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Hey everyone, it's Mike Andes, and today we're talking about cash flow.
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I'm gonna be talking about five different things that you can do in your business today to immediately collect money faster.
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Now this segment, it was live, and if you're watching this video, it gets a little grainy, but listen to what I'm talking about because these five things can be changed in the next few hours in your business and will immediately unlock the amount of revenue.
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These are things that you can do
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today.
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In my opinion, there are three major segments of a business.
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Ultimately, we look at home services.
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We have to get the work, we have to do the work, and then we have to get paid for the work.
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So I think of this as sales, operations, and admin.
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Sales, get the work.
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Operations, do the work.
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And number three, admin, get paid for the work.
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Admin does other stuff too, like payroll.
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They grease the gears of the business doing its job.
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But ultimately, admin is responsible to get paid for the work.
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And for some reason, some of us do a really decent job of getting the work.
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We do sales, we do marketing, we do advertising.
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And most of the calls today already have been about sales.
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And a lot of us, the vast majority of us, because otherwise you wouldn't be in business, do a really good job at operations.
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We do high quality work.
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Customers are happy.
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We do good customer service.
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Let's go.
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And most of us really, really stink at the third one, which is getting paid for the work.
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It just so happens that the reason you got into business, though, is to get paid and make more money.
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And yet, you would think that we are simply running an advertising campaign, or running an advertising agency that gives away free work.
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Because so many home service business owners do exactly that.
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We spend gobs of money on getting more leads, and then we spend tons of time, blood, sweat, and tears, managing team members, managing customers' expectations to do the work.
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And then for some reason, after the work is done, the job is completed, the walkthrough is completed,
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We just don't care about getting paid.
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It boggles my mind.
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Last month, I went to a business that is roofing.
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You're going to see this on the turnaround show so I can say their name.
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It's Good Hands Roofing.
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The best people ever.
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Best people.
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Best family.
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I love them to death.
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They had a business that did $1.6 million in revenue last year doing roofing.
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This is the problem.
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$278,000 was owed to them.
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$278,000 on a $1.6 million business is about 15% of revenue was outstanding.
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You know what's crazy?
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That was all of their profit.
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If they would just have collected on everything that was currently owed to them, they would have probably felt really good.
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But when there's no money in the bank account, the reason being, we haven't collected on the work we have already finished.
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Customers owe you money.
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The
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The bottom line is this, a fast growing, profitable home service business can go bankrupt.
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A profitable, fast growing business can go bankrupt because they did not collect on the money fast enough.
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All right, here, I'll actually draw this out.
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All right, let me make this a marker.
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I'm gonna draw this out.
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Let's see here.
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Let's go bigger on the marker situation.
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Okay, very good.
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Okay, here's how I like to think about it.
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And you'll see this in the turnaround coming out in a few weeks.
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This is zero, this line.
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I think you guys can see this one second.
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Okay, this is zero, all right?
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When the job starts out, let's say, like, Good Hands Roofing was expecting a 20% deposit, okay?
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So they actually, like, were above zero.
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Like, immediately someone gave you 20% of the job, let's go.
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But then they have to go buy materials.
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Then they have to start the job, have to pay for all the workers.
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And then let's hope and pray.
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The customer pays the rest of the job 80% afterwards.
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And if they did that, then we'd be profitable.
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Here's the problem.
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If you don't collect payment for 80% of the job, you are floating a huge amount of cost of goods sold, which is your materials,
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your direct labor, and your subcontractors.
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And we talk about all of this in cure number one of the book.
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You've got to know your cost of goods sold to be able to know whether or not cure one will work for you, which is shutdown mode.
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That being said, at Good Hand Roofing, they were collecting 20% up front, and $278,000 was owed to them on a $1.6 million business.
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And so the thing is this.
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The reason that a fast-growing home service business
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that is profitable, like they are profitable.
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Over here, once they get paid, they are profitable.
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Healthy profits, by the way.
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But if you start stacking more and more and more jobs and you're growing and getting bigger jobs, more jobs, this gap, if it starts taking 30, 60, 90 days to collect on money, will catch up with you.
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And that is what leads to a lot of people getting into credit card debt, into lines of credit, and they're essentially floating their cash flow because they are in the red.
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There are jobs where there are actually points in time throughout the entire job that they're losing money.
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And many times it's after a day or two after the estimate is accepted and the materials have been ordered.
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So you get 20% down.
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Great.
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We're on the schedule.
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You are floating that job.
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Like you are in the red by the time you pay for the materials.
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Your employees get paid.
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All your contractors get paid.
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Everything gets paid.
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And then six weeks later they pay you.
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You are in the red for six weeks.
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In the red, you're like, well, I'm profitable at the end of the job.
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We're 15, 20% profit.
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We're doing good.
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You are in the red.
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You are negative cash flow on that job for six weeks.
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So if you stack enough jobs on, and as you grow, this gets more and more painful because you're in the red more often.
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So let's talk today about the five ways to fix the cash flow problem if this is a problem in your business.
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Now, let's run some math, okay?
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Now look, one second.
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I think I can show you my remarkable.
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Give me one second.
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This will take me about, I would say one minute to figure out, but it'll be better than me sticking this thing up in your face on the screen.
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I'll just show it on the screen.
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If I open this up and then open this up,
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Oh, no, I might not have connected to this Wi-Fi.
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Give me one second.
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We're working on it.
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We're working on it.
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Can I share, present with screen share?
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Connect to app.
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Let's see if this works.
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All right, loading.
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Okay, so what I'm going to show you now is how mathematically this makes no sense.
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So here's how this works.
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If we have a business, we have a business on a monthly basis that is doing $300,000.
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In revenue.
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And let's assume a 15% profit margin.
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Okay, so 15% profit.
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Okay, I'm showing here how a profitable, fast-growing business can still go bankrupt.
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All right, so that means that on a monthly basis, we have $45,000 of profit.
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Very good.
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You're like, man, this is a great business.
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Okay, our expenses on this business are going to be $255,000.
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Very good.
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Now, here's the problem.
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When we look at this revenue, the problem is that we have 200,000 of it we've collected.
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And 100,000 of it is still in accounts receivable.
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In other words, people owe us money.
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Now, here's the problem.
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In this example is I have collected $200,000 in my cash flow.
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So $200,000 in but unfortunately I still have $255,000 out out.
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So what is the net net of this negative $55,000?
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My cash balance in my bank account has gone down by $55,000 even though
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Most people would say they are profitable because you're looking at accrual, which means I earned the money and therefore I am profitable.
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But if you don't collect on the money and your accrual accounting, i.e.
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when I earn the money, does not match up with when I collect on the money, my cash accounting, then I could literally have a negative cash balance in my bank account, even though I have a profitable business.
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Okay.
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And so just doing the work alone is not sufficient.
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We need to actually think about collecting on the money.
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And so I'm going to go over five different ways to prevent this problem from happening.
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Now, the Band-Aid, by the way, the Band-Aid fix is to get a line of credit for about $100,000 that I can tap into for $55,000.
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Because I do know that I will eventually be profitable.
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but I've got to float the $55,000.
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And that's why many people go into credit card debt.
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That's why many people will go into lines of credit.
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And that's very risky because if all of a sudden you get more and more of those jobs and that $100,000 line of credit doesn't work because now I doubled the business and guess what?
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Now I need $150,000, now I need $200,000, now I need more credit cards.
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And then guess what?
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When those are maxed out, when you're waiting for a massive project to pay, that's usually, that's usually,
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When you get a car accident, you get a lawsuit, you get a worker's comp claim, that's when crazy stuff happens.
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And if you're not ready for it and you don't have any money in the bank because you have all these jobs that are profitable on paper once they're finished, but in the meantime, they're negative cashflow, we have a problem.
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And so again, the band-aid fix is to go out and bridge the gap via a loan, via credit cards, via lines of credit.
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And this is what boggles my mind.
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People are like, I'm not going to pay 1% for an ACH, or I'm not going to pay 3% for credit cards.
