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6 Reasons Why You Should Have an Emergency Savings

If you’ve listened to financial podcasts or read personal money management books, you’ve most likely heard about emergency savings. The idea is simple: you stash away money for unexpected expenses, and you don’t touch it unless you absolutely must.   But it’s .....

Construction - 4 min read

Managing cash flow is one of the biggest challenges facing Australian construction companies. You need a steady stream of capital to fund your work, pay your staff, invest in equipment and grow your business, but roadblocks along the way can have you spinning in your tracks.

 

If this sounds familiar, these seven simple cash flow strategies are for you.

 

1. Process Change Orders Quickly

Change orders are part and parcel in construction, however, they usually feel like surprises and can throw your cash flow out of whack.

 

Implement systems to process change orders quickly. Faster processing leads to more immediate payment and fewer risks to your cash flow. If necessary, give your project managers the power to process changes from the field.

 

2. Spread Out Your Costs

Except when you can secure a discount for paying in cash, consider the option to finance your materials and equipment. Spreading out your costs can make it easier to forecast your expenses, giving you more cash to pay for your daily operations.

 

3. Evaluate Your Internal Systems

A construction company’s cash flow can resemble a roller coaster at times. Without effective financial systems in place, you can quickly lose track of balances and projections, leading to further headaches down the road.

 

Ask yourself, does your current accounting system allow you to get an accurate snapshot at any given time? How is your project management doing? Can you ascertain the status of various projects without having to get on the phone and ask for updates from multiple people?

 

4. Improve Your Billing Methods

Underbillings sabotage the cash flow of too many Australian construction companies, but can be avoided by getting documentation from the field quickly and tracking billing carefully.

 

We can help you to establish the procedures for gathering timely payments and steadier cash flow. By working toward this goal from multiple angles, you’ll enjoy more predictability and steadiness in your finances.

 

5. Forecast Your Tax Commitments

Tax planning can eliminate unpleasant surprises that derail your cash flow, and allow you to use strategies like deferring tax payments to finish large projects or invest in required capital.

 

By outsourcing this aspect of your business, you can take advantage of the expertise that keeps you compliant, even when tax laws and regulations change. You’ll also never miss a tax payment, thus avoiding fines that can cut into your available finances.

 

6. Project Your Future Cash Flow

The cash requirements of construction companies can change from week to week, but with proper management, you know when you’re going to have to place large orders for materials and when you can expect payments for phase completions.

 

Cash flow projections will help you to keep an eye on future obligations, allowing you to delay purchases and payments when that money is required.

 

7. Outsource Your Finance

If you’ve struggled with adequate cash flow, consider outsourcing your finance to experts with in-depth knowledge of the construction industry. Focus on what you do best, and leave the time-consuming financial tasks to us. We can manage your commitments, provide accurate reports and help you with future projections and planning. Reach out to us at Altus to learn more.

 

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