It’s Wise Up Wednesday! Are You Sick Of Trying To Collect Retention?
Streetwise Wise Up Wednesday Guides give you a quick burst of stuff that will help you in your business life.
Sometimes quirky, sometimes hard hitting, but always guaranteed to make you think and take no more than 2 minutes to read.
So How Important Is Collecting Retention?
The collection of retention money is not usually on most Specialist Contractors’ list of priorities. But just stop and think about that for a moment.
What is your actual net profit as a percentage of sales?
If you are like most Specialist Sub-Contractors, your actual profit after overheads might be as low as 3% to 5% of sales. If contractors are hanging on to 2½% of sales, they are effectively hanging on to your profit.
In most Specialist Sub-Contracting businesses, attention is focused on the here and now, the current jobs and the cash flow from those jobs. This is, of course, 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.
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. You will need to decide who is to be responsible for improving retention collection and who is actually going to do what.
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 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
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 Sub-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.
The length of time the contractor can hang on to and utilise these windfall monies to run his business, will depend upon your ability to chase him for your money.
Some Specialist Sub-Contractors will not be very good at chasing their retention money and some may even write it off altogether. The contractor simply takes advantage of your generosity.
Some main contractors will only pay out if the Specialist Sub-Contractor chases him for the money.
Other main contractors will deliberately set out to make it difficult for Specialist Sub-Contractors to collect their retention. There are those even less scrupulous who are known to have a system in place for writing your money into their profits after a given period has elapsed.
There is no one simple answer, so please check out the detailed information here Retention Information
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.
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.
Barry J Ashmore
P.S. Did you book your place yet at;
101 Things You Need to Know About Your Subcontract – #1 Day Workshop
Invest #1 Day Of Your Time – And Reap The Rewards For Years To Come
Where and when?
- Nottingham – Wednesday 8th May Village Hotel NG9 6DL
- Manchester Hyde – Wednesday 5th June Village Hotel SK14 4QG
- Leeds South – Wednesday 12th June Village Hotel LS27 0TS
- Solihull West Mids. – Wednesday 19th June Village Hotel B90 4JG
- Further dates in the South TBC
Throughout the day, you will discover the 101 things, that a lifetime of construction expertise and professional service to Specialist Contractors has taught us about the terms and conditions that will be used against you, and what you can do about them.
Please call our friendly team on 01773 712116 for details