Take Back Control: Don’t Let Slow Payments Interrupt Your Business Part 1
Unexpected delays in payments will happen. It is an unfortunate, but normal part of working in construction. As a construction contractor, you cannot afford to have a nonchalant attitude about getting paid. Late payments will threaten the survival of your contracting business, especially if you have little or no cash reserves to rely on.
Sometimes your cash flow problems are the fault of another party but sometimes you are the one to blame. Our Fort Lauderdale construction lawyers like to see construction professionals flourish, but success requires due diligence in business matters. We will identify several ways in which slow payments will affect your cash flow and, ultimately, the success of your business.
Common Culprits of Negative Cash Flow
A negative cash flow can be the result of numerous factors; some of these factors may include:
- Starting a project already in a negative cash position
- Under-billing a client before the project begins
- Inaccurate budget projections
- Poor payment agreements
- Not collecting on change order costs immediately
- An inability to manage cash flow
No Pay Raise for You
As the owner of your business, you will either have to take a pay cut indefinitely or your income will be unstable for some time. You already carry the weight of managing your business but imagine how much more difficult it will be to work hard without sufficient pay that you can rely on.
No New Hires
If you cannot afford to pay yourself a decent wage, how do you expect to pay a new worker? With this scenario, you will either have to pay lower wages, which may equate to releasing unskilled workers on a jobsite. As a result, the quality of work delivered to your clients might suffer or you may not be able to pursue the projects you really want to due to a lack of manpower. This is risky business that will ultimately damage your reputation.
Head on over to part two of are article to see what other areas of your business may be affected when your clients are slow to pay.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.