The same applies to levels.
You need to know your levels, no matter how intimidating this may seem.
Today’s video is Uncovering How Construction Payment Levels Really Work, watch it by clicking here or continue with this quick read.
Today’s questions are…
- How can I move up?
- How can I create a service that moves me up?
Let’s look at the levels of payment in business & construction.
In business, there are SIX levels of payment.
1. You’re essentially an employee. You perform a task and you get paid.
2. You’re a bigger business and can negotiate better payment terms so you don’t have to wait as long to be paid.
3. You get paid before you deliver the service. As a business model, this is way better for cash flow because you get paid before you do anything.
The benefits of Stage Three…
- No waiting time
- No need to get finance
- No lost money
4. Here you get loads of money upfront. This lump sum pays for a long period of time. 5. This is where banks are at. Take the money and then loan it out. So you’re earning money on your money. 6. Insurance Companies. They take money from you and they may never pay anything back to you depending on your circumstances.
YOU NEED TO ASK YOURSELF… On a construction project, how can I move up?
The worst case is you win a tender– and to do this you’ve had to reduce your margin. You then do the work upfront and get paid at the end. This could be 60 days after the work is complete.
What you should be looking to do is try to secure an upfront payment.
This will lock in the cost of materials.
You always need to think about how you can differentiate yourself and make money as quickly as possible without having to wait for payment.
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