“Turnover is vanity, profit is sanity but cash is king [or reality]”
Cash is the lifeblood of any business and yet in the traditionally low margin, high risk and often-volatile construction and engineering industries, cash management often leaves a lot to be desired with significant opportunity for improvement.
There are many facets to proactive cash management but underpinning it all is good administration, records and keeping your eye on the ball.
How often do you undertake cash-flow forecasts both for incoming and outgoing cash?
How does your cash collection / expenditure compare with your forecasts?
Is it possible to negotiate favourable payment terms?
Keep in close contact with your customer, arrange monthly site walk arounds to agree your valuations.
Do your clients pay in accordance with your Contract terms?
Don’t give your customer an excuse not to pay, e.g. keep on top of progress and Change Orders.
Don’t be afraid to chase an overdue payment; it’s surprising how many people view this as a confrontational approach … it is not, you simply want paying in accordance with the agreed terms.
Close out your projects expediently.
What about outstanding retentions, are you aware of what is outstanding and when it is due for payment?
Is your profit cash backed?
If you are finding that poor cash flow is a regular worry in your business, please get in touch to see if we can help you to implement a more proactive approach to your cash management.
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