You’re not going to get paid on time for every job you do. Sometimes the situation just gets out of your control. It’s a fact of life. Fortunately for service contractors, three of the most common reasons service contractors are not paid on time are within your control.

Before reading on, take a quick second to glance over the bolded heading below. If you can honestly say that your company has never lost revenue or had their cash flow suffer due to late payer, skip this post or try reading something like this, this, or this.

Lost Invoices

It’s amazing how generous service contractors can be. However, to get paid on time, you need to avoid the accidental freebie jobs. Invoices and completed work orders shouldn’t be filed under the seat in your tech’s vehicle. But somehow, it’s still a regular occurrence to find old invoices there when cleaning out the truck. If the customer doesn’t get the invoice, you’re certainly not going to get paid.

Your business needs a system to follow every job through from beginning to end to make sure that nothing gets lost in the shuffle and business of every working day. Your company should have a method to track each customer from the time they call requesting service, through the time your techs get the job, through the time they finish the work, through the time the customer receives the invoice, to the time you receive the money. Any gap in this work flow can mean lost revenue or a delay in cash flow.

Delayed Invoices

Customers–more than ever in this Internet age–expect to get their invoices right away. Many contractors, especially if they also work in the field, don’t keep up with their office work. That means that there can be quite a gap in time between when you do work and when your customer sees the bill.

It’s hard to expect timely payment from a customer, when it’s been so long since you completed the job that they hardly remember what the invoice is for. Customers have become used to receiving bills immediately. They’re also becoming more used to having invoices emailed to them, and then being able to pay those invoices online. To get paid quickly, it is important to bill quickly, in the field as soon as the job is completed if possible. When techs are able to create invoices and collect money via checks or credit cards for work they do in the field, you are far less likely to wind up waiting for payment or losing out on uncollected revenue.

Invoicing with Terms

The terms you offer can also have a negative impact on cash flow and timeliness of payments. Giving a customer 15 or 30 days to pay by cash or check invites the possibility of the customer forgetting about the invoice. Some contractors have gotten fed up with the issue of late cash or check payments and have just started to require customers to have a credit card on file.

Contractors that balk at having to pay 3% to the credit card companies often forget the cost of uncollected debt and the time and effort of having to call up and remind customers of past due invoices. Being able to capture signatures and accept credit cards in the field can be the difference between having a healthy cash flow and constantly be waiting on customers to pay their bills.

A predictable cash flow is incredibly valuable to service contractors. Your employees and vendors expect to be paid on time, and so should you. Putting systems in place to track work and invoices, making sure customers are billed quickly, and avoiding invoicing with terms are all ways to make sure you get paid on time.

What are some other ways to make sure you are paid in a timely fashion? Leave your ideas in the comments.

Below is a collection of quick tips for your service agreement program. These are from the end of a longer article from Contracting Business Magazine by Robert Wikos of Peaden Air Conditioning. The rest of the article goes into depth about how a strong service agreement program will lead to better customer loyalty, revenue, and company value. The full article provides lots of stats to argue for a strong service agreement program, but for those of you who are already believers, the following list will give you some food for thought of what parts of your service agreement program you can work to improve:

1. Display a total commitment
2. Offer priority service
3. Honor your word
4. Be flexible
5. Provide reasonably-priced service with good value and benefits. It’s the beginning of a long-term relationship and not just a quick sale
6. Monitor your growth
7. Refine and duplicate procedures
8. Track technician performance

How has your company benefited from your service agreement program? Share your service agreement tips in the comments.

For those of you who hate writing business letters, Service Round Table has provided an extensive resource will ease the burden.

The Service Roundtable obtained a special license from Eshinesoft Corporation to make these ready-to-go, easy-to-modify standard business letters available online for our members and potential members. Cut and paste any letter into your word processor.

Why Free? Why is the Service Roundtable making this letter library available for free when others charge for it? Simple.

The library is accessible here for both SRT members and non-members. There are tons of letters here, but the search field makes it easy to find what you’re looking for. Once you find the right letter, you can paste it into a Word document and fill in the blanks.

