Beating the top 3 challenges in construction & trade
We’ve looked at the top 3 challenges for construction and trade businesses and pulled together the tips, hints and tools you need to mitigate them.
How often do your clients make late payments?
Someone needs to own the business of getting paid, from quoting for work through to delivery and completion.
Three hints to for a smooth payment process:
Hint #1 Account for retention
If you have sub-contractors working for you, you can minimise the impact on your cashflow by withholding a similar % retention for the same period of time—this leaves you only at risk for the incremental value you’ve added.
Hint #2 Be clear about your terms of trade
Well-drafted contracts are essential for the smooth running of a contract. When quoting for work, point out your terms of trade to the customer. If the customer doesn’t agree to them then negotiate at this stage, not when the invoice becomes overdue.
Hint#3 Facilitate multiple invoices to the same account
Arrange your contract so you can raise multiple invoices against the customer’s account—an invoice for the cost of stock, 30% on order, 30% on delivery, etc. When there are variations, raise them on a separate invoice so that if there is a payment query, the whole amount due isn’t withheld.