Wise Up Wednesday: Boost Your Cashflow Collect Your Retention!
Here’s your Streetwise ‘Wise Up Wednesday’. Sometimes quirky, sometimes hard hitting, but always guaranteed to make you think and take no more than 2 minutes to read. this week is about how collecting your retention will boost your cashflow!
Collecting Your Retention
If your cashflow has been hit by coronavirus lockdowns or excuses for non-payment, why not boost your cash flow by collecting your retention?
It’s your money and it should be in your bank!
And the good news is that most Main Contractors are hanging on to it unlawfully, which means with the right approach it’s easy to collect.
How Important Is Collecting Your Retention?
Just stop and think about that for a moment. It’s your money and most likely it could help your business to get through these difficult times.
Not only that ask yourself what is your actual net profit as a percentage of sales?
If you are like most Specialist Contractors, Trade Contractors or Subcontractors, your actual profit after overheads might be as low as 3% to 5% of sales.
If contractors are hanging on to 2½% or even 5% of sales, they are effectively hanging on to your profit.
If you have heard enough already and just want the job done on a no win no fee basis, then give our helpline a call on 01773 712116. Alternatively read on to get the information you need to do the job yourself.
Guide To Collecting Your Retention
In most Specialist Contracting businesses, attention is focused on the here and now, the current jobs and the cash flow from those jobs. Of course this is extremely important and attention has to be given to those issues.
However, if you set clear priorities, you can also focus your team on the collection of retention money without affecting the rest of your business.
You simply do not have enough time and energy to do everything yourself.
Trying To Get Paid Is Stressful
Claiming back and collecting retention can become an extremely stressful and time-consuming process, which often leads to too many subcontractors giving up. A recent analysis of the top UK construction companies stated that nearly £1bn is owed in retention to subcontractors!
If any of the following sounds familiar, we are confident we can help you.
- You are not being provided with a valid reason as to why your retention has not been released
- You are not being provided with a date as to when your retention will be paid
- You are being given the run around by accounts and surveyors
- You have lost track of what retention you are owed
- You have given up chasing old retention
How To Set Your Business Up To Get Paid
In order to improve the collection of your retention money, you are probably going to have to delegate some of the work to others.
However, you will need to decide who is to be responsible for improving retention collection but do not fall into the trap of delegating the task to someone who does not have the skill and expertise to do the job.
For your team to be effective, they will have to overcome the likely problems they will experience. Contractors’ accounts departments are good at putting off Specialist Contractors’ accounts departments when it comes to collecting retention.
You may need to train and develop your people to improve their skills as the collection of retention requires contractual knowledge, persistence, good people skills and a degree of assertiveness.
There is detailed information here on our web site; Retention Information
But why not call our helpline on 01773 712116 and have it collected for you on a no win no fee basis?
What Can I Do If I Am Not Getting Paid?
In theory the Main Contractor should immediately pay out the retention money he has received.
Regrettably, one of the great weaknesses of the retention system so far as Specialist Contractors is concerned, is that it provides the Contractor with a golden opportunity to receive money which he should be paying out but doesn’t.
This failure to pay out may be accidental, but more often than not, it is quite deliberate.
What Alternatives Are Available?
We can provide a very cost-effective alternative to collecting your retention yourself. Once we know all the facts, we can come up with the right plan to ensure you get paid what you are entitled to as quickly as possible.
An M&E Contractor had been owed a retention payment for over 2 years. The Contractor had fobbed him off and ignored him all that time. We wrote just one letter and the Contractor paid the very next day!
Our roofing and cladding Subcontractor Client was owed retention of £44,687 on a job that had long since been finished. The retention should have been paid way back at least a year before, but despite their best efforts it had still not been paid.
With our action our Client received his money just 7 days after appointing us.
No matter how determined the Contractor is not to pay, we reckon we can usually find a way to unlock the cash, so, if you are struggling to recover retention pick up the phone and give our friendly team a call on 01773 712116.
I hope you enjoyed my Wise Up Wednesday email and that it gave you some food for thought.
P.S. Please remember if you need any support please take action sooner rather than later. If you’re not sure what you need, or just want a second opinion, please give us a call on 01773 712116, or email StreetwiseSubbie here.