Many full-service contractors struggle with cash flow. They float the costs of their rebuild work and don’t get a nickel toward those costs until 45 – 60 days after completion.
The insurance company is fine with contractors floating those costs, and so are customers. The only one not happy with the arrangement is the contractor and for good reason!
The insurance industry has established a two draw system. The first is the ACV payment (roughly two-thirds of the invoice), and is issued with estimate approval. The RCV payment is paid when the job is completed, and the customer signs off.
When the adjuster writes the estimate, it is automatically approved, and the ACV check is triggered. If the contractor writes the estimate, the trigger is estimate approval.
Notify your customer in the Work Authorization that “the customer is to release any and all funds to the contractor upon receipt.” You can explain this is customary in construction and is the very reason the insurance check is issued to the customer – to put into the contractor's hands to buy materials and pay for labor for the homeowner’s repair job.
Get that ACV payment before you begin your rebuild work and solve your cash flow problems once and for all!