If you’re looking to boost the cash flow in your tradie business, there are a few things you should bear in mind. In this article, we’ll present some suggestions to enable you to grow your company’s sales while ensuring you always have enough cash on hand.
A construction company may not survive simple issues like late payments and inaccurate accounting. Check out our best cash flow management advice below to make sure you stay clear of both of these dangers and more!
While you’re here:
You may require business insurance if you operate a small business with workers or are a self-employed tradesperson.
However, trade insurance is available to any self-employed individual who works in a trade, such as a plumber, electrician, tiler, or builder.
Depending on your needs and those of your firm, a specialised business insurance policy for tradespeople can include various cover options.
You can customize a policy to the unique risks facing your company and add additional coverage levels and forms. You can purchase policies to protect you if you’re working alone or have a team of staff.
1. Request a Down Payment
Asking clients for a deposit before the work starts is one of the simplest strategies to improve cash flow. This will guarantee that customers pay a portion of the payment beforehand and release some money for you to use in other areas of your company. Having some cash flow is always preferable to having none at all. Requesting a down payment reduces the damage that can be caused if clients don’t pay the remainder of the invoice on time.
2. Effective Account Management
A surefire way to stop the growth and cash flow of your company is through ineffective account management. Send invoices out as soon as possible, and make sure to follow up to ensure they are paid on time. Additionally, you can send progress invoices or set up automated reminders. Cash flow can be significantly increased by making sure you are paid on time.
3. Check Your Price.
Your pricing strategy could be restricting your cash flow. Your charges might be a little bit too high if your customers aren’t paying you on time. You should explore your supplier network to see if you can find supplies for less money so that you can cut your prices without losing any revenue rather than simply decreasing them and losing more money.
4. Pursue Better Terms of Payment
By talking to your customers and attempting to negotiate shorter payment terms, you can significantly boost your earnings. While the typical payment time for construction companies is 30 days, if you can shorten it, you’ll be able to get paid sooner without charging your clients more. Cash flow will grow when invoices are paid more quickly, but you can also strive to extend the duration of your contracts with your suppliers. One of the best ways to increase cash flow is to be able to receive money sooner while disbursing money later.
5. Talk to the ATO
The third strategy for boosting cash flow in your trade firm is to bargain with the Australian Taxation Office (ATO). Try to negotiate flexible payment periods. You’ll be able to boost your cash flow once more while reducing the rate at which money leaves your company if you can pay your taxes later (or pay less tax altogether!). Building a professional accounting staff is a terrific approach to take advantage of any potential tax advantages if you don’t want to deal with this alone or if you just don’t have the time.
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