Foreclosure Cleanup Jobs - How To Get Paid On Time

Foreclosure cleanup jobs can be relatively easy to secure, given the current economic crisis and the virtually untapped nature of the foreclosure cleanup business. Foreclosure cleanup jobs can involve general tidying, maintenance of properties (grass cutting, weeding and clearing gutters), removing waste, minor to major repairs, changing locks and other specific requests made by clients.

Often-times when a foreclosure cleanup business is in its infancy, a lot of jobs can be provided in the form of subcontracts from larger property preservation firms (since they receive the bulk of larger contracts). Larger companies may outsource jobs to smaller foreclosure cleanup companies to compete services on properties. The problem for smaller foreclosure cleanup companies, however, is that the larger property preservation firms can withhold money until they get paid from the client (banks, lenders etc) for the jobs completed. Obviously, this can present a massive problem in regards to cashflow for the smaller cleanup companies, since the money is passing through two hands instead of directly from the client.

If you're starting a foreclosure cleanup business and are looking for foreclosure cleanup jobs, I've put together a few tips that can help safeguard you against late or non-payment of any subcontracted cleanup job.

Negotiate Foreclosure Cleanup Job Payment Terms

Discuss and agree on payment terms with any company prior to starting any jobs. Typically, payment terms can be anywhere between 15 to 90 days from date of invoice (depending on the nature of the jobs). Most large property preservation firms will state their payment terms are company policy and nonnegotiable. So you’ve got a choice, you can argue your case for shorter payment terms or you can walk away from the cleanup job. However, you’d be surprised how often a little arm-twisting can help change these “nonnegotiable” terms when you stick to your guns. This is really your call, however, you're not a charity and no small foreclosure cleanup business can afford to do jobs for free - for very long at least. If you take on too many subcontracted cleanup jobs from companies that don't pay on time, you'll find yourself out of business before you've even got started.

Get your Foreclosure Cleanup Jobs In Writing

A subcontract works agreement or a contract signed by both parties is essential. You need the specifics of the jobs to be completed and also the payment terms in writing. If you carry out jobs via a verbal agreement, you're taking an enormous risk! You need to document your terms in writing and have their company sign it. If the organisation that is contracting your company asks you to sign their own agreement, read it thoroughly and do not be afraid to dispute any terms you don't agree with.

Add Late Fees as Part of the Foreclosure Cleanup Contract

If you stipulate late payment fees as a term in your signed contract with the company. You are within your rights to employ those fees should the company fail to pay within the agreed terms. Obviously charging late fees or involving solicitors can damage company relationships, however, if there’s no reasonable explanation for a late payment then it's something you will need to consider. Before getting to that stage, become a pest - this means picking up the phone and phoning every day until you get an update on payment. You can hire a credit controller to do this also, although for a new foreclosure cleanup business that may be a bit of a luxury. You can send payment reminders to the companies that owe you money, if that doesn’t move things along, have your solicitors send standard 7 – 30 days until legal proceedings letters.

Foreclosure Cleanup Jobs - Doing Your Homework

It’s perfectly acceptable to request references from any property preservation companies that wish to hire your company for job. You can always state that it's part of your company policy. Ask for three or more references for companies they've subcontracted jobs out to in the last six months. You can check with those subcontractors to see if they were paid a timely manner.

Using Factoring Companies for Foreclosure Cleanup Jobs

In this day and age, many smaller foreclosure cleanup businesses are starting to use factoring companies. Factoring companies essentially purchase your invoices for a percentage of the overall value due. This way you can get money straight away and it becomes the factoring companies responsibility to chase the invoices for payment. For example, you do jobs for a client and invoice them for $5,000. Instead of waiting 30 to 90+ days for payment, the factoring company will buy the invoice from you (minus their fee) which may be 5% for instance. So the factoring company purchases your invoice for $4,750 and you get the money within days of completing a job, as opposed to potentially waiting for months. Obviously this is your call again, since you’d lose out on $250 to get paid sooner rather than later. This really depends on how much cash-flow will be an issue for you, the type of clients you do jobs for and your relationships with them.

I highly recommend to anybody that's actually serious about starting a successful foreclosure cleanup business to read this