Well into their fourth decade of operations, contractor Guardian Exteriors of Duncanville, Texas, knows how to build a resilient business. General Manager Pius Coles IV tells us that the right technology, the right cash flow protections, and – above all else – the right people make it possible.
Coles has staff across seven states working on construction projects about evenly divided between disaster recovery and commercial installations.
The Right People
“As we grow,” he said, “our opportunity for growth is that much more accessible. New salesmen come in, new management, new people we can use throughout the year.
“So from one year to the next I’m going into battle with more soldiers, so to speak…people who have been with us for a longer period of time, who are more experienced, more educated, who are more prepared to go out and grow our company.”
One of his biggest challenges these days is “competition” from unlicensed and unprofessional carpenters.
“Homeowners are being taken advantage of by contractors that may not have insurance or, worse, that literally defraud the consumer by taking deposits and running with the money.”
Unwary customers acting strictly on price are often those who end up with an unscrupulous contractor. “If the insurance is paying, say, ten thousand dollars, and that’s the industry standard, then that’s what I can do it for. But some other guy who comes in and says he can do it for eight thousand dollars” might get the business.
Coles’ sales people help customers understand the hazards of a sometimes unregulated marketplace. “In certain states anybody can open a roofing company,” he explained, “When you have it so open…you’re exposing yourself to that much more opportunity for problems. If it was governed a little better it would minimize the competition from cut-throat type businesses, and it would help keep the industry standard where it needs to be.”
The Right Technology
In order to expand year after year Guardian keeps its standards high and wins a good number of its bids because of the quality of its prior work and because of its extensive capabilities. “We act as a general contractor, and most clients need more than just the roofing trade to actually get completed. I would say that on average a job would run around $10k.”
With dozens of people working on far-flung bids and projects, efficient management becomes challenging. In its 2015 State of the Industry report, Roofing Contractor magazine said that technology has become a significant differentiator and a key one for closing sales.
Customer confidence grows if you can create estimates efficiently and if you can demonstrate a history of completing projects on schedule.
Like many successful roofing contractors, Coles uses AccuLynx software to accomplish these things. “There are different phases for each job,” he said, “Each starts out as a lead, then it goes to a prospect, then it goes to an approved job where we’ve got a contract and are actually engaged in doing the work.”
The software helps create estimates to win business, and then it becomes a repository for all the documents related to a project. “Homeowners rely on us to do a lot of the back-end paperwork and follow-up,” Coles said, “We store all of that in AccuLynx.”
The Unique Situation
Protecting disaster victims from unscrupulous competitors and getting their repairs underway efficiently doesn’t insure that Guardian itself is protected from unscrupulous customers or that it will be paid in an efficient manner.
“It’s a unique business,” Coles explained, “because people are getting thousands of extra dollars in their hands that’s not really theirs because…the insurance company is paying them to pay us.”
Sometimes when a customer receives a final or supplemental insurance payout they “find one reason or another to either slow pay or to not pay” their contractor.
“They were paid by the insurance company, but they found another reason to spend the money. And that’s the thing that sucks: they had the money. They just don’t have the money.”
The Right Cash Flow Protection
Guardian has found that the most efficient way to overcome this situation is to have a solid process in place before the problem arises.
That way, recalcitrant customers immediately realize that Guardian intends to collect what is owed to them, and that non-payment will be met with an organized escalation of collection efforts.
“We do all of our collections in-house for the first 45-days, and then we invoke the Strategy I process with Optio.”
Low-key, polite, and fully branded as Guardian’s outreach, Optio Solutions’ Strategy I consists of automated “Talking Statements” that remind the customer of the money owed while clearly indicating that collection efforts have ratcheted up a notch.
Rarely does this have a negative impact upon the customer relationship, which remains completely in Guardian’s hands since the customer is encouraged to contact them and make arrangements.
“I have an opportunity to say, ‘First and foremost, it’s just our procedure that at 45 days all accounts go to Optio,’” Coles said, “’and in Strategy I it’s not going to affect your credit.’
“I say that because I want them to understand that there’s a second stage.”
“I’ve let them know, ‘Hey I know that you’re cool and we’re buddies, and everything’s great, but we’re serious about getting our money.’ And the customer says, ‘Ok, I understand that, so long as it doesn’t affect my credit.”
Most of the time, that’s all it takes.
“Only 10% will hit Strategy II,” Coles said, referring to the demand letter and phone call phase of the process.
In fact, over the two years Optio Solutions has been serving Guardian, Strategy I recovered 39% of his receivables. It’s provided for a flat up-front fee per account, often less than $20, and 100% of funds collected fall to Guardian’s bottom line.
“Strategy I is what I love the most about Optio,” said Coles.
For Strategy II, Optio Solutions takes a percentage of the funds collected, which is the typical payment format for collections, and for Guardian the two strategies combined recovered 52% of his outstanding receivables.
The process has worked so well that Coles would like to see it integrated into AccuLynx.
He explained that in AccuLynx “there’s an ‘Invoiced’ stage, and then a ‘Closed’ stage. In between those two would be a perfect opportunity for a ‘Send It To Optio’ stage.
“When I move a client to Optio now I have to email a copy of the contract, a copy of the insurance bill, a copy of things that are written up to provide proof. Well, all of that’s in AccuLynx. So if Optio had access to it that would make that process so much easier.”
Coles estimates that about 40% of his customers cross over that 45-day limit, and with an average contract of $10,000 and the outstanding payment equaling up to half of that, having Optio work so efficiently for him helps ensure that he can continue to grow his business.
“Optio allows me to get paid quicker, and probably guarantees that I get paid,” he said.