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But yet they're willing, for some crazy reason, to pay 10%, 15%, 20% on a line of credit or on a credit card.
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And yet they're not willing to pay 1% to 3% for ACH or credit cards to just charge them and get the money immediately.
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Boggles my mind.
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It is crazy to me.
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I have talked to people before that are using lines of credit and paying on their credit cards minimum payments and paying 15% to 20% on interest, and yet they're afraid of paying 1% to 3% to a credit card processing company so they can get the money immediately.
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I'm not going to wait for the check.
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I'm going to go pick up the check, but they're not here.
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Customers on vacation for a few weeks.
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I'll get in a few weeks.
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I want the money right now.
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Once the work is getting completed, the job is due.
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The money is due.
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I want the money right away.
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Any time after the job is elapsed, after I have paid my employees, paid for the material, and it's all on the job site and it's finished, I want to be paid immediately.
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All right.
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Five ways to do it.
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Five ways to be able to fix the cash flow problem.
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Because I want to collect my money as soon as possible.
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I want, the bottom line is this, this is why some people get very rich, and why unfortunately poor people stay poor, is they don't understand this one fact.
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I want to collect money as fast as possible.
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I want to pay it out as slow as possible.
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There are, you know, when you get like a CFO, and you get people controlling the finance of the business, their job is literally to do one thing.
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Pay bills as slow as possible.
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This is why your commercial jobs don't take so long to pay because they know this.
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And they have people in place to make sure instead of paying you immediately, they pay in 30, 60, or 90 days.
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Because they know if they can extend the terms and have a period of time where they don't pay you for 60, 90 days, they get to keep that money.
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And if they can at the same time collect as fast as possible, they actually have a negative situation, a different situation.
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They're able to collect money before they even have any cost of goods sold going out.
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Because they collect money fast and then they're slow, the money goes out slow.
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And that's all you want.
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You never want to pay a bill faster and you never want to be paid further down the road, never.
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From a cash flow perspective, I want money fast and I want to pay my bills slow.
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Okay?
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So let's go over these five different ways to fix your cash flow.
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And these are the things you're going to see in the turnaround with Good Hands Roofing.
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And we will find out very shortly whether or not they turn things around.
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But let's go ahead and talk about these five things.
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Number one, on your estimate, you can change the payment terms.
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Now, for some reason, in this industry, we are in love with 30-day terms.
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Net 30.
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If you pay us within 30 days, then you're good to go.
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After 30 days, then you're overdue.
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I don't know why we are okay with that.
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I think that is crazy.
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The fact that I am going to do a job and 30 days later, they're going to write me a check and then it's going to get to my house in three or four days.
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And then maybe the week after I'm going to take it to the bank and actually get my bank out.
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It could be five, six weeks before I actually get paid and the job has been completed and I've already paid my employees.
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I've bought the materials.
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All the cost of goods have been done.
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dumped on that property, why in the world?
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I am going to make it due upon receipt.
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At the very worst, maybe seven days I will give them.
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And we'll talk about why, because I'm not gonna accept check.
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I'm gonna require them to have cards on file, which we'll talk about in a moment.
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So there's no reason for them to have 30 days.
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I gotta give them time.
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No, I'm going to make sure I get paid as soon as possible.
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And that is going to include estimate terms and payment terms are not net 30.
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I don't know why in this industry, we think it's normal to have net 30.
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Why would you let someone pay you two pay periods after you've paid all the employees to do the work on their property?
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You're in negative cashflow on that job.
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Let that sink in for a moment.
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The fact that on April 1st, you did their property, you billed them later that week, and now middle of May,
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They're paying you.
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You have paid all of the wages out for that job.
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You've bought all the materials.
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And we are in the red.
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Make your payment terms due upon receipt, which is when the job is done and I send you this invoice, it's overdue.
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And the reason it's overdue is because you should have a card on file.
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You should have a bank account on file, which we will get to.
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But number one, we've got to change the payment terms.
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It's overdue.
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Even if you don't even charge fees, like inside of Copilot, you can have it where fees start to accrue automatically after 30 days, 15 days, or whatever you want to do.
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You can do automatic fees getting added.
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You can do that.
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But even if you don't, at least just change the payment terms on the estimate that say it's due upon receipt and a credit card is required.
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All right.
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Number two, deposit thresholds.
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Okay.
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Another way, another thing that we talked about at Good Hands Roofing was get 50% down.
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I don't know, like kind of industry standard to do 20%.
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Look, the customer has not changed their roof in the past.
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They have not gone and realized that it is industry standard to get only 20% or 25%.
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Get 50%.
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Give them a discount if needs be.
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I need all of my cost of goods sold covered with the deposit.
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And a vast majority of home service businesses, if they're running a solid business, can cover your cost of goods sold if you collect 50%.
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Before the job starts.
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So that way, back to our little example here.
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Boom.
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Back to our example here.
250
00:15:02.108 --> 00:15:06.871
What I'm trying to do here by getting 50% down, I'm trying to go like this.
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Get a bigger deposit so that as the job gets paid out, I don't have as much of a negative cash flow.
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Because I got more.
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Right, right, right, right, right, right, right.
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More of a deposit.
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So in my opinion, at least 50%.
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If I get 50%, I know I'm usually gonna be able to cover my cost of goods sold, which is my direct labor, the materials on that job site.
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All right, number three, pay in full.
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Okay, so this is something that I talked about with Good Hands Roofing, it's like, hey look, we're taking 20%, that's fine.
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I would rather 50% on deposits.
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But I said in the best case scenario, they would pay the entire estimate up front.
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And you might think, that's crazy.
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There's no way that that will work.
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No, it does work.
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For about 10% to 15% of your customers, if you give them the option to pay the entire estimate in full, they will do so.
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Why in the world would a customer pay in full when I'm also giving them the option to be able to pay a deposit?
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Here's why.
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Because they trust you.
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You've done work for them in the past.
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They know, like, and trust you.
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You've done service for them for years.
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And they just don't want to be bothered with a secondary invoice that they can deal with later.
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So what do they do?
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They just pay the whole invoice up front.
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on the estimate instead of the deposit.
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So here, I'll actually just show you real quick.
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Give me one moment.
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See here, when it's asking for the deposit, it's just simply also saying, hey, would you just wanna have the estimate total?
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So instead of 50% down, I am going to be asking for the estimate total.
279
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It's just there.
280
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Anytime that we're asking for a deposit, we're also asking for painful.
281
00:16:38.725 --> 00:17:04.758
and some people will do it and why in the world would i not want the money sooner because remember the whole goal is to be able to get collect money as fast as possible and have it paid out as slow as possible and good hands roofing is great great people they're fantastic and he was concerned by the fact that hey i'm robbing peter to pay paul because i could technically start taking the money from this first job that i got for 100 down and pay in full and start applying to a different job yes you could do that and that's a completely different problem
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That's an accounting function.
283
00:17:06.198 --> 00:17:07.018
That's a totally different problem.
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But ultimately, there's never a reason, never a reason, why I do not want to accept money sooner and pay bills slower.
285
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And so if someone gives you the ability to pay in full, I want that money.
286
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That money means something to me.
287
00:17:20.602 --> 00:17:23.422
And I even told them, hey, on a $30,000 job, I'm willing to give up 5%.
288
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I'm willing to give the customer a discount if they pay me today because if they're on the schedule for two months from now, and then I know on average six to eight weeks is what goes by before people pay me in full,
289
00:17:35.545 --> 00:17:39.948
for two or three months before I otherwise would if they just pay the whole job up front.
290
00:17:40.529 --> 00:17:43.431
So even if you have to give a discount for pay in full, I'd recommend it.
291
00:17:43.651 --> 00:17:51.796
But when we just literally, I just showed you, just show estimates with a deposit and we have inside Copilot over a certain dollar amount.
292
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Hey, here's the deposit and you can customize all that.
293
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Here, I'll actually just show it to you.
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This is how we have it set up inside Copilot.
295
00:17:58.761 --> 00:18:02.404
So in your estimate settings, you set your estimate threshold right here.
