Cash is crucial when you are running a Construction Business. Without it your business will come grinding to a halt. So, what can you do if you have Cashflow Problems?
What cashflow problems can be identified?
At Empowered by Cloud, our construction accountants work with many large construction companies and have helped them to overcome any cashflow issues. Here we cover what problems arise and the steps to take.
- Request payments on all overdue invoices.
- Ensure that the payment terms are clear on sales invoices and a few different payment options are on offer to make it easier for customers to settle their accounts.
- Have a consistent credit control process and have someone in the team who is responsible for this.
- Explore Invoice Financing, this is where the financing company funds customer invoices before the customer has paid. The company will normally get paid a percentage of the invoice value. Essentially you can often get paid earlier than you would by waiting for the customer
- Call your suppliers and have a chat with them about the problem you are currently facing, try to negotiate extended payment terms. (Remember communication is key here)
- Think about the consequences of not paying certain bills (ie HMRC, employees, overheads) and determine which you need to prioritise.
- HMRC – Always call HMRC if you are unable to meet payments of your tax liabilities, burying your head in the sand will result in surcharges and fines. HMRC may be able to arrange a payment plan (Where an agreed amount can be paid each month to cover liabilities)
- Look into business loans, particularly those with a lower interest rate
- Is the company eligible for any grants?
Other cash flow problems
- Put on hold team lunches and nights out, chat to your team about why this is temporarily being stopped so they are aware of the situation
- Consider vehicle sharing to get to jobs, this will reduce the fuel costs
- Consider reducing advertising and marketing if this is not (be careful to not totally eradicate this cost or new leads may be lost)
- Are there any subscriptions that could be temporarily stopped?
- When did you last look at your pricing? Are you making the profit you should be? Now may be a good time to reprice.
- When did you last check your utility/telephone bills, have you shopped around to see if there are any better tariffs out there?
Most businesses will face cashflow problems during their journey, its important to face these head on, so contact us to speak with a professional to further explore your options.