PODCAST: Get Paid Your Worth

Andy was recently interviewed for Restoration Domination Ep 027 on YouTube. You can watch the full video here.

Briefing Document: “Get Paid Your Worth w/ Andy McCabe | Restoration Domination Ep 027”

Date: October 26, 2023 Source: “Get Paid Your Worth w/ Andy McCabe | Restoration Domination Ep 027” (Podcast Interview) Subject: Strategies and Mindset for Restoration Contractors to Ensure Fair and Timely Payments

Overview:

This podcast episode features an interview with Andy McCabe, a claims delegate and active member of the “Restoration Rebels” online community. McCabe, who has extensive experience in the restoration industry, passionately advocates for contractors to be paid their worth. The conversation delves into the common pitfalls that lead to payment issues, the importance of proper documentation and contracting, the ongoing debate surrounding overhead and profit (O&P), the emergence of bulk pricing models, and the crucial shift in mindset required for contractors to secure fair compensation for their services.

Main Themes and Key Ideas:

1. The Need for a Paradigm Shift in How Contractors Approach Claims and Invoicing:

• McCabe argues that the restoration industry has, in part, created its own payment problems by becoming complacent and adopting practices that undermine their ability to charge appropriately for their work.
• He points to the historical shift where contractors seemingly conceded on O&P for all jobs, leading to an expectation from carriers that it's only applicable to complex losses.
• This has fostered a culture where contractors resort to “sneaky ass ways” to make up for lost profit, rather than establishing transparent and justifiable pricing.
• Quote: “The entire mentality of the industry needs to change to what did I do and what am I what's a proper price for the job that I did not how much stuff I can throw at the wall and see how much sticks…”

1. Reclaiming Control Over Pricing and Recognizing the Client:

• McCabe emphasizes that the “right price for a service is determined by the buyer and the seller,” and contractors should primarily focus on their agreement with their direct client (the insured) rather than trying to justify their costs to the adjuster.
• He criticizes the industry's over-reliance on Xactimate as the sole determinant of pricing, leading to laziness and a lack of understanding of individual business costs and profit needs.
• Contractors should determine their pricing based on their overhead, profit requirements, and the services provided, rather than trying to fit their business into pre-determined pricing models.

1. The Debate on Bulk Pricing vs. Itemized Estimates (Xactimate):

• Bulk invoicing is seen as a potential response to the fatigue of constantly defending itemized bills.
• McCabe acknowledges the potential of flat-rate or square footage pricing for mitigation (e.g., “$25 a foot to dry any house”), which could simplify billing and remove ammunition for adjusters to dispute line items.
• However, he also recognizes the potential pushback from adjusters accustomed to detailed Xactimate estimates, who might perceive bulk pricing as an “astronomical price” without a detailed breakdown.
• While Xactimate provides a common ground for comparison and facilitates timely payments for many, contractors should not feel beholden to it to the detriment of their profitability.

1. The Foundational Importance of Proper Documentation and Contracting:

• Quote: “The ultimate documentation does equal faster payment. It really does.”
• Detailed documentation, explaining the “why” behind every action (e.g., placement of equipment based on moisture mapping), is crucial for justifying invoices.
• However, strong contracts are equally vital. Contractors should avoid relying on “as per insurance proceeds” language, as this gives control over profitability to the adjuster.
• Instead, contracts should include scheduled fees, deductibles, and a clear understanding that the homeowner is ultimately responsible for the bill.

1. Addressing Weak Salesmanship and the Collection of Deductibles:

• The industry often exhibits “weak salesmanship” by not clearly communicating financial responsibilities to homeowners upfront, particularly regarding deductibles.
• Failing to collect deductibles at the outset creates issues later and misses an opportunity for the homeowner to have “skin in the game,” making them a potential advocate if payment disputes arise.
• Collecting the deductible establishes consideration for the contract and changes the dynamic of the indemnification question with the insurer.

1. Challenging the Myth of Excessive Profit in Restoration:

• McCabe vehemently refutes the adjuster narrative that there is “plenty of money” in restoration, urging contractors to question this assertion and demand justification.
• He points out the lack of transparency regarding overhead and supervision within Xactimate line items.
• Contractors should not feel guilty about charging a fair price for the demanding and often unpleasant work they perform.
• Quote: “You can't charge enough for what we do. You can't charge enough for getting out of the middle of night crawling into a poop filled crawl space and sucking poo for hours…”

1. The Role of Ethics in Invoicing:

• McCabe strongly condemns insurance fraud, such as fabricating data to secure payment.
• He believes that many contractors who engage in such practices lack a clear understanding of their own costs and profit structures.
• He advocates for a focus on legitimate billing practices based on actual work performed and encourages contractors to understand their numbers to confidently charge appropriately.

1. Leveraging Technology for Efficient Estimating:

• McCabe highlights the growing importance of remote estimating and technologies like Matterport and Hover for accurate and efficient property documentation.
• Direct integrations between these platforms and Xactimate streamline the estimating process.
• Utilizing such tools can reduce the need for extensive on-site measuring and improve the quality of estimates.
• Outsourcing estimate writing to specialists can be a cost-effective solution, especially for smaller or growing businesses, freeing up contractors to focus on other aspects of their operations.

