Wise Up Wednesday: The #1 Way To Destroy Your Business!
Cash flow is king.
Construction is a tough place to do business and as a Specialist Contractor, Trade Contractor or Subcontractor your kind of business is most at risk.
And whilst losing everything you have grafted for and worked so hard to build up isn’t something you like to think about, understanding how it happens to others can help you to prevent it from happening to you.
So, with thanks to the research by Investopedia and lots of other sources here is the #1 way businesses like yours fail. And of course a few tips from me on how to avoid that.
Cash Flow and Funding
The primary reason why subcontracting businesses fail is a lack of cash or working capital. In most instances you will be aware of how much money is needed to keep operations running on a day-to-day basis, including funding wages and ensuring that suppliers and subcontractors are paid on time.
But, owners of failing companies are less in tune with how much profit is actually being generated from the work they are doing, and so fail to realise that increasing turnover might actually be having a negative effect.
And before you know it the cash at bank is simply not there and there are no funds to pay anyone!
Cash Flow Is King
Projections and forecasts are important, but ultimately, it comes down to cash in the bank. So how do you maintain a consistent flow of cash?
It’s important to start the dialogue about getting paid as soon as possible. You don’t have to wait until the payment hasn’t been made. But, before you start that dialogue here is a useful checklist to get you on the right track;
• refamiliarise yourself with the exact procedures and contractual terms involved in the payment process
• find out who is responsible for dealing with your interim application
• make contact with the appointed person and discuss the process in more detail. (He, or she may be the most obnoxious person to deal with, but they are now your new best friend!)
• make sure you have provided the level of detail and substantiation required
• be certain about the dates by which applications must be submitted
• ensure the applications are/have been submitted by the required dates
The sad fact of life is that Contractors tend to push nice guys to the back of the queue. So you must set up a systematic procedure for monitoring and pursuing payment.
In today’s coronavirus “work from home world”, this might raise new and different challenges, but persistence, tenacity and communication is key. And here’s a reminder of the steps to take;
• establish and monitor the dates by which the Contractor’s notification should be received
• chase immediately if an expected notification fails to arrive on the appropriate date
• establish and monitor Final Dates for Payment (i.e. the last day by which payment should be made)
• chase immediately if an expected payment fails to arrive on the appropriate date
• consider giving notice of suspension if payment of the notified sum is overdue
• investigate and interrogate all reasons for under-payment
Most important of all, don’t just sit and wait for things to get better, because (based on our 30 years of helping you guys get paid), they invariably won’t.
Instead, you should escalate all cases of unacceptable late or reduced payment.
In short: Don’t procrastinate – take action!
It’s a Team Game!
Obtaining full and timely payment is far more than just a credit control function.
Cash flow is everybody’s responsibility, not just the credit control clerk!
From time to time you are going to need external suopport, and the quicker you do that the quicker you will get paid. All you need to do is call our friendly helpline on 01773 712116 or email firstname.lastname@example.org.
We provide a free no-obligation initial advice service, so that you can get a very quick idea of what we can do to make sure you get paid.
Don’t Allow “Coronavirus” To Be The Latest Excuse For Non-payment
Don’t be put off from collecting what’s due to you or think it will take months or years and cost a fortune. Here are a few examples of how effectively we have got payment for our Clients;
• Collected £5.5k for a paving contractor who had been trying for over 18 months – monies recovered within 3 weeks of our appointment
• Electrical contractor recovered £170k in overdue payment within 7 days of our appointment
• Groundwork contractor recovered £30k retention that was 2 years overdue – recovered within 2 months of our appointment
• Within 3 days of our appointment we helped a tiling contractor recover £5k in retention that had been overdue for 4 years
• In all cases recovery was very cost effective.
So, if you would like a free no obligation chat with one of our experts or need someone to take action on your behalf right now, then don’t delay, call our friendly Payment Helpline on 01773 712116 or email: email@example.com for free, no-nonsense, down to earth advice!
And What About That Retention You Are Owed?
Most Specialist Contractors, Trade Contractors and Subcontractors are owed substantial sums in retention. Why wait to collect it when we can do that for you on a no win no fee basis?
That’s right, you get paid first and only then do you pay us!
It’s your money and it should be in your bank!
And please do not think that if you are the boss you should automatically have all the answers. This is simply not the case, you need to take professional advice sooner rather than later.
Cash Flow Is King. Please Help Spread The Word
I hope you enjoyed this ‘Cash flow Is King’ post and that it gives you some food for thought.
In the meantime, please help to spread the word within your own business and with your colleagues in other businesses. Specialist Contractors are the backbone of the industry and we are here to help you all stick together.
You can find me on LinkedIn so why not connect up, and we have a LinkedIn Group with over 2,200 members so why not come and join us.
And if you want to get your contract checked or you need help with; Acceleration, Adjudication, Applications and Payments, Business Development, Contractual Advice, Delay and Disruption, Dispute Resolution, Extension Of Time, Retention… etc., or any of your business issues, please don’t hesitate to pick up the phone and give our Helpline a call.
You can contact us on 01773 712116 or email firstname.lastname@example.org