How do I find out how a towing company gets paid by insurers and clubs?

Third-party payers can make up a large part of a tow company’s calls, and they set their own terms. Begin by asking for a list of every insurer, auto club and fleet account that sends work, along with the agreement or rate sheet each uses. Note any that can be cancelled on short notice.

Next, trace real jobs. Pick a handful from different payers and follow each one from the call to the invoice to the bank deposit. This shows how long payment takes, what gets short-paid and how often paperwork errors delay money. Compare to the accounting records with your accountant.

Ask how the relationships are managed. Who talks to the payer, and does the account stay with the company or with a particular person? Find out whether any contract has a change-of-ownership clause or needs approval from the payer. Finally, ask about recent changes, such as dropped panels or new preferred providers. Those stories reveal how stable the work is. Also ask what the company does when a payer is slow, whether it charges the customer directly, and how it tracks unpaid balances. Those habits affect cash flow in your first months, so see them before you buy.

Key takeaways

• Get every payer’s agreement or rate sheet and note which ones can end on short notice.
• Follow sample jobs from dispatch to deposit to see payment timing and short-pays.
• Ask whether accounts belong to the company or to one person, and what a change of owner does.