4 Ways for Construction Business Owners to Manage Cash Flow
Let Nationwide Notice, Inc. solve your cash flow challenges. The construction industry can be very lucrative. However, it can also be challenging to manage your company's cash flow. Between slow-to-pay customers, not having the right accounting and financial practices in place, and other issues, it's easy to watch as your business begins a slow descent toward insolvency. The good news is that managing cash flow is not as hard as it might seem. Here are four ways for construction business owners to manage cash flow.
1. Improve Your Accounting and Financial Practices
Perhaps the most important tip is to ensure you have access to the right accounting reports and
financial statements. It's all about being able to measure accurately so that you can manage
cash flow better. It would be best if you did more than track what's in the bank. You must take
additional steps, including:
* Identify aging bills accruing interest
* Predict future cash issues
* Identify customers delaying payment
2. Ensure You Can File a Mechanic's Lien
A mechanic's lien is sometimes the only way to get payment for a project if a customer decides
they're not going to pay when they're billed. However, the rules governing mechanic's liens and
lien receivables in general, vary greatly from one state to another. You (or someone in your
organization) must track these rules and map them to individual accounts/projects.
It's important to understand that many states prefer you to send a preliminary notice of intent to lien before you place a mechanic's lien, too. You'll need to know what this notice consists of and how to send it before you take other steps.
3. Finance, Finance, Finance
Construction requires a lot of heavy machinery. Buying that equipment outright might seem like
the best option. After all, it gives you assets you can use in the future, right? That's true, but it
also ties up your capital and makes it harder for you to turn a profit.
Instead, consider financing fixed asset purchases rather than paying for them upfront. You'll still be able to own the asset down the road, but you have greater liquidity right now.
4. Invoice Regularly
Finally, make sure you're invoicing your customers regularly. After all, you can't get paid if you
don't send out those invoices. Make sure you're following your billing schedule and that each
invoice includes the documents you or your customers require
It's also a smart move to ensure that you get confirmation of receipt with each invoice. That way, your customers cannot claim they didn't receive it. If your customers don't pay immediately, follow up with a reminder in a week or so.
Choose Nationwide Notice, Inc.
At Nationwide Notice, Inc., we understand the challenges construction business owners face
when it comes to cash flow management. That's why we developed the nation's leading notice
platform. Simple and easy to use, it's an invaluable tool for your toolbox and a "must‐have" for
any construction business. Ready to learn more? Contact us! Take a moment to explore our
robust features and learn more about how our noticing management tool works.