Construction businesses fail for many reasons, but a lack of work is typically not the reason why contractors go out of business. Instead, many contractors go out of business because they run out of money, and nonpayment is a common element in these situations.
In this two-part article, we will provide some accounts receivable tips that will help you get paid and keep your cash flowing nicely. In part two we will provide more tips and discuss the importance of enlisting the help of a West Palm construction lawyer.
Send Invoices Immediately
Sending invoices can be time-consuming and awkward, but you need money to keep your business going. Staying on top of your billing is critical. Be proactive and have a schedule for sending out invoices. Get your clients to agree to electronic invoicing which is much faster than snail mail. If you are not sending timely invoices, you are only extending the time until your own payday.
Your clients are just a busy as you are. If you find that your clients are slow to pay, send them periodic reminders. Some may just need a gentle nudge as a follow up to previously sent invoices. Let them know that their due date is fast approaching or when they are past due.
Charge a Late Fee
Even if you invoice promptly and send your clients reminders, some of them will still delay their payments. For some businesses, this may require adding a late fee clause to your contracts. Requiring a credit card on file and charging late fees is wise. If clients know that delayed payments will result in them forking over more cash, it will encourage them to pay on time.
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.