Cash flow is king if you want to build a successful, sustainable business. It gives you the ability to take on projects, cover staff or outsourcing costs and keep the lights on everyday.
Sure, profit’s what we’re all chasing, but your cash flow is where the real success lies. Here are 6 ways you can better manage the cash flow of your next construction project.
Make a plan before you start
Before you even think about picking up a tool, map out your cash flow. Know when payments are coming in and when bills are due. Set up a cash flow forecast to help you spot potential gaps before they turn into big problems.
Track every single cent
A project’s budget on paper means nothing if you’re not tracking what’s actually happening. Use a cash flow tracker or software program to help you be more efficient about it so you’re not scrambling for numbers or wondering what’s happening. If you’re not on top of things, you’ll only realise you’re in trouble when it’s too late.
Invoice on time and follow up
It sounds obvious, but you can expect to be paid late if you send your invoices late. Invoicing on time should be a no-brainer, but with so much on your plate, it can be easy to let things slide. The thing is, delayed payments, even by a day or two, can have a serious domino effect. So set up automatic payment reminders and don’t be afraid to follow up with clients to get what you’re owed for the hard work you do.
Keep an eye on variations
Scope changes or design tweaks, even if it’s a small change here or there, all add up and have a big impact on your cash flow. If you’re not pricing and agreeing on variations as you go, you’re working for free. Make sure to price every variation properly and get it signed off before you do any work.
Negotiate better payment terms
Clients will more often than not push for terms that benefit them. But that doesn’t mean you have to just shut up and accept it. Remember that payment schedules, retention percentages and advance payments are all negotiable. Think about your upcoming projects, timelines and expenses and make sure any payment timelines work for you so you’re not left sitting around with bills piling up while you wait for the money to come through.
Keep suppliers and subcontractors happy
If your cash flow dries up, your suppliers and subcontractors are the first to feel it. And if they stop showing up because you’re slow to pay, your project is dead in the water. Along with your reputation. Be upfront about payment schedules with your team and if there’s a delay, communicate it early so they trust what you’re saying and can plan around it themselves.
The Bottom Line
Managing cash flow is a non-negotiable if you want your business to survive long term. You stay in control when you plan ahead, track spending, and keep payments moving.
If you need help managing your cash flow, contact us today at Carroll Estimating to find out how our team can support you with everything from tender bid to final account.