One Huge Mistake Contractors Can’t Afford To Make
Posted May 18th, 2018
A common commercial construction billing mistake companies tend to make is to delay submitting an invoice or pay application for the work completed during slow months. Construction companies, in most situations, have work schedules that ebb and flow as their jobs progress. Busy and slow months are inevitable. Federal holidays and poor weather conditions often result in slow months in November, December and January. Sudden and unforeseen holdups are caused by other subcontractors on a job or something as straightforward as a delivery delay or permit problem.
When these problems arise and the contractor gets less work done on a job than they had expected, they can not bill for as much during that period. So rather than billing for the work, they will roll that small bill into the next month’s invoice.
Here are 5 reasons you should always bill for your work, no matter the size of the invoice:
Regular invoicing ensures that checks continue to flow in from your client.
Payment delays in the construction industry are a persistent problem. If you want to be paid consistently and on time, you need to be billing consistently and on time. This removes confusion that could occur with the general contractor.
Delaying commercial construction billing also delays invoice approval.
Double paying a contractor is a major concern for property owners and general contractors. Skipping some months and rolling them into one large bill often results in more scrutiny from the general contractor or project owner, slowing down the approval and payment process.
Keep your contract rights in order with scheduled billing.
Depending on the state, not submitting a pay application can result in a loss of your lien rights, or other contractual obligations.
Interruptions in receivables impacts cash flow.
No matter how insignificant a pay application may seem, incoming receivables can be used to pay job costs or operating expenses. Also, if you are working on multiple jobs those dollars can add up to more than expected. After all, your fixed overhead expenses don’t go away.
Delays in billing put more of your receivables at risk of non-payment.
Delaying billing leaves more of your needed capital on the line if a worst case scenario arises, such as the project falling through.
Mobilization Funding can help you avoid stretching your resources too thin. Our a unique lending program can help your company better manage its cash flow throughout the ups and downs of a job. You can learn more by checking out About Construction Loans, or contact us to get started.
4 Signs You Need to Hire an Accountant For Your Commercial Construction Business