296
00:18:03.104 --> 00:18:07.166
So, hey, anything over $100, I'm requiring 50% percentage.
297
00:18:07.526 --> 00:18:09.267
So you could change this to like $1,000.
298
00:18:09.647 --> 00:18:12.429
You could change this to a dollar amount or 20%, whatever you wanted.
299
00:18:12.909 --> 00:18:16.131
But this is, you just toggle this one little button right here.
300
00:18:16.591 --> 00:18:17.251
Oops, you can't see it.
301
00:18:17.311 --> 00:18:18.352
One second, one second, one second.
302
00:18:19.973 --> 00:18:20.773
Whoa, someone gave me $4.99.
303
00:18:22.700 --> 00:18:42.617
whoa we're out here getting rich okay one second um there that little toggle right there is going to give you 10 to 15 of your customers will just pay the whole thing up front i believe we can get that 20 as time goes on we refine the user interface i do believe that also as you have more and more customers that have been with you for a long time
304
00:18:43.398 --> 00:18:46.440
and they already know, like, and trust you, this number will also go up.
305
00:18:47.101 --> 00:18:50.883
And all it is, a little toggle that when they're paying the deposit, it's like, hey, we just want to pay this whole thing up front.
306
00:18:50.903 --> 00:18:52.044
They're like, why in the world would they do that?
307
00:18:52.204 --> 00:18:54.686
Because they don't want to have to deal with another invoice getting paid down the road.
308
00:18:54.706 --> 00:18:55.166
They're busy.
309
00:18:55.347 --> 00:18:56.608
These are working professionals.
310
00:18:56.788 --> 00:18:58.169
These are people that have three, four houses.
311
00:18:58.269 --> 00:18:59.289
They don't want to deal with another invoice.
312
00:18:59.309 --> 00:19:00.650
They already know you're going to do a great job.
313
00:19:00.770 --> 00:19:01.791
They'll pay the whole thing up front.
314
00:19:02.352 --> 00:19:03.613
All right, so that's how the settings work.
315
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Anytime a deposit threshold is hit, it's going to give them the option to pay in full.
316
00:19:08.916 --> 00:19:09.797
You can toggle it on and off.
317
00:19:10.372 --> 00:19:13.733
All right, that was, which was number three.
318
00:19:13.953 --> 00:19:18.195
That's a third way to be able to fix our cash flow problems is pay in full.
319
00:19:18.635 --> 00:19:22.356
The fourth one is credit card and ACH on file.
320
00:19:22.676 --> 00:19:25.798
This ties back to the first way to be able to fix the issue.
321
00:19:26.258 --> 00:19:32.100
And that is not having net 30 and then requiring everything is paid like,
322
00:19:32.420 --> 00:19:38.145
Immediately, due upon receipt, which means when the work is done, the job is now ready to be paid.
323
00:19:38.265 --> 00:19:45.232
And the moment after the job is not paid and is completed, it is overdue, due upon receipt.
324
00:19:45.672 --> 00:19:54.220
And the reason you can have that as your payment terms is because you require a credit card or an ACH to be on file before the customer even accepts the estimate.
325
00:19:54.740 --> 00:20:00.644
And so, like we built this in Copilot because it's super valuable to us because here's the challenging part.
326
00:20:00.664 --> 00:20:11.853
Like if you don't have a, where they have to have a car on file before the estimate is accepted, if you allow them to accept the estimate, then you've gotta go like follow up with them to get a credit card or follow up with them to get ACH on file.
327
00:20:12.173 --> 00:20:15.857
and the first email you're giving back to them is now like, can you give us money?
328
00:20:16.217 --> 00:20:17.578
That goes to spam a lot of times.
329
00:20:17.898 --> 00:20:21.902
Also very difficult and it's another step I have to get them to contact me back.
330
00:20:22.362 --> 00:20:25.325
And for us, I am not doing service if you don't have payment information on file.
331
00:20:25.906 --> 00:20:38.177
Which means they could, in the past, accept the estimate and then I'd have the job coming up like, oh man, I gotta make sure, and I have to go back and I have to send them a message like, hey, we can't do your job unless you get this credit card information on file.
332
00:20:38.677 --> 00:21:02.928
Awkward weird strange or you risk doing the job and then them not paying you And so what we built inside of copa is like before they even accept the estimate It's very easy in the workflow They have to put a card information on file or a ch on file But that has to be done before the estimate estimate is accepted that means when the estimate gets accepted I know without a shadow of doubt that I can get the job on the schedule and have payment information on file so that
333
00:21:03.768 --> 00:21:11.894
I am able to have due upon receipt because you have due upon receipt without card information on file, without ACH information on file to be able to charge immediately.
334
00:21:12.315 --> 00:21:15.897
That means that customers are going to get their invoice at the end of the job and it's going to say overdue.
335
00:21:16.538 --> 00:21:17.799
And then you'll get some mad customers.
336
00:21:18.159 --> 00:21:24.844
So what I recommend is before the estimate is even accepted, when they're paying the deposit, capture that information, goes on their profile.
337
00:21:25.084 --> 00:21:27.927
And at the end of the job, you charge that card, you charge that ACH.
338
00:21:28.640 --> 00:21:31.243
And by doing that, you will not have net 30.
339
00:21:31.584 --> 00:21:35.890
Net 30 should be, is like a curse to this industry and for some reason it's become standard and I hate it.
340
00:21:36.530 --> 00:21:40.095
Number five, fifth way to fix cash flow is automations.
341
00:21:40.843 --> 00:21:46.484
I'm gonna have text, email, and calls, and I am going to make sure that I collect all my money.
342
00:21:46.824 --> 00:21:48.445
Okay, so we're gonna go to sequence automations.
343
00:21:49.785 --> 00:21:52.645
Let's see here, we're gonna do show me the money, right?
344
00:21:52.965 --> 00:21:54.586
We're not gonna name this something boring.
345
00:21:54.606 --> 00:21:55.506
It's in the power pack.
346
00:21:55.986 --> 00:21:57.086
So again, you can get all of this.
347
00:21:57.146 --> 00:21:59.487
It's completely free inside of Copilot once you sign up.
348
00:21:59.787 --> 00:22:01.087
And this is our sequence.
349
00:22:01.967 --> 00:22:05.508
So if they're two days overdue, they're getting a text message.
350
00:22:06.357 --> 00:22:09.279
If they're three days overdue, I'm going to email the customer.
351
00:22:09.800 --> 00:22:12.241
If they're seven days overdue, I'm going to email the customer again.
352
00:22:13.062 --> 00:22:15.384
If it's 10 days, I'm going to text the customer again.
353
00:22:15.404 --> 00:22:16.905
I'm going to email the customer.
354
00:22:16.925 --> 00:22:17.886
I'm going to text the customer.
355
00:22:18.106 --> 00:22:20.367
And then it gets a little bit hairy here.
356
00:22:20.988 --> 00:22:28.273
14 days in, I'm emailing the company owner that's coming to me and saying, this person needs to go to collections and you need to call them.
357
00:22:29.074 --> 00:22:31.516
And then I'm going to text the company owner again.
358
00:22:31.716 --> 00:22:33.217
If they don't respond and tell them,
359
00:22:33.938 --> 00:22:36.720
cancel service, get this person off our list, we're out of here.
360
00:22:37.101 --> 00:22:38.382
So we're going to click edit here.
361
00:22:39.082 --> 00:22:41.384
And you can customize all of these, by the way, you can see exactly here.
362
00:22:41.444 --> 00:22:49.831
So for example, if a trigger invoice is sent, boom, two days after we're following up, I got to get paid, I want to get paid immediately.
363
00:22:50.091 --> 00:22:57.397
And by the way, by the way, we should never have this automation going out because we have credit card informational file and we have ACH on file.
364
00:22:57.777 --> 00:22:58.758
But in the event of
365
00:22:59.380 --> 00:23:03.822
that something crazy happened, like that credit card expired or something crazy, this is what's gonna happen.
