10 Steps to Take Control of Cash Flow to Stay in the Black

If your business has unhealthy cash flow, you constantly need to delay payments—antagonizing your subs and suppliers—and you typically end up paying interest on cash (by drawing on your line of credit or, far worse, your credit card). On the other hand, a healthy cash flow means you can keep up with your bills and stay on good terms with your subs and suppliers, as well as take advantage of date-driven discounts.

Here are 10 ways to keep your business in the black:

Fund projects with customer's money

This seems so obvious, but at least once a week I discover yet another contractor funding his customer's projects. The strategies are somewhat different depending on whether the job is a contract price or T&M; the first three tips relate to contract pricing, while the fourth applies to T&M.

1. Get an initial payment at contract signing. Even though it may feel like you haven't spent any money yet, you will certainly be spending it before the job starts. You will be planning and perhaps preordering, and even if these tasks are treated as overhead in your company, you're still investing money in the project. It's easy to sell this deposit as a good-faith payment to hold the customer's place in your schedule. Be aware that some states regulate the amount that can be requested for a deposit.

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