Effectively steering your company's cash flow can often be likened to the skilful act of traversing a tightrope. Imagine holding a drill in one hand, a beer in the other, balancing a spare tire on one foot, and carrying a ladder on your head - all while the tightrope is ablaze.
Within this broad subject, there exist numerous robust building blocks that we are confident will prove invaluable in helping you successfully navigate the intricate financial landscape of the construction industry.
1. Implement strict invoicing and payment timelines
Issue accurate invoices promptly, establish a follow-up system for timely payments, incentivise early payments, penalise late payments, and
utilise automated accounting software like Xero.
2. Establish beneficial payment conditions
Adjust payment terms to suit cash flow, opting for upfront or progress-based payments tied to project milestones.
3. Implement a precise payment schedule
Create a comprehensive financial plan with cost projections, revenue forecasts, and a contingency fund, using tools like Xero’s “Budgeting
and Forecasting.”
4. Streamline procurement and emphasise supplier oversight
Trim excess inventory with precise material forecasts. Build ties with reliable suppliers for favourable terms and negotiate early payment
discounts based on invoice timelines or volume.
5. Trim expenses without sacrificing quality
Regularly scrutinise expenses for cost-cutting opportunities. Review overhead, renegotiate contracts, and explore alternative suppliers. Evaluate if office space, software, or materials can be obtained more efficiently without compromising quality.
6. Explore funding alternatives
Build ties with construction-focused financial institutions for cash flow support. Consider options like credit lines, equipment leasing, and factoring services for project delays.
Call us to see where you're standing financially, and how you can bulletproof your company's financials moving forward.
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