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[Music] all right our next videos we'll be talking about billing customers in cash collection now we're going to mainly be focusing this on the residential and commercial side we're not necessarily going to be talking so much about the government so i want to talk because a lot of you guys again you're probably going to start off doing residential obviously by the end of this video series we're going to have you maybe looking at other options on doing residential in the future even if you're wanting to start off then residential we're obviously going to be pushing you into doing commercial in the future but here we go on doing billing and cash collection okay guys one of the things we've talked about in the past is finding your perfect customer sometimes it's okay to walk away from a deal and there's going to be some customers that you think may not pay you then don't do work for them because if you go down the process of going ahead and doing a roof for this person and you don't think you're going to get paid just just don't do it let's let it be somebody else's problem i'll i'll kind of tell you a funny story my business partner would not find it very funny but i find it funny now the very first roof that we signed up we were in a little town called priceville alabama and we had gotten this call from our facebook page from this lady who wanted a new roof so we go out there and my business partner does a does an inspection on her roof she's got hell all over her roof i mean it's a slam-dunk claim so i go out there and since i says i had a little bit of experience doing the insurance claim process through another roofing company prior to starting hours i knew a little bit about what to do again we didn't have a lot of experience i think i've made this clear in our video series that we were not experts on this before we started this company so the fact that five years later i can i can be making this video series about the success we've had shows that anyone can do this if you just apply the basic principles and when you work hard and make smart decisions so with my little little little little bit of experience that i had i knew that this lady was probably not the best client for us and it was probably one we should just walk away from but my business partner was like man are you crazy like this is gonna be like a ten or twelve thousand dollar roof it's our very first one keep in mind we're in north alabama so you know the price per square here is much lower than what it would be if you're in a major metro like chicago or new york or san francisco like obviously things are a lot cheaper here so don't worry about the prospect square so much just understand that this is going to be a big job for us you know we're planning on making like three thousand dollars on this roof which you know when you first start a company it's like oh my god that's three grand in cash that we're gonna make out of profit on this how awesome well long story short the lady was a total kook and she had shirts made up of our company like mom we did not give her logos or anything she just had her own shirts because we told her that we'd give her a 100 referral if she signed up a new roof with our company it was a sales tax we had heard that works long story short again it just ended up being a nightmare we ended up not getting paid on the back end she owed us money for years like three years she said she had a leak on her roof and she wanted us to come out and fix it even though she never paid us totally so obviously we didn't go out and fix a roof even if there was an issue because we don't think that there was the point is like she was a horrible first client for us to have but it was a good learning curve at the same time so maybe it was a really great client for us to have to understand who you should go after and who you shouldn't so when you come up with your perfect client understand that when it comes to billing customers and cash collection making sure that you're working with the right customers is really going to play a lot into making sure you get paid all right so i know i've talked bad about doing residential roofing and i don't want to be this grim reaper about residential roofing and stuff but i will tell you if you are going to be doing residential roofing make sure you get contracts and whether you're doing insurance claims or you're doing retail work get money up front never ever ever just get money on the back end because you are going to get screwed i'm telling you you're going to get screwed you're going to get screwed and if you're like oh zach don't worry i'm not going to get screwed it's never going to happen to me listen you're gonna get screwed okay you're gonna get screwed that's just it's just part of doing this business now if you do get screwed when it comes to bill collection you have to find ways that you can collect your money and it can't be personal it's just about business there's a few ways that you can do that one is you can hire a bill collecting company to do that if you have an outstanding invoice and someone's not paying you you can pay a bill collection person and i know hiring a billing collector for some people is like i would never do that well guys once your money and you're trying to get cash back in your pocket sometimes it's worth you know hiring someone to collect the money for you so you're not having to pay that so here's here's the thing is you only have a finite amount of time do not waste your time chasing money we wasted a lot of time chasing money so if you get to the point where someone does owe you money for a project you can do bill collection so you can hire like a credit card collector or a credit collector someone who's going to go out to your outstanding invoices and collect let's say you know ms jones owes