Cash flow management in construction

Cash flow management in construction: smart ways to improve payments and avoid bottlenecks

Cash flow bottlenecks are a threat to any construction business. Project schedules are tighter than ever and payment delays can cause a slowdown on site. No matter well planned your project is, a delay of even a few weeks can mean the financial health of your company is put at risk.

Minimising that potential financial strain relies of making use of smart cash flow management in construction to improve payments and cut bottlenecks out of the process altogether. This blog contains insights and practical advice for doing that successfully.

Accelerated invoicing

Inefficient invoicing and late payments from clients are two of the biggest risk factors in construction. In harder economic times, many companies are only one late invoice away from insolvency. Failure to get client payments in on time is commonly cited as a reason for firms in the sector going bust.

By using smart financial software, you can ensure you never send out an invoice late again, and never miss out on essential payments. You can easily identify which project contracts are due for billing, then prepare and quickly process invoices at scale while maintaining billing accuracy.

You can also use the power of data to adjust your invoicing on a client-by-client basis. If someone always needs chasing, you can adjust your invoicing process so they receive theirs earlier in the process. If a customer always pays on time, you might give their work preference in future or be able to send an invoice at a later stage with confidence.

Active management of the invoicing process using software support is a key way to maintain cash flow into your business.

Automatic chasing and accountability

The benefits of using software to enhance your invoicing and payment process don’t stop once the invoice is out. Your accounting software will automatically issue reminders once a payment is overdue so that you be confident your cash flow is not falling behind due to administrative errors.

Automating this process is an easy way of maintaining your cash flow by improving your processes. At the same time, it offers the additional benefit of reducing your team’s administration workload so that they can concentrate on other areas of the business and multiply the benefit offered by financial software even further.

Improved payments

The other side of cash flow management is making sure that you are meeting your obligations to suppliers. If you don’t pay subcontractors on time, this might delay progress on the project, in turn delaying future payment and completion milestones. Similarly, you will have CIS, VAT and other obligatory payments that need to be made by certain deadlines in order to continue operating as a business.

In all cases, automated financial software means you will never miss a payment deadline. It’s a key part of the proactive financial management process that stops costs escalating unnecessarily and harming your financial resilience.

Maintaining cash flow with smart software solutions

Improving your payment system to avoid bottlenecks and maintain cash flow is vital for all construction companies in the current climate. It’s also an area of the business which can benefit instantly from the introduction of software.

By automating invoicing, chasing and payments, you can improve your cash flow management in construction and reduce your workload at the same time. The 4PS Construct ERP software system deals with everything on your behalf and makes your business more financially resilient straight away.

Contact our team to learn more about our software system and how it can help you maintain cash flow today. We’ll be happy to give you a no-obligation consultation.

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