366
00:23:03.842 --> 00:23:05.322
It's gonna clean up after the mess.
367
00:23:05.942 --> 00:23:11.064
So two days after texting the customer, three days after emailing the customer, seven days.
368
00:23:11.084 --> 00:23:12.585
You're like, why are you doing it so quickly?
369
00:23:12.885 --> 00:23:22.149
Because if you don't get payment collected within 30 days, if you don't get a click within 14 days, the likelihood just continues to drop whether or not you're actually gonna get paid.
370
00:23:22.569 --> 00:23:25.770
And so I highly recommend, same thing with estimate follow-up, we'll talk about this later.
371
00:23:26.250 --> 00:23:31.535
I would recommend stacking as many of your communication in the first seven to 10 days.
372
00:23:32.236 --> 00:23:35.018
There's a precipitous drop in the likelihood that people will pay.
373
00:23:35.038 --> 00:23:39.602
If they haven't paid within 14 days, the likelihood of them paying at all is much lower.
374
00:23:40.103 --> 00:23:42.385
So collect the money as soon as possible.
375
00:23:42.725 --> 00:23:44.427
Text, email, and phone calls.
376
00:23:45.090 --> 00:23:49.795
Email, here down here, the company owner here, you can see, this is the email template.
377
00:23:49.815 --> 00:23:51.396
So I can go check out the email template.
378
00:23:51.937 --> 00:23:54.019
Invoice follow-up, let's check that out real quick.
379
00:23:54.720 --> 00:23:56.481
Invoice follow-up, buh-buh-buh.
380
00:23:57.102 --> 00:23:58.663
Number four, here's this internal one.
381
00:23:58.744 --> 00:23:59.684
Here's what it's gonna look like.
382
00:24:00.245 --> 00:24:03.588
Overdue invoice, you can click on it directly because this is gonna come to me.
383
00:24:04.009 --> 00:24:05.010
I'm gonna be able to see
384
00:24:05.718 --> 00:24:06.778
Whoops, whoops, whoops, whoops.
385
00:24:07.079 --> 00:24:07.999
I go back to Safari.
386
00:24:08.419 --> 00:24:10.060
I have like 50 tabs open here.
387
00:24:10.080 --> 00:24:10.680
Okay.
388
00:24:11.080 --> 00:24:12.701
Over to invoice for this certain customer.
389
00:24:12.881 --> 00:24:13.461
This is their invoice.
390
00:24:13.501 --> 00:24:17.763
I can click on it immediately and make sure that the services are stopped at their property.
391
00:24:18.123 --> 00:24:21.284
Go to the client's house in person with a printed copy of the invoice.
392
00:24:21.565 --> 00:24:26.226
You can contact an online or local credit collections agency and send the invoice to them.
393
00:24:26.727 --> 00:24:26.907
So...
394
00:24:27.547 --> 00:24:28.408
Hopefully we don't get here.
395
00:24:28.468 --> 00:24:30.969
We should never get here because we have all the other things in place.
396
00:24:31.890 --> 00:24:34.892
And to fix our cash flow, because I'm not going to become a bank.
397
00:24:35.332 --> 00:24:35.913
You are not a bank.
398
00:24:36.153 --> 00:24:37.794
And you're not charging interest.
399
00:24:38.034 --> 00:24:42.077
If you're not charging, like, by the way, we also have the inside of Copa.
400
00:24:42.377 --> 00:24:44.358
If they're overdue, they're getting fees charged.
401
00:24:44.818 --> 00:24:52.223
Because, like, if you're going to take money from me in the form of, like, we don't take, we don't count it as taking money.
402
00:24:52.363 --> 00:24:54.265
But they are, they are absolutely taking your money.
403
00:24:54.865 --> 00:24:58.508
They are taking your money in the form and fashion of labor and materials.
404
00:24:59.349 --> 00:25:00.590
And you have paid that out.
405
00:25:01.031 --> 00:25:01.931
And you have done the work.
406
00:25:02.232 --> 00:25:04.173
Why in the world do we not get paid?
407
00:25:04.774 --> 00:25:06.015
And why don't we get paid fast?
408
00:25:06.676 --> 00:25:11.800
Because a fast-growing, profitable business can go out of business and become bankrupt.
409
00:25:12.201 --> 00:25:13.942
Okay, so these are the five ways to fix your cash flow.
410
00:25:13.982 --> 00:25:17.105
Number one, we are going to change the payment terms on our estimate.
411
00:25:17.225 --> 00:25:18.046
No more than that 30.
412
00:25:18.166 --> 00:25:18.767
That's stupid.
413
00:25:19.387 --> 00:25:22.889
Get card information on file, et cetera, so you can immediately charge their card.
414
00:25:23.189 --> 00:25:25.610
And if it doesn't go through, it's now overdue.
415
00:25:26.191 --> 00:25:27.291
And fees can start to accrue.
416
00:25:27.451 --> 00:25:28.452
Look at your local state laws.
417
00:25:28.752 --> 00:25:30.153
Make sure what fees are allowed.
418
00:25:30.893 --> 00:25:31.754
I'm charging fees.
419
00:25:32.374 --> 00:25:33.895
Number two, deposit thresholds.
420
00:25:34.660 --> 00:25:37.825
So if they're over a certain dollar amount, I'm gonna be taking a deposit up front.
421
00:25:37.865 --> 00:25:38.786
The more, the better.
422
00:25:39.247 --> 00:25:40.709
Number three, pay in full.
423
00:25:40.729 --> 00:25:45.336
I'm gonna give the option for the customer to pay in full prior to the job even starting.
424
00:25:45.977 --> 00:25:50.364
Number four, I'm going to have credit card and ACH on file required.
425
00:25:50.894 --> 00:25:51.936
Before the estimate is accepted.
426
00:25:52.297 --> 00:25:52.938
And number five.
427
00:25:53.199 --> 00:25:55.464
I'm going to have automations to clean up the mess.
428
00:25:55.584 --> 00:25:57.067
If anything slips through the cracks.
429
00:25:57.688 --> 00:25:58.249
Via text.
430
00:25:58.650 --> 00:25:59.031
Emails.
431
00:25:59.312 --> 00:25:59.853
Phone calls.
432
00:26:00.173 --> 00:26:00.715
In person.
433
00:26:00.955 --> 00:26:02.659
And anything short of harassment.
434
00:26:02.699 --> 00:26:04.022
Because they owe me money.
435
00:26:04.623 --> 00:26:05.986
And I'm not going to wait around for it.
1
00:00:00.051 --> 00:00:02.773
Hey everyone, it's Mike Andes, and today we're talking about cash flow.
2
00:00:02.853 --> 00:00:08.757
I'm gonna be talking about five different things that you can do in your business today to immediately collect money faster.
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Now this segment, it was live, and if you're watching this video, it gets a little grainy, but listen to what I'm talking about because these five things can be changed in the next few hours in your business and will immediately unlock the amount of revenue.
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These are things that you can do
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today.
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In my opinion, there are three major segments of a business.
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Ultimately, we look at home services.
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We have to get the work, we have to do the work, and then we have to get paid for the work.
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So I think of this as sales, operations, and admin.
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Sales, get the work.
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Operations, do the work.
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And number three, admin, get paid for the work.
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Admin does other stuff too, like payroll.
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They grease the gears of the business doing its job.
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But ultimately, admin is responsible to get paid for the work.
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And for some reason, some of us do a really decent job of getting the work.
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We do sales, we do marketing, we do advertising.
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And most of the calls today already have been about sales.
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And a lot of us, the vast majority of us, because otherwise you wouldn't be in business, do a really good job at operations.
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We do high quality work.
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Customers are happy.
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We do good customer service.
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Let's go.
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And most of us really, really stink at the third one, which is getting paid for the work.
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It just so happens that the reason you got into business, though, is to get paid and make more money.
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And yet, you would think that we are simply running an advertising campaign, or running an advertising agency that gives away free work.
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Because so many home service business owners do exactly that.
