Dispatch #71 - Put the Money in the Bank and Learn from Mistakes
In this final installment of how best-in-class construction companies get paid consistently and quickly, with the least amount of hassle, I want to cover the last two stages of the pay cycle.
Deposit what you collect
Put the money in the bank. I know that sounds obvious, but several times I’ve come across contractors sitting on checks for up to a week before depositing them, whether at the bank or electronically through a check scanner (preferred method).
Know the ins and outs of your customers’ electronic payment systems so you can anticipate and prevent any snags that might delay transmittal of funds.
Don’t delay putting the money in the bank, but if you’re not sure exactly which customer bill to apply their payment to, take a few minutes to figure it out so you’re not creating downstream A/R billing and collections confusion (a barrier to getting paid quickly).
Debrief. During job debriefs, add a question like, “Is there anything learned on this job―whether it sped up or delayed getting paid―that we can apply to future customer contracts, jobs, or service ticket contracts?”
Finally, a special call-out to the Project Managers, who are in the unenviable position of balancing the needs of the customer, other contractors and suppliers, their own field crews, and their own accounting department. Give them the tools and training to succeed. Make sure they understand the pay cycle from initial lead through final collection. Coach them to higher levels of performance, measure and report their results, then recognize and reward their success.
Sell the work, do the work, and above all, get paid.
I've compiled the best tips from the entire How Best-In-Class Contractors Get Paid Quickly series―targeting customers and jobs that pay the best, setting up the job right, documentation, tracking, negotiating, timing―into one easy-reference e-book. Be sure to download your copy and start collecting like a pro.
Need help with this or other financial matters faced by construction contractors? Let’s talk!
David Stern CFO makes every effort to provide useful and accurate information. This content, however, is not intended as a substitute for specific business-related financial advice. We disclaim all warranties and liabilities from its use.