Do you know that having a steady cash flow is integral for subcontractors? And, this is all because of the nature of work. The majority of subcontractors not only initiate projects but also tend to be paid after the job has been accomplished. For them, losing cash could mean hindrance in production, decline in profitability, overlooked payroll, or even financial collapse.
To run a business efficiently and continue to yield good value for clients, subcontractors need to control their cash flow. Here are 9 effective tips to help you stay consistent in the market.
Why is Cash flow Important for Your Subcontract Business?
Ensure timely employee payments (if you have staff)
Streamline purchasing of materials or equipment and other business needs such as utilities, advertising, site maintenance, etc.
Get a steady cash flow and maintain a good relationship with banks and other creditors to seek loans.
Ensure proper funds are on hand during late payment.
9 Effective Tips for Subcontractors to Maintain their Cash Flow using ProjectPro
There are numerous steps subcontractors can take to manage their cash flow. These involve understanding when and how to say “no” to assignments, remaining organized, establishing a credit line with their bank, operating with suppliers who give them better terms, etc. Also, subcontractors can adopt the latest technology, such as ProjectPro, which is powered by Microsoft Dynamics Business Central.
1. Stay Organized
Controlling your spending is a vital part of handling your cash. You can start by making a forecast of what expenditures need to be managed, a budget, and what materials and supplies need to be bought. Once you determine what you need, you may be able to purchase in bulk to get lower prices and shipping costs. Also, ProjectPro enables you to organize all your purchases smartly.
2. Develop a Forecast Plan
So what have you included in your schedule, and how much work can your business realistically take on? Are there leads you need to follow up on? ProjectPro allows you to establish a sales objective and schedule jobs ahead. This will help you control a scramble to find work and keep the money flowing in.
3. Prioritize Smartly
Refine your consideration, which means you can prioritize specific projects or clients over others. Prioritizing higher-paying clients or those who pay in advance helps protect your bank account—and retains good relations with your most profitable clients. With ProjectPro, you can monitor all the tasks on a single-integrated platform and manage your priorities efficiently.
4. Advertise your Business Before You Fly Out of Work
It’s effortless to get hooked up with paid work, but marketing your business is critical and shouldn’t be ignored. Invest a small amount of time in making sure a new company has a method to find you.
Your business cards, website, and brochure are excellent starting points for acquiring new clients, so financing is important to maintain cash flow. If you have the budget available, take out an ad or two in local journals. This is another excellent way of hitting up new business.
5. Don't let Marketing Prevent You From Obtaining Jobs
A subcontractor doesn't have enough time in a day. The hunt for new clients must not ingest time and energy at the cost of finishing projects for paying customers. After all, you can't pay a bill if the job isn't done.
6. Be Adaptable
Discover a balance in your scheduling so you can periodically take on an emergency project without creating a backlog in your processes. Having the skills to benefit from a last-minute opportunity can mean an excellent bonus at the end of the month.
Adaptability also enables you to switch lanes if a project is unexpectedly delayed.
7. Work on Project Scope
When we're willing to impress a client, it can be pleasing to think that going above and beyond is good—putting more resources into projects than what has been decided and budgeted—harms your working relationships and bottom line. It sets unrealistic expectations for the long term. Ensure that the scope of your projects is clearly planned and revised if necessary.
8. Be Ready With a Backup Plan
Risk is in every business, but successfully managing it is essential to being a subcontractor. Always stay proactive, and don't let any issues stop you from halting projects. If it seems possible:
Keep funds aside
Have a team on call as a backup
Be ready if anything goes wrong and you can't finish the project, or if the payment is delayed
9. Manage your time Smartly
As a subcontractor, keeping track of the resources you spend on each project is critical. So that whenever you invoice your client in the end, there's no confusion about what you purchased, be it materials or anything else. You can also use this data to speed up your workflow and determine the most time-consuming tasks.
Set dates in your contract cautiously
Use project management tools like ProjectPro to track challenges and run everyday reports.
We hope the above-mentioned tips and benefits of ProjectPro will help you manage your subcontracting business with ease and efficiency. To explore the unique features of ProjectPro, schedule a demo.