As a subcontractor you face many challenges both on and off the jobsite; managing your cashflow is probably one of the most vital skills you need to stay in business. From interfacing with the contractor to working with the homeowner your talents must be honed to perfection; also working with and paying the men who work for you can be a challenging part of your job. When working with suppliers, vendors, and your crew of craftsmen you must have a plan in place that helps you to manage your cashflow effectively.
Let’s take a look at some ways to keep the cash flowing and the work around you progressing smoothly.
- The first step you should take as a subcontractor is to build strong relationships with those people who impact your cashflow; this should include lending institutions in case you need to procure a small loan to expand your business or buy equipment to finish an emergency job.
- Create a chart for yourself that demonstrates the work completion schedule and the payment schedule you’ll share with the contractor; it’s imperative you know when you will be getting paid and the amount of the payment.
- Next you should consider when your suppliers, vendors, and personnel will need to be paid. It’s a balancing act if your contractor only pays you when a portion of the work has been done but your crew wants to be paid weekly; you will certainly have to monitor and adjust your cashflow effectively to cover all of your expenses.
- You should always keep a log of how much work is accomplished by your crew each day and date the notations; this can show the contractor that your crew was on the job attending to the jobs assigned to them.
- Once you’ve had time to review your records from a job, you may want to develop a back-up plan for funding should you expect a shortfall.
This works well if the client delays or refuses to pay until certain specifications are met. This is a confidential service that provides you with capital with which to run your business and that makes it easier to honour your financial obligations during the job in progress.
After each job you and your crew does on-site, you should take a look back at how well you managed your assets, your personnel, and your cashflow so that you can make improvements on the next job. Remember to establish good working relationships with other professionals in your field, and develop an alternative plan to help finance your job should you experience a shortfall in the funds you have available. Keeping one step ahead of the cashflow process will provide you with peace of mind on every job and the confidence to undertake jobs that challenge you and your crews.
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