1. The Importance of Mindset and Confidence:

• A key takeaway is the need for a shift in mindset where contractors are confident in their pricing and advocate assertively for their worth.
• Understanding their costs, having strong contracts, and providing thorough documentation empowers contractors to push back against unfair payment practices.
• Honest and transparent communication with clients about their responsibilities and the scope of work builds trust and can mitigate payment disputes.

Actionable Insights for Restoration Contractors:

• Re-evaluate your pricing strategy: Don't solely rely on Xactimate. Understand your overhead and profit needs and price your services accordingly.
• Strengthen your contracts: Include clear schedules of fees, explicitly state the client's responsibility for payment (including deductibles), and avoid “as per insurance proceeds” clauses.
• Prioritize thorough documentation: Document every aspect of the job with high-quality photos, moisture readings, and clear notes explaining the “why” behind your actions. Utilize tools like Company Cam.
• Improve your sales process: Have clear and honest conversations with homeowners upfront about their insurance coverage, deductible responsibilities, and your company's pricing. Collect deductibles at the start of the project.
• Challenge unfair payment practices: Don't accept adjuster narratives about excessive profit margins without evidence. Be prepared to advocate for your legitimate costs.
• Consider leveraging technology: Explore tools like Matterport and Hover for efficient and accurate property documentation to improve your estimating process.
• Understand your financials: Know your costs, overhead, and profit margins to ensure you are charging appropriately and can justify your invoices.
• Be ethical in your billing: Avoid inflating invoices or fabricating data. Focus on accurate billing for services rendered.
• Shift your mindset: Be confident in the value of your services and advocate assertively for fair and timely payment.

Quotes from the Source:

• “andy is really one of these guys in our industry that is advocating hard to make sure that you get paid exactly what it is that you're worth” – Rico Garcia (Host)
• “what everyone in this industry seems to have this selective amnesia about is we put overhead and profit on everything” – Andy McCabe
• “we decided to be deceptive about it and it was a collusion between us and the adjusters that we were working with” – Andy McCabe
• “the right price for a service is determined by the buyer and the seller” – Quoted by Andy McCabe, attributed to the president of Xactware.
• “The ultimate documentation does equal faster payment. It really does.” – Andy McCabe
• “Insurance jobs are not competitive bid right there's there's no requirement for for three numbers so we we just get lazy right and and we fall back on on bad habits and that laziness is is why your your ar is out in 120 days right” – Andy McCabe
• “You can't charge enough for what we do. You can't charge enough for getting out of the middle of night crawling into a poop filled crawl space and sucking poo for hours…” – Andy McCabe
• “a well-written estimate…the ability to communicate non-verbally through an xactimate estimate is underrated” – Andy McCabe

Conclusion:

Andy McCabe's insights provide a valuable roadmap for restoration contractors seeking to improve their payment outcomes. By focusing on ethical billing, strong contracting, thorough documentation, a confident mindset, and potentially embracing evolving technologies, contractors can move away from reactive claim chasing and towards proactive strategies that ensure they are consistently paid their worth for the vital services they provide. The episode underscores the importance of understanding one's own business needs and not being solely dictated by insurance carrier expectations or outdated industry norms.

Topics Covered:

• Getting paid the ethical way, fast and in-full. Where do some contractors fall down and make mistakes? 
• Why insurance companies don’t like to pay for profit. A little history of what happened in the industry. We (contractors) laid an unethical foundation.
• Should OMP be negotiable? Why are you entitled to your OMP? How to stand up for your rights and what you charge. Who is your actual client?
• Bulk pricing/invoicing. What is it? Does it work? Should I use it?
• Advocating for flat rate pricing. How to make them take you seriously. Documentation gets paid. You need a system, like The 24 Hour Tech.
• Being a better sales person. Soft sell vs. hard sell. What’s happening with deductibles? The need to remind property owners. Skin in the game and cash flow issues. Getting property owners on your side. What are they in for? How big will their final invoice be?
• The need for a clean contract. Have you read your fine print? Don’t give up your power. Don’t use boiler-plate contracts. You don’t need to feel guilty about charging your worth.
• Don’t be a Hyundai. What does that mean? The insurance company wants that. Do you?
• TPAs are Necessary? We’re all in business to make money. Here’s an alternate opinion.
• Insurance Profit Game. We’re certainly not getting the money. The insured isn’t getting the money. Who’s getting the money?
• Making the case that CONTRACTORS are the enemy. We know this is ridiculous, but the insurance company paints this picture.
• How much money do you need? You should know how much you have spent on a job. You need to make at least that much. Everything else is profit. What if you don’t know? The insurance company knows…
• Having bad intentions from the start. This leads to difficult discussions later on. Be honest from the start. Trust us.
• Power Question FREE DOWNLOAD. Put the adjustor in his or her place. Tell your client EXACTLY what they will say. Arm them with the right answers.
• TOO MUCH TO COVER! Seriously. There’s a ton of golden nuggets in this one.