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Cash Flow Ideas for Construction Firms

Cash Flow Ideas for Construction Firms

by Proforma Construction, January 16, 2020

Make sure you are getting paid for the work you do.

Unfortunately, cash flow problems remain one of the most widespread issues for construction companies.  In fact, about one in five companies report that cash flow problems are a frequent issue.  Oftentimes, this leaves companies to dip into their own savings to cover routine costs such as payroll and rent.  For companies that routinely struggle with cash flow problems, your Pleasanton contractor offers these solutions.

  • Choose Clients Wisely

If you’ve been in the construction business for a while, then you’ve probably worked with enough clients to recognize the ones that will have issues paying you for your work.  To ensure that you don’t run into cash flow issues, simply choose not to work with these clients.  If you don’t have the luxury of being able to pick and choose your clients, then make sure that your contracts include payment agreements that ask the client for partial payment upfront or penalizes late payments.

  • Try Offering Flexible Payments

Flexible payment plans allow clients more time to pay your company for its work.  Instead of the traditional 30-day invoice, flexible payment plans allow your clients to pay you back in installments.  While this option will mean that it takes longer to get paid, it improves the chances of your company getting everything that it is due.

  • Charge Interest on Late Payments

Finally, you can address cash flow issues by including an interest clause in your construction contracts.  This pressure will improve your chances of getting paid on time.  Please keep in mind that some states have laws dictating how much interest you are allowed to charge on late invoices.  So, make sure you are in compliance when drafting your interest clause.

These are some of the things that you can do to address your construction company’s cash flow problems.  Do you have more questions about the commercial construction industry?  If so, then contact your Pleasanton contractor at Proforma Construction.   Serving Pleasanton and the surrounding California area, our highly-trained team is ready to make your commercial construction dreams a reality.