You can use these letters in your business correspondence, and if you’re an ESC user, you can save the templates you use regularly right into ESC. If you’re not an ESC customer, you can sign up for the 30-day free trial to see how ESC can make your correspondence with your customers more efficient.

Make Each of Your Customer Interactions During Service Agreement Service Call a Selling Opportunity

August is almost over. That means the hot weather and the summer busy (or crazy) season is drawing to a close for much of the country.

It also means it’s time to take a look at the health of your service agreement program. Did your technicians sell more new service agreements than they did last year? Did your renewal rate improve? Do you have enough service agreements to keep your technicians busy through the winter? How has your service agreement base affected the overall value of your business? These are all good questions to ask to get ready for next summer’s busy season.

The summer busy season was a great opportunity to sell service agreements to your new or repeat customers. I hope your company had a successful year for selling service agreements. I also hope that the service agreements you sold are more than just a way to keep your technicians busy during the slow times.

Service agreements do give you revenue throughout the year and help to spread out the annual work load, but they also give you an opportunity to sell to your customers. A routine service check can uncover major problems for your customers before they become emergencies.

Those same routine checks also get your technicians face-to-face with your customers, which will beat the odds of door-hangers and direct mail any day of the year. You have a huge opportunity here. Your customers are expecting you to come. They’ve invited you in.

However, this direct interaction will be a huge waste if your techs just go into the house look at the equipment, change a filter or two and move on to the next service call.

This doesn’t mean you can invent problems or be dishonest with your customers, but your technicians should approach each service agreement call as an opportunity to find a way to help the customer through suggesting an equipment upgrade to save energy, proposing automated climate controls to make their house more comfortable, or some other way that you can benefit your customers.

You’ll want to make sure your technicians are prepared to sell during each encounter they have in the home of your service agreement customers.

Conversion Rate on a Service Agreement Call

Conversion rates on these routine calls will probably be much lower than your conversion rate of service agreements or ordinary service call, but it stands to bring in more sales dollars because you’ll be selling a more tangible product or service.

During a service agreement service call is the best time to bring up more extensive tune-ups to prepare equipment for cold weather and seeing what equipment is in need to replacement.

Conversion and sales rates are going to vary by your type of Service Company, but there are a few principals that will remain consistent.

1. Set a conversion rate goal: Every one of your technicians needs to know what the goal is and how well they are doing to reach it. Each tech should know where they stand.
2. Sales Training for Technicians: First and foremost, your technicians are technicians and the good work that they perform will have to stay priority number one. However, they are also the ones on the front line of your business. They have the most face-to-face contact with your customers, and therefore are best suited to selling to them.
3. Provide Strong Marketing Materials to Your Technicians: Your technicians can sell and talk about solutions, but many times it will not be a one call close. However, the marketing materials they leave behind after the sales conversation can help in the decision making process, as well as fill in many of the technical gaps that don’t get talked about in the sales conversation.
4. Reward the Results: The technicians that succeed in converting more sales should be rewarded generously for their efforts. Give them the incentives they need to stay motivated and focused on their goals.

You worked hard to get these service agreement customers. They trust you and count on you. Make sure that you serve them well by finding ways to make them more comfortable and making sure they’re equipment doesn’t break when they need it the most.

Identify Your Customers’ Needs

Communicate Regularly With Your Customers

Get Your Employees Involved in the Vision

Market Your Business Aggressively

Consistently Seek Out Referrals

Matt Michel, the CEO of the Service Roundtable, has some simple tip for making sure your customers remember doing business with your company.

Some companies work really hard to ensure they are remembered. The employees in these companies are downright creative in their approach. They manage to form a lasting impression that burns the company name into the customer’s consciousness. They generate such an impact that their customers feel compelled to tell their friends and neighbors all about their experience.

These strategies are no secret. Thousands of companies manage to execute them daily.

via 15 Ways To Ensure People Remember You.

