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The good news is that there are many things you can to do better manage your cash flow so you can take on that next big job:
Managing outflow as well as inflow
Take extra care to manage your contracts with vendors, suppliers and subcontractors. Try to negotiate payment terms which match your cash expenditures as best as you can.
Offer an incentive for paying early
It’s not the best solution, but between missing payroll and impacting overall revenue it may be an option. By choosing to offer your clients a slight discount if they pay their invoices early—say, 1 or 2 percent off if checks are sent within 10 days—chances are you’ll find your invoices will clear faster.
Rather than waiting to get paid, you could also consider making use of a service that allows to advance your outstanding invoices. You’ll have the capital in your bank account the next day, giving you the agility necessary to respond quickly to new opportunities.
Hire awesome project managers and use a time tracking software
As much as 85 percent of the cash construction companies have on hand comes from projects in progress. So don’t forget that stellar project management starts with the people you put in charge and the tools you choose to implement. If your construction company manages all of its projects effectively, it’s likely your cash flow will follow suit.
Don’t overlook your closeout process
It matters how you finish. As you near the end of the project make sure you’ve documented your man-hours and identify any items that might hold up payment with the customer and address them quickly. Customers will release the cash faster if you make the closeout process easier.