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We spend gobs of money on getting more leads, and then we spend tons of time, blood, sweat, and tears, managing team members, managing customers' expectations to do the work.
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And then for some reason, after the work is done, the job is completed, the walkthrough is completed,
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We just don't care about getting paid.
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It boggles my mind.
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Last month, I went to a business that is roofing.
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You're going to see this on the turnaround show so I can say their name.
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It's Good Hands Roofing.
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The best people ever.
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Best people.
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Best family.
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I love them to death.
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They had a business that did $1.6 million in revenue last year doing roofing.
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This is the problem.
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$278,000 was owed to them.
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$278,000 on a $1.6 million business is about 15% of revenue was outstanding.
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You know what's crazy?
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That was all of their profit.
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If they would just have collected on everything that was currently owed to them, they would have probably felt really good.
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But when there's no money in the bank account, the reason being, we haven't collected on the work we have already finished.
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Customers owe you money.
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The
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The bottom line is this, a fast growing, profitable home service business can go bankrupt.
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A profitable, fast growing business can go bankrupt because they did not collect on the money fast enough.
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All right, here, I'll actually draw this out.
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All right, let me make this a marker.
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I'm gonna draw this out.
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Let's see here.
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Let's go bigger on the marker situation.
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Okay, very good.
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Okay, here's how I like to think about it.
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And you'll see this in the turnaround coming out in a few weeks.
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This is zero, this line.
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I think you guys can see this one second.
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Okay, this is zero, all right?
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When the job starts out, let's say, like, Good Hands Roofing was expecting a 20% deposit, okay?
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So they actually, like, were above zero.
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Like, immediately someone gave you 20% of the job, let's go.
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But then they have to go buy materials.
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Then they have to start the job, have to pay for all the workers.
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And then let's hope and pray.
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The customer pays the rest of the job 80% afterwards.
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And if they did that, then we'd be profitable.
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Here's the problem.
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If you don't collect payment for 80% of the job, you are floating a huge amount of cost of goods sold, which is your materials,
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your direct labor, and your subcontractors.
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And we talk about all of this in cure number one of the book.
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You've got to know your cost of goods sold to be able to know whether or not cure one will work for you, which is shutdown mode.
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That being said, at Good Hand Roofing, they were collecting 20% up front, and $278,000 was owed to them on a $1.6 million business.
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And so the thing is this.
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The reason that a fast-growing home service business
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that is profitable, like they are profitable.
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Over here, once they get paid, they are profitable.
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Healthy profits, by the way.
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But if you start stacking more and more and more jobs and you're growing and getting bigger jobs, more jobs, this gap, if it starts taking 30, 60, 90 days to collect on money, will catch up with you.
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And that is what leads to a lot of people getting into credit card debt, into lines of credit, and they're essentially floating their cash flow because they are in the red.
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There are jobs where there are actually points in time throughout the entire job that they're losing money.
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And many times it's after a day or two after the estimate is accepted and the materials have been ordered.
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So you get 20% down.
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Great.
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We're on the schedule.
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You are floating that job.
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Like you are in the red by the time you pay for the materials.
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Your employees get paid.
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All your contractors get paid.
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Everything gets paid.
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And then six weeks later they pay you.
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You are in the red for six weeks.
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In the red, you're like, well, I'm profitable at the end of the job.
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We're 15, 20% profit.
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We're doing good.
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You are in the red.
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You are negative cash flow on that job for six weeks.
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So if you stack enough jobs on, and as you grow, this gets more and more painful because you're in the red more often.
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So let's talk today about the five ways to fix the cash flow problem if this is a problem in your business.
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Now, let's run some math, okay?
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Now look, one second.
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I think I can show you my remarkable.
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Give me one second.
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This will take me about, I would say one minute to figure out, but it'll be better than me sticking this thing up in your face on the screen.
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I'll just show it on the screen.
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If I open this up and then open this up,
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Oh, no, I might not have connected to this Wi-Fi.
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Give me one second.
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We're working on it.
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We're working on it.
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Can I share, present with screen share?
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Connect to app.
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Let's see if this works.
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All right, loading.
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Okay, so what I'm going to show you now is how mathematically this makes no sense.
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So here's how this works.
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If we have a business, we have a business on a monthly basis that is doing $300,000.
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In revenue.
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And let's assume a 15% profit margin.
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Okay, so 15% profit.
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Okay, I'm showing here how a profitable, fast-growing business can still go bankrupt.
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All right, so that means that on a monthly basis, we have $45,000 of profit.
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Very good.
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You're like, man, this is a great business.
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Okay, our expenses on this business are going to be $255,000.
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Very good.
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Now, here's the problem.
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When we look at this revenue, the problem is that we have 200,000 of it we've collected.
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And 100,000 of it is still in accounts receivable.
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In other words, people owe us money.
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Now, here's the problem.
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In this example is I have collected $200,000 in my cash flow.
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So $200,000 in but unfortunately I still have $255,000 out out.
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So what is the net net of this negative $55,000?
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My cash balance in my bank account has gone down by $55,000 even though
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Most people would say they are profitable because you're looking at accrual, which means I earned the money and therefore I am profitable.
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But if you don't collect on the money and your accrual accounting, i.e.
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when I earn the money, does not match up with when I collect on the money, my cash accounting, then I could literally have a negative cash balance in my bank account, even though I have a profitable business.
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Okay.
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And so just doing the work alone is not sufficient.
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We need to actually think about collecting on the money.
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And so I'm going to go over five different ways to prevent this problem from happening.
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Now, the Band-Aid, by the way, the Band-Aid fix is to get a line of credit for about $100,000 that I can tap into for $55,000.
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Because I do know that I will eventually be profitable.
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but I've got to float the $55,000.
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And that's why many people go into credit card debt.
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That's why many people will go into lines of credit.
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And that's very risky because if all of a sudden you get more and more of those jobs and that $100,000 line of credit doesn't work because now I doubled the business and guess what?
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Now I need $150,000, now I need $200,000, now I need more credit cards.
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And then guess what?
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When those are maxed out, when you're waiting for a massive project to pay, that's usually, that's usually,
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When you get a car accident, you get a lawsuit, you get a worker's comp claim, that's when crazy stuff happens.
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And if you're not ready for it and you don't have any money in the bank because you have all these jobs that are profitable on paper once they're finished, but in the meantime, they're negative cashflow, we have a problem.
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And so again, the band-aid fix is to go out and bridge the gap via a loan, via credit cards, via lines of credit.
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And this is what boggles my mind.
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People are like, I'm not going to pay 1% for an ACH, or I'm not going to pay 3% for credit cards.
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But yet they're willing, for some crazy reason, to pay 10%, 15%, 20% on a line of credit or on a credit card.
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And yet they're not willing to pay 1% to 3% for ACH or credit cards to just charge them and get the money immediately.
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Boggles my mind.
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It is crazy to me.
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I have talked to people before that are using lines of credit and paying on their credit cards minimum payments and paying 15% to 20% on interest, and yet they're afraid of paying 1% to 3% to a credit card processing company so they can get the money immediately.
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I'm not going to wait for the check.
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I'm going to go pick up the check, but they're not here.
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Customers on vacation for a few weeks.
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I'll get in a few weeks.
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I want the money right now.
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Once the work is getting completed, the job is due.
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The money is due.
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I want the money right away.
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Any time after the job is elapsed, after I have paid my employees, paid for the material, and it's all on the job site and it's finished, I want to be paid immediately.
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All right.
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Five ways to do it.
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Five ways to be able to fix the cash flow problem.
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Because I want to collect my money as soon as possible.
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I want, the bottom line is this, this is why some people get very rich, and why unfortunately poor people stay poor, is they don't understand this one fact.
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I want to collect money as fast as possible.
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I want to pay it out as slow as possible.
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There are, you know, when you get like a CFO, and you get people controlling the finance of the business, their job is literally to do one thing.
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Pay bills as slow as possible.
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This is why your commercial jobs don't take so long to pay because they know this.
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And they have people in place to make sure instead of paying you immediately, they pay in 30, 60, or 90 days.
