Everything You Need to Know
If you run a construction business, you don’t need us to tell you how challenging it can be to improve your cashflow and keep it that way. Few industries come with as many obstacles, which is why we are on hand to offer you the help you need.
We are expert providers of cashflow forecasting for construction businesses and can help you to turn things around. Let’s look at the importance of cashflow in construction and how a skilled construction accountant can help you.
Summary
- Good cashflow allows you to balance your costs and make payments on time
- Failing to pay subcontractors can lead to higher costs and legal action
- Taking deposits, optimising the timing of bill payments, and cashflow forecasting can all help
- Here at Outsource Financial Solutions, we can provide tailored accounting services
Understanding the importance of cashflow in construction
Why is cashflow so important in construction? Well, project payments are often delayed or staged. If you don’t have a solid cashflow strategy in place, then you may not be able to cover costs such as labour and materials before you receive those payments. When you find yourself in this situation, things can fall behind schedule, and the growth of your business can take a direct hit.
What happens if I can’t pay subcontractors on time?
If you are struggling with poor cashflow, then you might not be able to pay subcontractors on time. If a subcontractor is not being paid, they do have the law on their side. Under the terms of the ‘Late Payment of Commercial Debt Regulations 2013’, they are entitled to charge interest and statutory fixed costs on any invoice paid outside the contractually agreed payment terms. This means ever higher costs for you in the long run.
How construction businesses can improve cashflow
So how can you improve your cashflow? There are many things that you can focus on, but the following are all great places to start:
Request deposits or part payments
All too often, a client can be delayed in paying their invoice. Asking for a deposit or part of the total price to be paid upfront can give you the cash that you need and reduce your financial burden. We can handle invoicing for you, ensuring that they are sent out promptly.
Don’t pay your bills too early
It might seem natural to clear any outstanding bills, but doing so too early can leave you with a black hole in your finances and leave you vulnerable to a cash shortfall. We are experts in cashflow forecasting for construction businesses and can identify the best time for you to pay.
Invest in cashflow forecasting
We’ve just spoken about cashflow forecasting, but it can be helpful in many other ways too. By planning for the weeks and months ahead, you can identify periods where your funds may be stretched and prepare accordingly.
Talk to Us
To find out more about us and our construction accountant services, please get in touch with our team today. We can start to help you with cashflow forecasting right away, protecting your business for the future and ensuring that your funds are healthy enough to face any challenge that lies ahead. So what are you waiting for? We can’t wait to hear from you.