You may be surprised how easy it is for you to make a long lasting impression on your customers, and how ready and willing they will be to spread the word about your service.

How many of the tips in Matt’s article is your company guilty of?

Service agreements are a great way to create regular re-occuring revenue streams for your company. But they can be a tough sell.

Your customers need to understand the value of service agreements. When they see how the plan and its benefits will save them time, money, and hassle, your number of service agreements will grow.

via Contracting Business: Establish Value to Boost Service Agreement Sales

Growing and keeping track of these service agreements is key to growth and creating value for your company.

What do you say when asked how many service agreements your company has? Has that number been reviewed? Is it accurate? Is the number of agreements growing, staying the same, or shrinking from year to year? How do you improve the numbers?

Why all these questions? It’s because the heart and soul of a company’s business are service agreements, and growing these agreements leads to growth of the company in service and sales. It’s therefore vital that the value of these agreements be firmly established on a continual basis — both externally and internally.

These service agreements are also what create real value for your company and make it more sell-able. No one is going to buy your list of names when you want to retire. But they may be willing to buy several thousand on-going service agreements.

Owners of small service companies have to make all the hard decisions of what they do themselves and what they delegate. There is always the temptation to try try to do everything yourself, to keep control, to manage the details. This is natural because there is always risk involved in letting other people take over.

But part of being a manager is learning how to effectively delegate. That delegation can be to someone in your company or to another company entirely.

Today lets take a look at payroll. Every company with employees has to do it — usually twice a month.

Every service company owner has to decide if this task is done in house or if the work should be off loaded to a payroll company. Chances are you’re already doing one of the two options. Below is a list of pros and cons for each. Hopefully what you find will support what you’re already doing. But if not, there will also be a few tips on how to make the switch.

Pros of Outsourcing Your Payroll Department

Cost savings – If it costs less to have someone else do it, that’s big check in its favor. Those costs though can come in two forms. First in the traditional quantifiable sense, like wages and software. Secondly, outsourcing payroll can reduce opportunity costs. You can spend the time you once spent worrying about managing payroll on more productive things, like finding new customers or figuring out how to increase the renewal rate on your service agreements.

Flexibility – If your service company is growing, outsourced payroll can be better equipped with the infrastructure and know-how to handle a larger workload.

Cost tracking – You know exactly how much payroll costs when your outsource. You get a bill and can track it easily. With internally managed payroll can be more difficult to know exactly how much the function costs.

Frees up capital – If your company is just getting started or just taking off, outsourcing payroll can usually cost less in the short term than setting up an internal payroll process . This means you can put your money into other parts of your service business that will have a bigger impact on growth and the bottom line.

Best Practices – Chances are you’re not a payroll expert. A good payroll company will deliver the best practice systems, the latest technology and experts to manage it. You can avoid the investment in software and training all together.

Cons of Outsourcing Your Payroll Department

High Costs — It is possible to save money by outsourcing payroll. However, not all payroll companies are created equal. And not all service companies have the same payroll needs. Your company could end up paying more to have another company handle your payroll needs if your process is not too complex. With an outsourced solution, you may end up paying for service you don’t need.

Poor Service – With an outsourced solution, you may not get as quick of a response or as good of service as you’d expect from an employee working in house. You may have to wait for help, or be put on hold, or not have your issues resolved the first time.

Difficult to Access Employee Data – It can sometimes be difficult to access important employee data from outsourced payroll companies. For example, you might want to quickly find out your company’s payroll tax, but the information might not be as readily available as it would be if you had a payroll manager in house.

Data Security – Modern security technology does take care of many of these problems. However, some owners have a difficult time trusting outside companies with vital employee information. Trust is necessary with any outsourced service.

Mistakes Are Harder to Correct – If a payroll mistake occurs, it may take longer to correct the error. In any company, payroll is a sensitive area and some managers might not be comfortable letting outsiders handle it.

Does your company outsource its payroll? What factors would convince you to switch from what you’re doing now to the alternative?