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Because they know if they can extend the terms and have a period of time where they don't pay you for 60, 90 days, they get to keep that money.
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And if they can at the same time collect as fast as possible, they actually have a negative situation, a different situation.
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They're able to collect money before they even have any cost of goods sold going out.
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Because they collect money fast and then they're slow, the money goes out slow.
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And that's all you want.
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You never want to pay a bill faster and you never want to be paid further down the road, never.
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From a cash flow perspective, I want money fast and I want to pay my bills slow.
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Okay?
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So let's go over these five different ways to fix your cash flow.
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And these are the things you're going to see in the turnaround with Good Hands Roofing.
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And we will find out very shortly whether or not they turn things around.
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But let's go ahead and talk about these five things.
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Number one, on your estimate, you can change the payment terms.
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Now, for some reason, in this industry, we are in love with 30-day terms.
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Net 30.
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If you pay us within 30 days, then you're good to go.
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After 30 days, then you're overdue.
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I don't know why we are okay with that.
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I think that is crazy.
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The fact that I am going to do a job and 30 days later, they're going to write me a check and then it's going to get to my house in three or four days.
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And then maybe the week after I'm going to take it to the bank and actually get my bank out.
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It could be five, six weeks before I actually get paid and the job has been completed and I've already paid my employees.
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I've bought the materials.
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All the cost of goods have been done.
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dumped on that property, why in the world?
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I am going to make it due upon receipt.
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At the very worst, maybe seven days I will give them.
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And we'll talk about why, because I'm not gonna accept check.
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I'm gonna require them to have cards on file, which we'll talk about in a moment.
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So there's no reason for them to have 30 days.
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I gotta give them time.
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No, I'm going to make sure I get paid as soon as possible.
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And that is going to include estimate terms and payment terms are not net 30.
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I don't know why in this industry, we think it's normal to have net 30.
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Why would you let someone pay you two pay periods after you've paid all the employees to do the work on their property?
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You're in negative cashflow on that job.
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Let that sink in for a moment.
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The fact that on April 1st, you did their property, you billed them later that week, and now middle of May,
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They're paying you.
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You have paid all of the wages out for that job.
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You've bought all the materials.
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00:13:44.698 --> 00:13:46.119
And we are in the red.
226
00:13:46.779 --> 00:13:51.424
Make your payment terms due upon receipt, which is when the job is done and I send you this invoice, it's overdue.
227
00:13:52.104 --> 00:13:54.887
And the reason it's overdue is because you should have a card on file.
228
00:13:55.407 --> 00:13:57.869
You should have a bank account on file, which we will get to.
229
00:13:58.390 --> 00:14:00.592
But number one, we've got to change the payment terms.
230
00:14:00.612 --> 00:14:00.912
It's overdue.
231
00:14:01.112 --> 00:14:08.338
Even if you don't even charge fees, like inside of Copilot, you can have it where fees start to accrue automatically after 30 days, 15 days, or whatever you want to do.
232
00:14:08.558 --> 00:14:10.860
You can do automatic fees getting added.
233
00:14:11.140 --> 00:14:11.720
You can do that.
234
00:14:11.941 --> 00:14:20.227
But even if you don't, at least just change the payment terms on the estimate that say it's due upon receipt and a credit card is required.
235
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All right.
236
00:14:21.228 --> 00:14:23.209
Number two, deposit thresholds.
237
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Okay.
238
00:14:24.830 --> 00:14:28.934
Another way, another thing that we talked about at Good Hands Roofing was get 50% down.
239
00:14:29.922 --> 00:14:32.684
I don't know, like kind of industry standard to do 20%.
240
00:14:33.125 --> 00:14:35.947
Look, the customer has not changed their roof in the past.
241
00:14:36.288 --> 00:14:41.092
They have not gone and realized that it is industry standard to get only 20% or 25%.
242
00:14:41.732 --> 00:14:42.753
Get 50%.
243
00:14:43.374 --> 00:14:44.615
Give them a discount if needs be.
244
00:14:45.015 --> 00:14:48.778
I need all of my cost of goods sold covered with the deposit.
245
00:14:49.359 --> 00:14:54.483
And a vast majority of home service businesses, if they're running a solid business, can cover your cost of goods sold if you collect 50%.
246
00:14:55.704 --> 00:14:56.665
Before the job starts.
247
00:14:57.165 --> 00:14:59.547
So that way, back to our little example here.
248
00:15:00.167 --> 00:15:00.527
Boom.
249
00:15:01.148 --> 00:15:01.908
Back to our example here.
250
00:15:02.108 --> 00:15:06.871
What I'm trying to do here by getting 50% down, I'm trying to go like this.
251
00:15:07.272 --> 00:15:12.495
Get a bigger deposit so that as the job gets paid out, I don't have as much of a negative cash flow.
252
00:15:13.135 --> 00:15:14.236
Because I got more.
253
00:15:14.716 --> 00:15:16.718
Right, right, right, right, right, right, right.
254
00:15:17.158 --> 00:15:17.858
More of a deposit.
255
00:15:18.358 --> 00:15:20.539
So in my opinion, at least 50%.
256
00:15:20.619 --> 00:15:25.961
If I get 50%, I know I'm usually gonna be able to cover my cost of goods sold, which is my direct labor, the materials on that job site.
257
00:15:26.601 --> 00:15:29.762
All right, number three, pay in full.
258
00:15:30.342 --> 00:15:35.144
Okay, so this is something that I talked about with Good Hands Roofing, it's like, hey look, we're taking 20%, that's fine.
259
00:15:36.284 --> 00:15:38.326
I would rather 50% on deposits.
260
00:15:38.667 --> 00:15:43.772
But I said in the best case scenario, they would pay the entire estimate up front.
261
00:15:44.512 --> 00:15:46.134
And you might think, that's crazy.
262
00:15:46.154 --> 00:15:48.016
There's no way that that will work.
263
00:15:48.402 --> 00:15:49.403
No, it does work.
264
00:15:50.003 --> 00:15:56.208
For about 10% to 15% of your customers, if you give them the option to pay the entire estimate in full, they will do so.
265
00:15:57.189 --> 00:16:03.534
Why in the world would a customer pay in full when I'm also giving them the option to be able to pay a deposit?
266
00:16:04.134 --> 00:16:04.555
Here's why.
267
00:16:04.835 --> 00:16:05.675
Because they trust you.
268
00:16:06.156 --> 00:16:07.397
You've done work for them in the past.
269
00:16:07.517 --> 00:16:08.798
They know, like, and trust you.
270
00:16:09.679 --> 00:16:11.100
You've done service for them for years.
271
00:16:11.820 --> 00:16:14.742
And they just don't want to be bothered with a secondary invoice that they can deal with later.
272
00:16:15.003 --> 00:16:15.643
So what do they do?
273
00:16:16.284 --> 00:16:17.705
They just pay the whole invoice up front.
274
00:16:18.395 --> 00:16:19.976
on the estimate instead of the deposit.
275
00:16:20.216 --> 00:16:21.677
So here, I'll actually just show you real quick.
276
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Give me one moment.
277
00:16:23.378 --> 00:16:28.860
See here, when it's asking for the deposit, it's just simply also saying, hey, would you just wanna have the estimate total?
278
00:16:29.501 --> 00:16:33.242
So instead of 50% down, I am going to be asking for the estimate total.
279
00:16:33.543 --> 00:16:34.023
It's just there.
280
00:16:34.303 --> 00:16:38.145
Anytime that we're asking for a deposit, we're also asking for painful.
281
00:16:38.725 --> 00:17:04.758
and some people will do it and why in the world would i not want the money sooner because remember the whole goal is to be able to get collect money as fast as possible and have it paid out as slow as possible and good hands roofing is great great people they're fantastic and he was concerned by the fact that hey i'm robbing peter to pay paul because i could technically start taking the money from this first job that i got for 100 down and pay in full and start applying to a different job yes you could do that and that's a completely different problem
282
00:17:05.298 --> 00:17:06.178
That's an accounting function.
