Contractors live in a world of the unexpected: unforeseen conditions; weather delays; supply chain disruptions. The list goes on. But as far as clients are concerned, the project must proceed as if not a single obstacle has appeared. Why, then, don’t construction companies afford themselves the same level of stability when it comes to managing their own finances?
The answer is fairly simple; the solution, less so. Contractors looking to bring stability to their business need to take proactive steps to mitigate shortfalls and shore up against lean times. Key to this is understanding what your predicted incoming cash flow will look like and forming a strategy around this.
There are numerous steps involved in achieving an accurate estimate of incoming cash flow, but starting with projects that are planned, in progress or completed jobs that haven’t been fully billed is a good first step for forming a baseline. Let’s take a look at some other ways contractors can build stability into their bottom line.
Capturing the Unknown
Of course, like so many things in life, the key to successful planning is strong due diligence. Contractors should plot out a comprehensive billing schedule so they can clearly see where and when expenditures will hit. Big ticket equipment rental, for instance, should be billed immediately to the client so the contractor isn’t holding the bag for rented machinery. Knowing up front when a cost like that will be hitting ensures teams can issue bills proactively, potentially before the equipment even shows up on site, in order to get paid sooner.
This same school of thought applies to almost every other aspect of cash management within construction companies. For instance, forecasting which types of projects your company will bid on and its success rate with those types of jobs. Are you more successful when pursuing higher education projects versus science laboratories, or corporate fit-outs versus emergency room retrofits? Answering these questions can not only help predict future cash flows, but also reveal where your company’s strengths and weaknesses exist when pursuing certain kinds of work.
Of course, now the hard part is corralling all of that data – but it doesn’t have to be a challenge. Construction project management software is designed to help you capture the essential details you need while also providing easy access to historical cost data and other key performance indicators of past performance.
Real Time, Real Results
Other tools now exist that move data collection into real time, such as mobile field application tools that allow project teams to monitor labor hours daily to manage the total cost of the job against expectations. Trouble spots can be identified sooner, and project managers end each day with a clear picture of their total labor and asset consumption.
In general, being more informed makes good business sense no matter the industry. But for general contractors, advanced construction technology and project management software can make all the difference between being in control or running on empty.
United Solutions provides unmatched software solutions and support for more than 3,000 clients in the construction, real estate industries. We enable our clients to operate at peak efficiency and maximize their profits.Read More
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