you three thousand dollars for you know the second half of the project that she never paid you just hire somebody else to do that work for you now they're going to take a percentage of the profits but it's out of your hands and they're taking care of it okay the next option is you can file liens on people's properties you can find mechanics liens what you can't do is you can't go out and rip that roof off and i'm telling you there has been times where we have been over backwards for customers on the residential side and they just turned around and screwed us and not paid us for hard work that we did that we we did aren't into the bargain and they didn't and they didn't pay and we're a company with integrity and hard work and we take care of people and we fixed a lot of roofs that we didn't have to that were outside of warranty and we've done a lot of great things for the community and stuff but there are people that will take advantage of you and when they do that you have to do the things like bill collection or file lanes on their property now what sucks when you file a lien on the property is you're not going to get paid right away you're going to have to wait till that person sells their property or they pass away or somehow there's changes that hands that property but it at some point your company will get paid for that project okay so do yourself some favors when you if you're going to do residential get very familiar with build collection and then also with mechanics liens okay so i'm going to say this one more time before i move over to the commercial side when you do residential roofing whether you're doing retail or you're doing insurance work you have to collect money up front that's going to protect you just in case you don't get paid if if anything just make sure if you're doing insurance work collect the deductible and the first check up front then you're going gonna try to get paid on the rcv check after it's over and any um you know any extra billing that you have if you have you know extra money that ends up going on the job with change orders now if you're doing retail work i would definitely recommend getting paid at least half up front and then half after the job's over and guys make sure you have contracts every person needs to sign a contract you need to have contracts for your subcontractors and you have contracts with the homeowners never ever ever do a roof without a contract ever because you if you don't have a contract sign and you're just like oh yeah this guy said that i can do the roof you're going to get screwed there's no way you can win in court there's no way you can do any bill collection you can't file in if you don't have a contract so get a contract signed okay now i told you guys in one of the previous videos that i read a book called good to great and that was the reason why we decided to stop doing residential and start doing all commercial work okay the reason that we moved over to doing commercial work is we found affordable housing ended up being a really really good option for us and i'm going to tell you guys the secret on being able to get affordable housing you know towards the end of the video and our final thoughts because i want to give you guys some tips on some things that made us successful and don't worry you're not going to be competitors of ours anyway we're going to be working in different markets and going through different customers so it really doesn't matter i do not mind opening up the secrets of the trade now the reason we started going with mainly doing commercial work is because we got tired of chasing money on the residential side we had contracts we had all the things i'm telling you about but it didn't fit our business model because again we wanted to do a lot of traveling and work less with less stress we fell on the residential side all that we found it very stressful so the reason we started doing commercial work mainly was to lower stress and increase profits and that's exactly what happened so when you start doing commercial work you're going to start working for large general contractors and you're going to start looking working for direct property management companies these people are not paying with their personal money what they're paying with is money the company and that's better than if miss jones has the decision of paying you 3 000 or paying her light bill next month she's going to pay her like mail she's not going to pay you and that's just that's just the truth of the situation so when you move over to commercial now you're paying with you get paid with corporate accounts now the difference is you get paid faster again on residential and with commercial it's going to be a slower payment process and guys i want you to be very very careful and i want you to listen to me when i tell you this also be careful with who you do business with that are general contractors there are a lot of general contractors that are looking for roofing contractors to do work for them and a lot of times they will hire you to do a job and they will not pay you for 12 to 18 months to complete the for your complete work even if you have a contract in place because the end of the day their contract's gonna supersede yours i'm gonna tell you a story uh this happened to us i'm gonna tell you two stories and you can take it for what it's worth the first story is we had a co we had a company we went to these affordable housing conferences we got a client that we started doing a lot of work for it wasn't big jobs but they were you know 30 to 100 000 roofs which was you know pretty good at that time for us and we started building a relationship with them we started doing a lot of work for them and there was a project that came up it was like a 30 000 repair that we had done or replacement and then they found while we were out there we inspected