Let’s help you navigate…
Finance with Flow would like to highlight within this blog post some of the signs that may indicate cash flow challenges within your business and discuss how we can support you at regaining control and understanding your cash flow.
Client Payments
The most obvious concern over cash flow is missed or late payments from clients, this can especially be a concern in the construction industry where clients can be notorious for late payment to subcontractors. Good discipline in raising applications for payment on time, and a good dialogue with the client QS can ensure contractors settle their accounts on time.
Delayed or missed applications for variations
Variations can be a tricky topic, and sometimes one that gets swept under the carpet until the final account, however, this will have a negative impact on your cash flow as you will have paid out for labour and materials to carry out those variations potentially a long while before you get the cash back in. Leaving applying for variations to the end of a job also makes them harder for the client to agree so could erode your profit margin as well.
Through proper job costing, Finance with Flow can support in making regular applications for variation orders to ensure your cash flow is not negatively impacted.
Poor pricing
Cash flow concerns could be indicative of a larger problem, potentially that you have not been pricing your projects correctly, a low gross profit margin could result in negative cash flow where it does not generate sufficient to cover overheads. This is particularly pertinent at the moment where costs have been rising for a sustained period, with more to come in April as a result of the near 10% increase in national minimum wage.
Increasing Overhead Costs
As already alluded to, overhead costs have also been on the rise. This can easily be put on the back burner and not always budgeted for or allocated within your cash flow.
Rapid Expansion
Despite the difficult conditions, there are some sectors seeing fantastic opportunity, for example the renewables sector, and this can lead to rapid expansion, which in turn can deliver its own pressures on cash flow. Active scheduling of milestone payments to ensure a positive cash flow can support in navigating this.
How can we help?
A robust cash flow forecast will give you the oversight to manage your cashflow proactively, understand where the pinch points may be and ensure that you are pricing accurately.
It is very common for businesses to have cash flow problems throughout their journey, and it is crucial to identify and address these concerns promptly.
Addressing cash flow issues is not just about survival – it’s about creating a solid foundation for your company to build from and ensure sustained growth for the future!
Our team of experts at Finance with Flow cover many different skill sets and can help you turn things around to gain back control of your business.
Contact us today on undercontrol@financewithflow.com and let’s chat through your needs. We can shape your success together!Visit our website to find out more about our services and packages – www.financewithflow.com
