A new way for construction companies to handle cashflow issues
The author Napoleon Hill said that strength and growth come only through continuous effort and struggle. Well, that struggle is tough when growing a construction business.
You have this unique set of cash flow problems that occurs in busy periods, not low periods. And funds tied up in supplies that restrict your ability to pay critical expenses - like salaries, insurance and more.
There’s the subcontractors. The possibility of going over budget. So much to plan. Such little confidence in your finances. We feel your pain.
And then, the big one; customers not paying their invoices on time!
$1T in unpaid invoices
It’s nearly impossible for a construction business to compete without offering long payment terms - often 60 to 90 days - after the work is completed. This standard, which I’m sure you accept grudgingly, is contributing to, what Sage claims, a $1.01T global deficit of unpaid invoices.
SMEs are particularly vulnerable to cashflow problems from late payments. It’s not unusual for a large chunk of an SMEs capacity to be dedicated to a specific client or project, meaning that these invoices are a large proportion of their total income. This results in ongoing fluctuations in cashflow.
So, long payment terms are a competitive advantage. Buyers like the arrangement because they’re able to use the money to grow their own business. The seller wants the money now. And the buyer wants to keep his money longer, while expecting to pay late.
Those receivables might look nice on the balance sheet, but you can't spend them.
While your money is sitting nicely in your customer’s bank account, and you don’t want to push them for it because you want to keep a good relationship, you’re not able to use that money to invest in your own business.
For years and years this was just the way it was. The smaller subcontractor gets the bad end of the deal. The larger company is in control. But now, thanks to recent innovation in fintech, you can access the funds you need to grow your business and give your customers more time to pay.
The fintech future
Fintech companies, like CreditStretcher, mean you can stop acting like a bank.
CreditStretcher gives your customer more time to pay. That all seems normal, right? But what’s different is that while they get longer to pay, CreditStretcher pays you now. Your customers get to keep their payment terms and you get the funds you need to keep growing your business.
If you’re sick of dealing with traditional business finance options that don’t cater to your needs, moving to a fintech finance option like CreditStretcher will free you upto to focus on what you’re best at - running and growing your business. The whole process is automated meaning you can get setup in minutes - and if your customer agrees, you can get funded immediately.
Perhaps if Napoleon Hill had lived through the fintech era he might have said that strength and growth come only through continuous effort and struggle, but it’s made a whole lot easier with the use of technology.