283
00:17:06.198 --> 00:17:07.018
That's a totally different problem.
284
00:17:07.238 --> 00:17:13.600
But ultimately, there's never a reason, never a reason, why I do not want to accept money sooner and pay bills slower.
285
00:17:14.180 --> 00:17:18.281
And so if someone gives you the ability to pay in full, I want that money.
286
00:17:18.881 --> 00:17:20.141
That money means something to me.
287
00:17:20.602 --> 00:17:23.422
And I even told them, hey, on a $30,000 job, I'm willing to give up 5%.
288
00:17:24.062 --> 00:17:32.844
I'm willing to give the customer a discount if they pay me today because if they're on the schedule for two months from now, and then I know on average six to eight weeks is what goes by before people pay me in full,
289
00:17:35.545 --> 00:17:39.948
for two or three months before I otherwise would if they just pay the whole job up front.
290
00:17:40.529 --> 00:17:43.431
So even if you have to give a discount for pay in full, I'd recommend it.
291
00:17:43.651 --> 00:17:51.796
But when we just literally, I just showed you, just show estimates with a deposit and we have inside Copilot over a certain dollar amount.
292
00:17:52.177 --> 00:17:55.439
Hey, here's the deposit and you can customize all that.
293
00:17:55.459 --> 00:17:56.660
Here, I'll actually just show it to you.
294
00:17:56.740 --> 00:17:58.401
This is how we have it set up inside Copilot.
295
00:17:58.761 --> 00:18:02.404
So in your estimate settings, you set your estimate threshold right here.
296
00:18:03.104 --> 00:18:07.166
So, hey, anything over $100, I'm requiring 50% percentage.
297
00:18:07.526 --> 00:18:09.267
So you could change this to like $1,000.
298
00:18:09.647 --> 00:18:12.429
You could change this to a dollar amount or 20%, whatever you wanted.
299
00:18:12.909 --> 00:18:16.131
But this is, you just toggle this one little button right here.
300
00:18:16.591 --> 00:18:17.251
Oops, you can't see it.
301
00:18:17.311 --> 00:18:18.352
One second, one second, one second.
302
00:18:19.973 --> 00:18:20.773
Whoa, someone gave me $4.99.
303
00:18:22.700 --> 00:18:42.617
whoa we're out here getting rich okay one second um there that little toggle right there is going to give you 10 to 15 of your customers will just pay the whole thing up front i believe we can get that 20 as time goes on we refine the user interface i do believe that also as you have more and more customers that have been with you for a long time
304
00:18:43.398 --> 00:18:46.440
and they already know, like, and trust you, this number will also go up.
305
00:18:47.101 --> 00:18:50.883
And all it is, a little toggle that when they're paying the deposit, it's like, hey, we just want to pay this whole thing up front.
306
00:18:50.903 --> 00:18:52.044
They're like, why in the world would they do that?
307
00:18:52.204 --> 00:18:54.686
Because they don't want to have to deal with another invoice getting paid down the road.
308
00:18:54.706 --> 00:18:55.166
They're busy.
309
00:18:55.347 --> 00:18:56.608
These are working professionals.
310
00:18:56.788 --> 00:18:58.169
These are people that have three, four houses.
311
00:18:58.269 --> 00:18:59.289
They don't want to deal with another invoice.
312
00:18:59.309 --> 00:19:00.650
They already know you're going to do a great job.
313
00:19:00.770 --> 00:19:01.791
They'll pay the whole thing up front.
314
00:19:02.352 --> 00:19:03.613
All right, so that's how the settings work.
315
00:19:04.313 --> 00:19:08.356
Anytime a deposit threshold is hit, it's going to give them the option to pay in full.
316
00:19:08.916 --> 00:19:09.797
You can toggle it on and off.
317
00:19:10.372 --> 00:19:13.733
All right, that was, which was number three.
318
00:19:13.953 --> 00:19:18.195
That's a third way to be able to fix our cash flow problems is pay in full.
319
00:19:18.635 --> 00:19:22.356
The fourth one is credit card and ACH on file.
320
00:19:22.676 --> 00:19:25.798
This ties back to the first way to be able to fix the issue.
321
00:19:26.258 --> 00:19:32.100
And that is not having net 30 and then requiring everything is paid like,
322
00:19:32.420 --> 00:19:38.145
Immediately, due upon receipt, which means when the work is done, the job is now ready to be paid.
323
00:19:38.265 --> 00:19:45.232
And the moment after the job is not paid and is completed, it is overdue, due upon receipt.
324
00:19:45.672 --> 00:19:54.220
And the reason you can have that as your payment terms is because you require a credit card or an ACH to be on file before the customer even accepts the estimate.
325
00:19:54.740 --> 00:20:00.644
And so, like we built this in Copilot because it's super valuable to us because here's the challenging part.
326
00:20:00.664 --> 00:20:11.853
Like if you don't have a, where they have to have a car on file before the estimate is accepted, if you allow them to accept the estimate, then you've gotta go like follow up with them to get a credit card or follow up with them to get ACH on file.
327
00:20:12.173 --> 00:20:15.857
and the first email you're giving back to them is now like, can you give us money?
328
00:20:16.217 --> 00:20:17.578
That goes to spam a lot of times.
329
00:20:17.898 --> 00:20:21.902
Also very difficult and it's another step I have to get them to contact me back.
330
00:20:22.362 --> 00:20:25.325
And for us, I am not doing service if you don't have payment information on file.
331
00:20:25.906 --> 00:20:38.177
Which means they could, in the past, accept the estimate and then I'd have the job coming up like, oh man, I gotta make sure, and I have to go back and I have to send them a message like, hey, we can't do your job unless you get this credit card information on file.
332
00:20:38.677 --> 00:21:02.928
Awkward weird strange or you risk doing the job and then them not paying you And so what we built inside of copa is like before they even accept the estimate It's very easy in the workflow They have to put a card information on file or a ch on file But that has to be done before the estimate estimate is accepted that means when the estimate gets accepted I know without a shadow of doubt that I can get the job on the schedule and have payment information on file so that
333
00:21:03.768 --> 00:21:11.894
I am able to have due upon receipt because you have due upon receipt without card information on file, without ACH information on file to be able to charge immediately.
334
00:21:12.315 --> 00:21:15.897
That means that customers are going to get their invoice at the end of the job and it's going to say overdue.
335
00:21:16.538 --> 00:21:17.799
And then you'll get some mad customers.
336
00:21:18.159 --> 00:21:24.844
So what I recommend is before the estimate is even accepted, when they're paying the deposit, capture that information, goes on their profile.
337
00:21:25.084 --> 00:21:27.927
And at the end of the job, you charge that card, you charge that ACH.
338
00:21:28.640 --> 00:21:31.243
And by doing that, you will not have net 30.
339
00:21:31.584 --> 00:21:35.890
Net 30 should be, is like a curse to this industry and for some reason it's become standard and I hate it.
340
00:21:36.530 --> 00:21:40.095
Number five, fifth way to fix cash flow is automations.
341
00:21:40.843 --> 00:21:46.484
I'm gonna have text, email, and calls, and I am going to make sure that I collect all my money.
342
00:21:46.824 --> 00:21:48.445
Okay, so we're gonna go to sequence automations.
343
00:21:49.785 --> 00:21:52.645
Let's see here, we're gonna do show me the money, right?
344
00:21:52.965 --> 00:21:54.586
We're not gonna name this something boring.
345
00:21:54.606 --> 00:21:55.506
It's in the power pack.
346
00:21:55.986 --> 00:21:57.086
So again, you can get all of this.
347
00:21:57.146 --> 00:21:59.487
It's completely free inside of Copilot once you sign up.
348
00:21:59.787 --> 00:22:01.087
And this is our sequence.
349
00:22:01.967 --> 00:22:05.508
So if they're two days overdue, they're getting a text message.
350
00:22:06.357 --> 00:22:09.279
If they're three days overdue, I'm going to email the customer.
