Today’s video is Why Cashflow Matters Most in Construction. You can watch it here or continue with this quick read.
Why is Cash Flow such an issue?
A lot of the time it comes down to HOW LONG it takes to get paid for the work that you’ve done. And while you wait for the big payment you still have to pay your expenses. When we talk to our clients the major issue is…
THE FINAL QUARTER, Q4, OF A CONSTRUCTION PROJECT
If your cash flow is very tight in this quarter then you’re going to run into problems. In Q4 this is where disputes start to emerge and where payments get delayed for various reasons. Therefore if you’re in a pinch you’re going to battle to keep your head above water.
Often these delays in payment aren’t your fault… but they will be your problem. Remember, don’t rely on relationships to get paid. Rely on what’s in the contract.
How to Get into a Better Contractual Position and Protect Your Cash Flow?
In the pre-award stage make sure you look at:
- PAYMENT TERMS: Where possible get paid as much upfront as you can. Also, try not to agree to being paid too long after 30 days. DOUBLE CHECK THE CLAUSE to make sure the fine print is ACTUALLY 30 days from when you submit your claim.
- CONSIDER TIME BARS: The advice here is to ask for an ASSESSMENT PERIOD. This means that rejections and approvals will move a lot more quickly and you won’t be in a position where you’re wasting time waiting for decisions to be made.
- INTEREST ON LATE PAYMENTS: You don’t ever want to apply this, but it’s really useful to have if there’s ever a dispute.
And obviously… ALWAYS NEGOTIATE to get the best contract with the least risk!
Other things you can do…
- GET PRE-PAYMENT EVEN IF YOU HAVE TO GIVE THEM A DISCOUNT LATER DOWN THE LINE.
- SUBMIT ALL OF YOUR DOCUMENTS AND PAPERWORK IN TIME
We want you to be the MOST SUCCESSFUL you can possibly be. That’s why we put together content with tips and advice that is tried and tested.
For more contractual advice, Quantum Contract Solutions is here to guide and assist you through everything contract related. Let’s reduce risk in your contracts and save time and money, just click this link to get our FREE case study to show you how clients just like you are doing it.