Many trades and construction companies admit that they struggle more with managing their cash flow, than finding new clients – that’s not surprising given the current booming construction industry! As your trade or construction business grows, you might find yourself frustrated with managing a positive cash flow, but remember, how you manage your cash flow on your construction projects throughout the year can spell the difference between a successful and failing business.
If there are gaps in your cash flow, your ability to pay bills, order inventory, and pay contractors, or employees may be affected. Your cash flow balance may also be stalled by delayed payments from clients, seasonal inconsistencies, overpaid vendors, inventory surplus, and equipment issues. What a headache!
The good news is that you can manage all these using an invoice software system that creates estimates and automatically issues invoices and receipts to help you receive payments faster. Accounting software like Xero, Hubdoc, and Spotlight Reporting simplify business tasks such as claiming expenses, calculating GST, bank connections, paying bills, budgeting, and management reporting.
Aside from using an accounting software, your accountant will also help you understand your finances, so you can adjust and level out your cash flow at the peak of making rapid payments. Don’t forget to take advantage of upfront discounts!
Make sure you don’t stretch out your cash flow cycle and divide your invoices, so you end up with more cash in your pocket and have the flexibility to improve customer experience. You can offer instalments to make it a win-win situation for you and your customers. Buy only the inventory you need, receive payments upfront, and hire extra staff only during busy seasons. All these can be managed through an accounting software.
To improve your cash flow, you can create a sequence between your company cash flow and project cash flow. It’s a good idea to align your projects with your company expenses by paying your foreseeable business expenses even before the larger expenses are
due. This ensures that you have funds for unexpected overheads.
A trustworthy project manager who’s equipped with training and experience in cash management and allocations can also monitor your cash flow. He or she should be experienced in your business software and input the correct data for accurate reporting.
Plan your business cash flow! Give us a buzz and let’s talk about your cash flow concerns. Our team is well-versed in the construction industry and we can help you see potential avenues of revenue, and even overlooked loopholes in your business.
Your Outside Team
Address: Level 2, 182 Vivian Street,
Te Aro, Wellington 6011, New Zealand
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