351
00:22:09.800 --> 00:22:12.241
If they're seven days overdue, I'm going to email the customer again.
352
00:22:13.062 --> 00:22:15.384
If it's 10 days, I'm going to text the customer again.
353
00:22:15.404 --> 00:22:16.905
I'm going to email the customer.
354
00:22:16.925 --> 00:22:17.886
I'm going to text the customer.
355
00:22:18.106 --> 00:22:20.367
And then it gets a little bit hairy here.
356
00:22:20.988 --> 00:22:28.273
14 days in, I'm emailing the company owner that's coming to me and saying, this person needs to go to collections and you need to call them.
357
00:22:29.074 --> 00:22:31.516
And then I'm going to text the company owner again.
358
00:22:31.716 --> 00:22:33.217
If they don't respond and tell them,
359
00:22:33.938 --> 00:22:36.720
cancel service, get this person off our list, we're out of here.
360
00:22:37.101 --> 00:22:38.382
So we're going to click edit here.
361
00:22:39.082 --> 00:22:41.384
And you can customize all of these, by the way, you can see exactly here.
362
00:22:41.444 --> 00:22:49.831
So for example, if a trigger invoice is sent, boom, two days after we're following up, I got to get paid, I want to get paid immediately.
363
00:22:50.091 --> 00:22:57.397
And by the way, by the way, we should never have this automation going out because we have credit card informational file and we have ACH on file.
364
00:22:57.777 --> 00:22:58.758
But in the event of
365
00:22:59.380 --> 00:23:03.822
that something crazy happened, like that credit card expired or something crazy, this is what's gonna happen.
366
00:23:03.842 --> 00:23:05.322
It's gonna clean up after the mess.
367
00:23:05.942 --> 00:23:11.064
So two days after texting the customer, three days after emailing the customer, seven days.
368
00:23:11.084 --> 00:23:12.585
You're like, why are you doing it so quickly?
369
00:23:12.885 --> 00:23:22.149
Because if you don't get payment collected within 30 days, if you don't get a click within 14 days, the likelihood just continues to drop whether or not you're actually gonna get paid.
370
00:23:22.569 --> 00:23:25.770
And so I highly recommend, same thing with estimate follow-up, we'll talk about this later.
371
00:23:26.250 --> 00:23:31.535
I would recommend stacking as many of your communication in the first seven to 10 days.
372
00:23:32.236 --> 00:23:35.018
There's a precipitous drop in the likelihood that people will pay.
373
00:23:35.038 --> 00:23:39.602
If they haven't paid within 14 days, the likelihood of them paying at all is much lower.
374
00:23:40.103 --> 00:23:42.385
So collect the money as soon as possible.
375
00:23:42.725 --> 00:23:44.427
Text, email, and phone calls.
376
00:23:45.090 --> 00:23:49.795
Email, here down here, the company owner here, you can see, this is the email template.
377
00:23:49.815 --> 00:23:51.396
So I can go check out the email template.
378
00:23:51.937 --> 00:23:54.019
Invoice follow-up, let's check that out real quick.
379
00:23:54.720 --> 00:23:56.481
Invoice follow-up, buh-buh-buh.
380
00:23:57.102 --> 00:23:58.663
Number four, here's this internal one.
381
00:23:58.744 --> 00:23:59.684
Here's what it's gonna look like.
382
00:24:00.245 --> 00:24:03.588
Overdue invoice, you can click on it directly because this is gonna come to me.
383
00:24:04.009 --> 00:24:05.010
I'm gonna be able to see
384
00:24:05.718 --> 00:24:06.778
Whoops, whoops, whoops, whoops.
385
00:24:07.079 --> 00:24:07.999
I go back to Safari.
386
00:24:08.419 --> 00:24:10.060
I have like 50 tabs open here.
387
00:24:10.080 --> 00:24:10.680
Okay.
388
00:24:11.080 --> 00:24:12.701
Over to invoice for this certain customer.
389
00:24:12.881 --> 00:24:13.461
This is their invoice.
390
00:24:13.501 --> 00:24:17.763
I can click on it immediately and make sure that the services are stopped at their property.
391
00:24:18.123 --> 00:24:21.284
Go to the client's house in person with a printed copy of the invoice.
392
00:24:21.565 --> 00:24:26.226
You can contact an online or local credit collections agency and send the invoice to them.
393
00:24:26.727 --> 00:24:26.907
So...
394
00:24:27.547 --> 00:24:28.408
Hopefully we don't get here.
395
00:24:28.468 --> 00:24:30.969
We should never get here because we have all the other things in place.
396
00:24:31.890 --> 00:24:34.892
And to fix our cash flow, because I'm not going to become a bank.
397
00:24:35.332 --> 00:24:35.913
You are not a bank.
398
00:24:36.153 --> 00:24:37.794
And you're not charging interest.
399
00:24:38.034 --> 00:24:42.077
If you're not charging, like, by the way, we also have the inside of Copa.
400
00:24:42.377 --> 00:24:44.358
If they're overdue, they're getting fees charged.
401
00:24:44.818 --> 00:24:52.223
Because, like, if you're going to take money from me in the form of, like, we don't take, we don't count it as taking money.
402
00:24:52.363 --> 00:24:54.265
But they are, they are absolutely taking your money.
403
00:24:54.865 --> 00:24:58.508
They are taking your money in the form and fashion of labor and materials.
404
00:24:59.349 --> 00:25:00.590
And you have paid that out.
405
00:25:01.031 --> 00:25:01.931
And you have done the work.
406
00:25:02.232 --> 00:25:04.173
Why in the world do we not get paid?
407
00:25:04.774 --> 00:25:06.015
And why don't we get paid fast?
408
00:25:06.676 --> 00:25:11.800
Because a fast-growing, profitable business can go out of business and become bankrupt.
409
00:25:12.201 --> 00:25:13.942
Okay, so these are the five ways to fix your cash flow.
410
00:25:13.982 --> 00:25:17.105
Number one, we are going to change the payment terms on our estimate.
411
00:25:17.225 --> 00:25:18.046
No more than that 30.
412
00:25:18.166 --> 00:25:18.767
That's stupid.
413
00:25:19.387 --> 00:25:22.889
Get card information on file, et cetera, so you can immediately charge their card.
414
00:25:23.189 --> 00:25:25.610
And if it doesn't go through, it's now overdue.
415
00:25:26.191 --> 00:25:27.291
And fees can start to accrue.
416
00:25:27.451 --> 00:25:28.452
Look at your local state laws.
417
00:25:28.752 --> 00:25:30.153
Make sure what fees are allowed.
418
00:25:30.893 --> 00:25:31.754
I'm charging fees.
419
00:25:32.374 --> 00:25:33.895
Number two, deposit thresholds.
420
00:25:34.660 --> 00:25:37.825
So if they're over a certain dollar amount, I'm gonna be taking a deposit up front.
421
00:25:37.865 --> 00:25:38.786
The more, the better.
422
00:25:39.247 --> 00:25:40.709
Number three, pay in full.
423
00:25:40.729 --> 00:25:45.336
I'm gonna give the option for the customer to pay in full prior to the job even starting.
424
00:25:45.977 --> 00:25:50.364
Number four, I'm going to have credit card and ACH on file required.
425
00:25:50.894 --> 00:25:51.936
Before the estimate is accepted.
426
00:25:52.297 --> 00:25:52.938
And number five.
427
00:25:53.199 --> 00:25:55.464
I'm going to have automations to clean up the mess.
428
00:25:55.584 --> 00:25:57.067
If anything slips through the cracks.
429
00:25:57.688 --> 00:25:58.249
Via text.
430
00:25:58.650 --> 00:25:59.031
Emails.
431
00:25:59.312 --> 00:25:59.853
Phone calls.
432
00:26:00.173 --> 00:26:00.715
In person.
433
00:26:00.955 --> 00:26:02.659
And anything short of harassment.
434
00:26:02.699 --> 00:26:04.022
Because they owe me money.
435
00:26:04.623 --> 00:26:05.986
And I'm not going to wait around for it.
