of that, you can have an automated email system that keeps the lead warm and fuzzy.

Here are some tips to help stand out from the comp:

Setup an email marketing drip campaign to nurture that lead!
This is the one key to sales conversion success. You can translate your authoritative professionalism by using things like your website blog, YouTube videos, and other sales material that identifies your business as the obvious & trusted solution. So you better be creating great content on your website! (If you need help with email marketing or lead nurturing systems just let us know!)

Signing the agreement

We cannot stress this enough, NEVER DO WORK WITHOUT A SIGNED CONTRACT!! Within the contract / agreement you need to specify in explicit detail every single bit of terms and conditions, limitations, exclusions, warranties, scope of work, etc. Do not leave anything up to interpretation!

Follow through with your promises

Your end of the deal is as important as the customer’s responsibilities so don’t shoot yourself in the foot by breaching your own contract. Once you engage into a contract with a customer you must follow through with your own guidelines and expectations or else all of that professional positioning and marketing means nothing if you are sitting in a court hearing.

Along with following through with your obligations you must also be aware and mindful that the client is upholding their responsibilities and expectations. If you see a red flag or breach of contract you MUST ENFORCE THE TERMS OF THE CONTRACT. If that means stopping the work, then stop work immediately! If that means the client wants you to do just one more little thing outside of the scope of the agreement “and then they will pay you”, DON’T DO IT!

Finishing strong

At the end of the day there is nothing better than the satisfaction of a job well done and paid in full. Getting to that point takes a lot of effort and attention to detail, so the upfront work is worth it so that you don’t get screwed by a non-paying customer.

If you are reading this chances are that you are a hard working honest contractor that might be struggling to get paid, so we encourage you to have a close look at the documentation and processes your business is implementing to find any holes or weak points.

Finishing strong means that you can get paid when completed as expected but also have a happy client on your hands that will refer you to their friends and family.

Here are some tips to finish strong with a happy customer:

Hold up your end of the deal.
Treat the customer fairly.
Stand firm aligned with your contract and terms.
Have a walk-through of the job at the time of final payment.
Get final payment BEFORE you remove yourself & team / equipment from the job.
Ask if they are happy with the results, and if they are have them leave a good review / testimonial of your company.
Follow up with a happy client after 2 – 3 months, you may get some new business from them.

We hope you have found this information valuable, and if you have any questions or are seeking advice on how to make sure you get paid on your next job then contact us today.

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