As a subcontractor your responsibility is to carefully manage the money that you receive from the work that your crews do for clients. Before, during, and after the job you will have to pay your employees in a timely fashion if you expect them to remain loyal to your company. Once they know that they can count on you to pay them for the work that they have done they will be loyal to you even when times get tough. Financial management requires you to navigate a plethora of issues that can arise on a jobsite; from homeowners who withhold payment to delayed deliveries, your job will be to handle these issues and to keep your crews paid and happy. Let’s take a look at how you can successfully manage the balance of your business funds.
At the beginning of every job you should meet with the general contractor to establish a payment schedule. This will prevent delays in payment for your crews who will be expecting to get paid when you told them that they would. After you offer your quote for services to be carried out you should get in writing how and when you will be paid so that you can adjust your business finances to coordinate with these payment periods.
In your discussions with the general contractor, it’s important to cover any change orders or modifications in the job that may arise as the project progresses. If your crews are doing extra work that wasn’t covered in your initial agreement they will expect to be compensated for their extra efforts. The general contractor and you should have a plan in place to cover additions to a basic project that will require specialised skills and talents from your tradesmen.
Next, meet with your crews to explain how the payment schedule will work. Let them know up front when they will be paid and make a commitment to honouring this plan. Keep in mind that your crews have bills coming each month and that they are counting on you to provide their pay when you say that you will.
If you begin to anticipate a negative cashflow you should have an alternative plan that can help you cover any shortfall. Learn about strategies you can put in place before any negative cashflow occurs, such as those provided by ultimatefinance.co.uk. This will allow you to continue to operate smoothly and more importantly it will keep your men on the job completing the project.
Finally, it’s always a good idea to anticipate delays in payment or even non-payment to occur. What will you do and how will you pay your crews should this happen? Having a method in place so that you can pay the tradesmen working for you will alleviate any stress or worry for you; it will also help to keep the crews loyal to your company and working diligently to complete the job that you took.
Maintaining a positive cashflow and successfully managing the money that you receive will make your subcontracting business a success.