Maximizing cash flow with faster payment options
Cash flow is about timing. A profitable month can still leave you short if the jobs are finished but not yet paid. For a contractor, maximizing cash flow mostly means shortening the time between buying materials, doing the work and getting paid for it.
By Business Genie, Mesa, Arizona
Published · Updated
Sample job · job done · invoice sent
Where the money waits
In most service businesses, cash waits in three places: materials bought before the job, finished work that hasn’t been invoiced, and invoices that were sent but haven’t been paid. Each has its own fix. Take last month’s jobs and note, for each one, how many days passed between the first dollar going out and the last dollar coming in. Start with the longest gaps.
The longest wait is invoiced, not paid. Start there: follow up on every unpaid invoice, and accept the payment methods customers use.
Take a deposit before you buy materials
Works on wait 1 · Materials bought, job not done
When a job needs materials up front, a deposit means the customer pays for them, not you. Put the deposit on the estimate, so the customer approves the price and pays the deposit in one step. Estimates and proposals in Business Genie can carry a deposit. See estimates and proposals.
Invoice on the day of the job
Works on wait 2 · Job done, not invoiced
Work that hasn’t been invoiced can’t be paid. If invoices get written at the end of the week, every job waits days before the customer even sees a bill. Send the invoice from the phone when the work is done. The online invoicing guide covers what goes on it.
Accept the payment methods customers use
Works on wait 3 · Invoiced, not paid
A customer who can pay with a tap usually pays sooner than one who has to find a checkbook. A Business Genie invoice can be paid by card, Apple Pay, PayPal, Venmo or Cash App, and the customer picks the method. See payment options.
Follow up on every unpaid invoice
Works on wait 3 · Invoiced, not paid
Most overdue invoices aren’t refused. They’re forgotten. Follow up the same way every time: a reminder a few days after the invoice goes out, another on the due date, and a phone call after that. Business Genie’s automated follow-ups send the reminders for you.
- A few days after the invoice goes outA reminder, sent by the automated follow-ups
- On the due dateAnother reminder, sent the same way
- After thatA phone call, from you
Look at two numbers every week
Two numbers tell you most of what you need: what customers owe you now, and what you have to pay out in the next few weeks, such as payroll, supplier accounts, truck payments and insurance. Check both at the same time each week. If what’s coming in won’t cover what’s going out, you find out while there is still time to chase invoices or delay a purchase. Over a longer stretch, job costing shows which jobs made money once labor and materials were counted.
What’s coming in won’t cover what’s going out. You know now, while there is still time to chase invoices or delay a purchase.
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Plan for the slow months
Maintenance agreements are the usual way to plan for the slow months. Most trades are seasonal, and an agreement brings in work during the quiet months and keeps customers coming back.
The recurring maintenance plan guide shows how to price one from your own costs.
Get paid sooner for the work you already do
Deposits on estimates, invoices sent from the job, and payment by card, Apple Pay, PayPal, Venmo or Cash App. Free for a month.