How Roofers Can LEGALLY Force Homeowners to Pay - The #1 Strategy to Make Homeowners PAY

If you've ever finished a job and didn't get paid, this video is for you. Because an unpaid roof doesn't just cost profit, it can cost you weeks of work. And the worst part, it's avoidable. I'm Adam Sand, CEO of the roofing business partner. In this video, you'll learn the exact three things you need to protect yourself and how just $99 can make a homeowner's debt stick with them for seven years. Let's get into it.

When we get down to collecting money, it's important to think of first, what is the cost of an unpaid job? Because sometimes we just think of it as the lost net profit. So if you look at a house like this, what do you think roof is worth? Like, how much does this roof cost? So, yeah, everybody's going to have an answer. And the more we know about this, the more we know what it could cost, right? Because we have to think, what do we have to do with the chimney? There is these cornice returns. How much time does that take? When we think here we got all these flower beds that we have to deal with and protect, right? And hopefully don't damage. And then right here, it doesn't look like there's any gutters. That's me dripping right here on the concrete. What's the flashing look like against the wall? So when I ask everybody how much, most people say the average of the room is around 15,000. This is kind of everywhere. What happens if they don't pay? Now I owned a roofing company as well, so I know how this feels. The first thing that comes into mind when they don't pay for the roof, after you're done, you're like, fine, I'll take it back. I used to actually devise this idea in my head of taking an old truck and deckling it up as pay me later roofing. And then I would take that truck, drive to their house and start ripping the roof off. If they didn't pay me, then I had to think, well, we have to have better ways of collecting money. What helped me was understanding the time value cost of money. Essentially it states that a dollar today is worth more than a dollar tomorrow. So when a customer delays payment, you lose the opportunity to use immediately. So these delayed payments in cash flow, but they also have many downstream effects as how you're going to use it. A way that you use to calculate this is you take the interest rate. A 30 day non payment incurs a cost of $67.81 or 4.5% of the 10% profit. And this continues to add up. If the customer doesn't pay you now it's $15,825 that it costs you after a year. If you're doing three jobs per week at a 10% net profit, it's going to take you 10 and a half jobs or three and a half weeks of work to make that money back. All of a sudden now we see the net profit from ten and a half jobs or three and a half weeks of work. That's what it takes to make this money back. If someone doesn't pay me, that's where I went through the mindset shift of an ounce of prevention is worth a pound of cure, as the kind of old cliche statement states. I know that we had to begin with the end in mind is how I was taught. Which meant that I had to establish myself as a contractor that gets paid on time. So in many cases it came down to the word tracks that I used. You can say like, hey, we don't expect payment full until you're happy, but when you're happy, we expect to get paid. Your best bet is to have a certified check for the quote amount ready for the day we complete the job to avoid a credit card fee. So I usually prefer to actually discount for cash, not add a fee for credit card because nobody likes a fee, but everybody likes a discount. But you have to condition your customers on a way to get that discount. And it's always nice when you can finish the job and have that check in your hand and have that thank you picture. If you're a small contractor, this is probably one of the best ways. Maybe leave the checkout, but this is one of the best ways to build your brand when you're a small company. Now, once you've had the right language, then you want to establish good processes in that process of handing off to production. You want to have a contract now you have to get your system to support you in invoicing the customer. And you want to keep this kind of process tight and being proactive. Sending them early is huge. I used to send the invoices when they were capping and cleaning. The idea was, is that when they started capping and cleaning, I wanted to get it out to the customer, say, hey, good news, there's no change order. Here's your invoice. If you want to run to the bank and get a certified check, you can have it ready for the guys when they're done. Again, we don't want to get paid Till you're happy. But if you're happy, we'd love to get paid because that saves us a trip. So try and send them early invoices have a few key elements to making them right. You want to get set up invoice with billing with you know, having PO numbers or something to keep track of it. You want to make sure your line items are on there. You want to have a summary of what is owed and then hopefully have good billing options. Then you know, if you're like in HubSpot, you just save and finalize and send. It's very easy, you guys can do whatever you guys want. But then you have to be able to manage those payments to make sure you are collecting those payments on time. You make sure you receive those payments so you can keep track of your payment records. When somebody owes you money, you know they owe you money. If you don't have a good reporting on this, the problem that can happen is you're accidentally requesting money from people who already paid you and that's embarrassing. And then you worry that it kills the Google review. So once you have all this other stuff right, you establish yourself as a contractor gets paid. But you have to answer the question but what if they don't? So here's your writer downers, your tools that you want to make sure you get implemented in your business. And you want to have this as an autopilot thing in your business, right? If you're with rbp, you could have us build this in as automations into your company. If you never use it, maybe a deal never crosses this line and you never use this workflow. But when it does, I promise you you'll be happy that you had it in place. So first things first, the credit app, it's a website, it's $99 debt collection. You report when that invoice goes over 30 days past due, bang. Automatic trigger. We have to go file this with the credit app. So you have to submit a bonafide debt and the homeowner will have your debt show up on their credit bureau for seven years. There is no percentage of the amount collected fee which is important. The number one reason why contractors do not get paid is by not having a contract that is sufficient for the state are in. So remember, an invoice does not constitute a contract and a signed certificate of completion is a slam dunk in the collections world. So what do I mean by all this? Okay, there are three things that you need to make sure you collect money. I actually just heard a sermon on this because he talked about the difference between justice in Jesus eyes versus, like, justice in the law courts. And he told a story about this pastor. He was a contractor. So he provided a woman an estimate to fix her car. It was like 6400 bucks. He fixed the woman's car. She was happy with the work. She left. She was fine. Three weeks later, she had some issues with her brakes, and she thought, I thought I just had these things worked on. So she went to a contractor, a mechanic, and the mechanics had looked and said no. All the stuff he said he did, he did a great job on. But the problem is, is now a problem with your master cylinder. Just, you know, bad luck, another issue with your car. So you have to fix that. So then she ends up going to him saying she's not happy that he ripped her off because the $6,400 or whatever it was. So then she ended up taking him to small claims court. When he went into court, she told her story. She's like, yeah, I got the estimate. I did this and the this and this. He's like. He's like, la, why are you here? You said you're happy with the work he did, all the work that you paid him for. You had an estimate three weeks beforehand. Why are you suing this man? And she was suing him for the full amount. And the pastor, who used to be a mechanic, he tells his side of the story. So they adjourn court, and then he gets a letter of judgment in the mail that he has to pay the lady back. Why? Because the estimate wasn't signed. And the pastor actually saw the judge at another point. He's like, I had to make that decision because that's the law. And so all this to say that you need three things to create what the credit app calls a bona fide debt. And the bona fide debt is you told them what it was going to cost. Then you do the work, which is a certificate of completion, and then you send them an invoice requesting payment. And when that date has passed 30 days overdue, then you have a bonafide debt. If any one of those pieces is missing, it just comes into the realm of questionable. And then a court can arbitrarily decide based on the laws in your state. A bonafide debt is basically saying, I showed them what it would cost. I got any change orders approved. I confirmed that we did the work through some kind of point in time where they said, yep, work's done. And then I sent an invoice to get paid, and in that they're overdue by 30 days. If you have all those things, you're good. So then the process is that you're going to upload your contracts to the website, a personalized notice is going to go to the homeowner notifying them of the consequences of non payment, which is that this is going to show up on their credit report, and after a two week grace period, the debt will be reported on the customer's credit bureau. So now if they go to get a loan, get a cell phone, remortgage their house, get a car, this is going to be something that's going to negatively impact their credit, could prevent them from getting the interest rates that they want on car or even getting approved. So there's a pretty significant consequence for $99.