In the construction business, the most effective step that you can take to protect your company and the payments you expect to receive is the use of accurate documentation. It’s crucial that you have everything in writing before you commence a project and that you obtain change orders before additional or different work is performed for a client. Make sure that all documentation is signed by the client and that you provide them with a copy before your crews begin working on the project. Let’s take a look at some other pieces of documentation that you must have in order to keep your construction company in sound financial shape.
- The main contract that you sign with your client for the work to be done should be as detailed as possible. This should include the materials that are to be used, the estimated duration of the project, and measures that will be taken if any delays are encountered during the timeframe. If you are working during a rainy season, you may want to include a clause that releases you from responsibility for work that cannot be done due to weather conditions.
- All of the invoices that you provide to the client should have the date that you expect them to be paid, what the client is paying for, and the penalties for non-payment or late payment. Issue the invoice immediately when the part of work has been finished that the invoice covers so that you can pay your subcontractors in a timely fashion. If you expect any financial shortfalls, check out finance solutions such as those provided by www.ultimatefinance.co.uk so that you can see what options are available until you receive payment from the client or make changes that ease up your cashflow problems.
- If you have worked with the client before you may want to offer incentives or discounts for early payment. This will allow you to pay the crews working for you in a timely fashion; keeping crews paid and happy can provide you with loyalty benefits on future projects. Make sure that your client understands the terms of your discounts and the timeframe for which they are valid.
- After each project you may want to do a study of how your paperwork performed and if there were any problem areas make notes about changes that you can make on future projects. If you enjoy seeing how your money is working for you, you can develop charts and graphs that show you exactly how money enters into and leaves your company accounts. Doing a financial study at the end of each project will hone your management skills and make your business operations go more smoothly on the next job.
Running a construction business requires that you wear a lot of hats, each one with its own responsibilities. From making sure that your tradesmen show up on the job to having enough money at the end of the week to pay your crews and the vendors who supply the materials, you must have your finger on the pulse of your company’s finances from start to finish.