Small HVACR firms need to get a big bang out of every dollar spent by the company. The firm needs new customers to grow and better tools to get the jobs finished correctly. It also needs to make a profit.
Think of the whole picture as a process. You spend money advertising wisely. You get the first telephone call from the potential new customer. You make sure you have all the information to properly service that customer.
Setting up the appointment for either a service call or cleaning takes time. Our customers love the "first morning call" and will make an appointment months in advance. This eliminates many Saturday calls, which the "Generation X" tech wants to avoid.
Cell phones have practically eliminated the need for the customer to sit at home and wait. We find out how much travel time the customer needs and then we call when our tech is en route. This also eliminates the frustrating situation of the tech sitting in front of a customer's house and wondering where the customer is.
Once on the jobsite, that professional process must continue. If you charge a diagnosis fee, make sure the diagnosis is complete or the customer knows why it isn't complete. Techs must call the correct distributor if an OEM part is required, especially on older equipment. A customer can make a better decision to replace the unit when the customer knows it must have an OEM part that is out of stock.
Also note whether the part is under any warranty. A pleasantly surprised customer, who doesn't know about the five-year warranty on parts, should immediately perceive your honesty and give you more trust.
On the company's copy of the invoice, the tech needs to note any special tools needed or the specifics of the material needed. Further, a picture, either Polaroid or digital, should be taken when the proposed work is complex.
For pricing any repair jobs or accessories, we use a short proposal form that can be mailed, faxed, or e-mailed. It contains the scope of work, total cost, warranty, deposit (I always get a deposit for jobs over $500 or for new customers), and their authorization.
Often the customer is given the choice of repair (and clean) or replace. The age and other pertinent information are given in the form. While this slows down the process, the customer tends to feel better.
When the job is done, the tech fills out the invoice right on the job and asks for payment.
If the customer tries to avoid payment, the tech does allow payment to be mailed and leaves a pre-addressed envelope and a card. The card informs the customer of our terms and that interest will be charged after 30 days.
The customer must sign the invoice, which also has our legal terms. We realize that an elderly customer might need someone else to write and sign the check. Some people will only pay by credit card, which we readily accept.
Giving the customer choices shows your expertise, builds confidence toward your firm, and ensures prompt payment. Isn't that the bottom line? Ninety-five percent of my residential receivables are paid within 15 days.
When a customer has not paid within 15 days, a statement is sent. I started including "Due now: $150.00," with the following line stating: "Due after (30 days from date of invoice): $168.00." By doing this, I received most payments within the next 10 days.
At the bottom of the statement is the note: "If payment has been mailed, please accept our thanks." And just below that, it states: "All payments are expected to be received within 30 days of the invoice."
Keep a copy of all statements sent with the original invoice. If 15 days go by without receiving payment, call the customer and note the date and time of the call. Note if you left a message and/or with whom you spoke. You want to document all your efforts to contact the customer. Any collection agency or attorney will help you with your forms, from the invoice to the statement.
Unfortunately, each state differs in what is and is not allowed when collecting. Your chamber of commerce is an excellent resource for finding a collection agency or attorney. You should not need them often, but each contractor has a deadbeat horror story, so be prepared.
Credit cards, of course, are often the preferred choice of customers. Remember that the customer can cancel a credit card payment very easily. You will only be notified after the credit card bank has grabbed back the money out of your checking account. Having a properly signed invoice strengthens your demand for payment.
Once you get the payment process debugged, you will find you have fewer outstanding invoices. Once you and your techs start giving customers all the necessary information to make their best decision, they are more likely to appreciate your services and reward you by paying promptly. What more could you ask for?
Chris Colditz is co-owner of Laco Mechanical Services, Palatine, Ill. She can be reached at 847-358-3300, 847-358-8710 (fax), or firstname.lastname@example.org.
Publication date: 07/19/2004