another roof that was just i mean it was just totally messed up they hired a company like two or three years ago they put on a metal roof that there's leaks everywhere and so we offered to do it at cost we were going to tear off the the metal roof and they wanted to go back with asphalt shingle to match the rest of them so we tore off the metal roof went back with asphalt shingle and we tried to get it paid for by the insurance and we said if the insurance doesn't pay for it then we'll just do it at cost you guys because you've given us so much work over the last year pretty fair what happened was i had a project manager that worked for us and he did not get a contract sign with them saying that we were going to do that extra roof and so when we built them the additional 30 thousand dollars they said hey sorry um the insurance company ever paid for it you never got a contract signed so we're not going to pay you for it and we did that project at cost so that 30 grand that we made on the other roofing replacement we only really made about 10 000 so that entire project we end up losing twenty thousand dollars just like that i mean these this is a project that we knocked out in a couple weeks just because they said oh well sorry you need to get a contract signed so we're not paying and this is a company that we had met personally we had a personal relationship with the owner we had a personal relationship with their president of their property management side like we felt like this is something that we were doing negotiated work for we had hit that last section with them like giving the good stuff and they turned around and screwed us because we did not get a contract signed so that was a lesson learned for us we turned it over to collections never got paid on it that's just sometimes when you come when it comes to business that's just how it is another thing is we did another project down in miami it was a large uh it was a 330 000 contract replacing some roofs in miami-dade county it was our first project that we did in miami and long story short again i had a project manager that worked for us had a ton of experience the guy was the lead project manager at the tampa airport roof replacement you know so we felt like we had hit the jackpot when we hired this guy and he's managing the project and he ends up overpaying for subcontractors then he just disappears off the face of the earth we're i'm living in mexico at the time my business partners in colombia we had an office manager in alabama and we got a project going on in florida and all of a sudden he just disappears we don't know though okay we don't know this happens so i have to fly from mexico city to florida to find out what in the hell just happened he had been paying our subcontractors because we didn't we didn't pay attention we had a guy we trusted i found out after they did four buildings that they were paying almost 200 a square on labor for residential or excuse me for multi-family asphalt shingles 200 a square when the agreed price was 120 and we had overpaid on them so that happened i got all that fixed there was a bunch of change orders that were supposed to be put in that were never put in so the general contractor didn't approve the change orders because they were supposed to be done prior to starting construction we ended up breaking even on that job just because i went and i started personally managing the project we ended up breaking even exactly what it cost us exactly made and keep in mind we don't break even because your general liability your workers comp all that stuff's based on how much is getting paid out what your yearly gross gross sales are point is we still lost money on the job and then the general contractor paid us they were paying us progress payments per building but then when we got finished we didn't get our last check for like six months so they paid us like 270 or 300 000 and then they owed us 10 for the retainage the retainage didn't get paid out until uh about 18 months after we started construction 18 months after we started construction we got paid retainage it only took us like three months to do the project so we didn't really get paid retainage for 15 months so we were just out 30 000 that was money that again we lost on that wasn't even profit that was losses we were trying to make up and i'm telling you that project almost bankrupt our company so i want you to be careful as you work into the commercial side some of the things that we're going to talk a little bit about are line of credits and credit cards here in one of the upcoming videos but just because that job was so bad it really really screwed us so what i want you guys to take away from this video because again this video series isn't telling you exactly how to structure your company and make it exactly this way this is advice coming from someone who's done it when you switch into commercial there is a lot more success that you can have in it but you have to make sure the contracts and your bill collection is spelled out never ever ever take a job where it's not exactly in the contract which you're supposed to get paid and when you're going to get paid it okay and even if you do understand that a general contractor or property management company at the end of the day you can take them to court by the time by the time you pay all the attorney fees and the court costs and stuff like that sometimes it's just better just to walk away and wait and i hate telling you that so as you transition to this commercial side be careful with who you work with do your due diligence on the company you're going to do business with make sure you have a good lawyer in place that looks over the contracts and if there's an opportunity for you to be the general contractor that gets paid directly through the property management company go that route [Music]