Keeping Your Contracting Business Afloat

Posted on: 28 March 2019

Whether your expertise is plumbing or roofing, being a contractor requires that you pay for a lot of supplies, labor and materials before clients pay you. At times, this can lead to financial difficulties. These difficulties increase when your clients aren't immediately paying you, especially if you're taking on more work. What contractor funding activities can you do to keep money flowing in?

Maintain Good Credit

If your business credit isn't good, purchasing supplies or dealing with other company emergencies is hard. You should always be looking far ahead and when you have extra money, whittling down business credit debts. When extra money comes in because multiple clients are paying you at once, put as much of that money into business debt so that credit can remain good or your credit lines can increase. Credit can be a cushion which allows you to keep working.

Send Invoices Before Project Completion

As your contractor work piles up, paperwork may fall behind. This will especially happen when you wait for project completion for payment. You might considering restructuring the way payments come in and sending customer invoices out before you finish work for them. You might send them out each week as portions of the contracting job is done, for instance.

Get a Bigger Down Payment

You might also examine how large of a down payment you're accepting from clients. If the amount is less than a third or a half of the total project cost, you may want to raise those prices. The more a client can give you, the quicker you can fund your work.

Consult Factoring Companies

Sometimes you'll need help to make ends meet and get projects finished. This can at times be accomplished with the aid of factoring companies. What happens in such cases is that the "factors" will take the client invoices you give them and work on getting them paid; however, you will get a check or deposit to your business account almost immediately. Factors, or accounts receivable management companies, charge a fee per individual invoice, but otherwise you'll be getting contractor funding fast. 

You'll just need to negotiate with factoring companies about how they will contact your clients. Ensure that branding will remain the same; most factoring businesses will allow your branding to remain on invoices so that clients never suspect another company has stepped in to handle payments.

Contractor funding never needs to be a hassle with adherence to the above tips. Seek out receivables management companies, factoring companies and other professionals to ensure you always have the money to keep your contracting business alive. Contact a company, like Genesis Contractor Solutions, for more help.