- Look at terms and conditions from invoices and statements.
- Communicate with vendors who don’t offer early payment terms on extensions.
- Make it a top priority to review your aged receivables.
- Think about the interest rates on your line of credit vs. your early discounts.
- Watch the billing cycle windows and stored materials dates.
- Offer clients more aggressive early payment terms.
- Always ask for a pre-payment large enough to cover the materials on negotiated projects.
- Don’t get sucked into using your credit line for payroll, vehicles or improvements until the cycle has improved.
- Refuse to work on jobs at cost or with very low margins. I know what you are thinking on this … easier said than done.
- And, my personal favorite, run your business by the numbers, not emotions.
The common theme is to make managing cash flow an everyday priority and to pay close attention to it. As we are finding out, credit is hard to come by for many of our members.
I hope these ideas help.