Today’s video gives THREE easy tips to increase your Cash Flow. You can check it out here or continue with this quick read.
Aside from looking at payment terms, there are three easy ways to make sure you have a healthy cash flow.
Look at Change Orders, Variations, and EOT Clauses.
The client will ask you to notify them between 1-2 business days if there’s a delay or a change.
Then you’re asked to submit an extension of time or a change order within a certain period.
Recently we know this has become a contractual tool to not pay. Originally it was used to track delays, projects, and costs as and when they happen. It was a way of thinking ahead to avoid the end-of-project pile-up.
You want to make sure you’re getting paid for changes and delays promptly.
TOP TIP: Ask them for an assessment period. For example, 14 days to approve notices. This will speed up the approval process.
When you get a bid there may be an option to submit an alternative tender.
If there isn’t an alternative tender DO IT ANYWAY.
It’s a great option to show your expertise and show how you would do it differently. I.e. if we do it this way it will save you money.
BUT MORE IMPORTANTLY, approach it from a pricing model point of view.
I.e. give them your normal price but ask them to pay a percentage upfront.
In return for the payment upfront you then agree to give them 5% off the total cost.
This works out cheaper than the original offer.
You want to be paid upfront so that you can get that money working straight away. And in all likelihood, you will make the 5% back in your post-award phase because of variations and change orders.
IMMEDIATELY chase up on delayed payments.
Regardless of the size of the company you’re dealing with… if they pay you late, even by one day, you chase up and you follow up.
Immediately follow up.
Start with emails, then phone calls. Don’t ignore it.
TOP TIP: You want to be known as the company that is annoying if you’re not paid that way you will be first in line for payment. Train them on how you want to be treated. And refer to the contract.
It’s never too late to start thinking commercially and getting contractually savvy. We’re here to help.
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