Deal flow management software for Construction Industry

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thank you everyone for joining us today um my name is autumn sullivan i'm the marketing director at mobilization funding and i'm so excited to bring you um these three cash flow experts we're going to talk about cash flow management and construction i have scott peeper the ceo of mobilization funding i have lori drake who is the community manager of payment professionals from level set and suzanne cox who is a partner at salt marsh cleveland and guns and um scott will be leading the conversation they have a list of topics but if you have a specific question you want to ask please drop it in the q a and i will make sure they get that and without further ado i'm going to go behind the curtain hide my screen and monitor our linkedin conversations in our chat you guys have a great conversation thank you very much ottoman welcome everybody lori and suzanne i really appreciate you guys joining me and going through this topic i know the three of us are very impassioned by cash flow specifically for construction how people get paid when they get paid how we can make it better how we can fix it and i think each of us have a shared perspective but also comes from different ends of that cash flow waterfall spectrum so i find it really interesting and exciting to be able to go through that with you guys and kind of i think the genesis of how we all landed on this spot together from where we came from with these clients i think is going to be really impactful and beneficial to the collective audience so jumping right into it first and foremost thank you for joining me i'm glad to be here thank you all right jumping into it i want to talk about basically the flow of cash in and out of a construction business and how it's a little bit different than many other industries cash flows and what i mean by that is every business has i like to call a revenue cycle you get in order to do work today and ultimately you either perform that work you make a product or a service and then you invoice it and you get paid to me that's the revenue cycle and then there's cash needs all along the way just for that specific um opportunity of revenue and then that has to marry up to the cash flow needs of your overall business but specific to construction there's some unique things about that that are very different for than other industries and so suzanne can you just sh can you share what experience has been like working with contractors in your role as a cpa and what you do to help manage contractors cash flow and i might have a follow-up question or two after that sure so i'm i'm making a wild assumption that we have some contractors on on the phone here see you guys probably already know why cash flow is a challenge so i won't back up and talk about why but obviously there's this time period between you know when you may have mobilization costs and you've got labor costs and supply costs and all of these costs and they're rolling in the door and you may not get paid for 60 to 90 days you know depending on who your customers are so you've got this very long wait time in between when the services are performed and when you get paid unlike say a restaurant who also has the same thing supplies people etc etc but the minute you give that service you're getting paid you know there's no 90-day uh wait time to pay for your meal that you just had you know so there's obviously a huge challenge of that um i would say that i i have some contractors that have desperate cash flow needs and then i've got contractors that are sitting pretty nice and it depends i'll tell you on a few things what kind of construction they do who they work for who their customers are if they're working for the government perhaps they're getting paid really timely and they're submitting on you know line and they get paid in eft in a couple days but that's not going to be your most of your you know contractors out there so it does depend on what type of construction you're in you know who your clients are how well you manage your you know your business and i'm i'm not sure if you asked me part of that but you know my my contractors that are paying close attention to cash flow they've got a dashboard they're constantly monitoring what their ar turnover is and what that means is how quickly they get paid so they send a bill and that time in between when they send that bill and when they collect the cash is is essentially a turnover rate and so the people that are monitoring their collections and their turnover very closely and they're monitoring their payables you know how soon they're paying people and uh can they negotiate better terms both on the front side and the back side the contractors that are very focused on those are obviously usually in a better you know cash position the ones that are just winging it and i i say that um because a lot of people do when times are good and there's a lot of work um some of these like accounting boring you know boring accounting details they tend to get pushed to the back burner and so the contractor is you know not really focused on that they're about going out making money getting new work and getting it done and they're very focused on the production side of their business and maybe not so much on the on the boring accounting side of their business so that's when i you know come in and help from a you know let's do a cash flow forecast let's talk about a budget you know let's get things in order in your house so that you can go out and have the infrastructure to take on more work and and that sort of thing did that cover what you're looking for i think so yeah lori you know what you have an interesting perspective you know prior to the role that you serve now at level set you were a credit manager for a supplier working directly with construction subcontractors general contractors and they're they're purchasing can you give us some insight into what you saw in that aspect of your life and how you manage that from a supplier perspective absolutely so it's always been a big issue like you said i was a credit manager for over 20 years in construction and obviously we work on the past due account that's our big focus and typically those are the ones that have the cash flow issues we found that one one of two things was always the case they either had strong cash flow but they didn't have any profit or they had a bad cash flow with a lot of profit and unfortunately that usually means that they are making so much excuse me it means that they are not covering their liabilities because their profit margins and earnings are not coming in high enough it could happen because they're not budgeting for retainage they may have a high dso they're not collecting on their accounts and kind of closing that past due gap they might not be projecting their cost estimates and progress payment billings and there's a lot of different ways they can do that but we definitely find the ones that we were typically working with they had the bad cash flow because they were just trying to get the profit in there they may be trying to pay their bills to get that ten percent discount or one percent discount within 10 days with some other suppliers they're just not managing the money like they're supposed to be managing we had a lot that were trying to pay us in terms well they weren't paid yet so the not paid paid pay when pay paid not paid that it has a big effect on contractors especially you know the ones that are working out the back of this truck you know they may not have the big office and the other resources that they could use so managing that cash flow was definitely something that we tried to help them out with so so question of both of you guys do you think the average contractor that you work with i guess in any phase regardless of the size of their business do you think they understand cash flow and the management of it and how to use it as an effective tool i mean i know they all understand cash flow in my in my opinion i don't know if they understand and i'm curious what your thoughts as to what the power of it is when you when you when you actually can control it and understand it what you can do with it i guess same question to you what is your opinion on that in my opinion i don't think that they do i i mean a lot of people start construction businesses they're the labor side you know they don't really know how to do the business side and then they hope to hire somebody that does have that experience or knowledge but not understanding the cash flow side of it i mean they may get a bunch of jobs and they don't have payroll to pay somebody to work on those jobs so those jobs just sit out there they can't grow if they don't have the cash flow coming in to pay the labor to buy the materials i mean it's kind of a vicious cycle and unfortunately if they keep getting these jobs and not getting the labor and materials to get out there they're kind of going to go in more debt it's kind of that same old sale where it's not a sale until it's paid i honestly i just don't think that a lot of them know how to manage that i know we'll talk later on different policies but there are ways you know that even their credit manager or supplier can help them you just got to ask for that help and they can kind of walk through what's going on in their company currently and try to make some changes on where they see that it could improve suzanne do you have anything to add you'd add to that yeah sure so that we uh of course are issuing tax returns and financial statements and the first question i get when anybody gets a financial statement is on the cash flow page and uh of course there's a difference between accounting cash flow and perhaps what we're discussing here you know cash flow forecasting and things like that but that's always the first question they're like i have more cash than that i definitely made more cash than that and they they're not sure what you know the inflows are and the outflows are so it of course is a top top concern for contractors to to understand what that page and all those numbers mean and so it's really nice to work with them to be able to simplify it and say okay here's you know cash inflows from receipts of ar and from debt you know if you're getting inflows of cash and then here's your outflows and you know breaking it down and showing them where their cash is coming in and out i would say our contractors that are maybe a little bit bigger and have an in-house person that has an accounting background or doing a little better in this area um our smaller contractors that aren't you know spending money on the accounting again the back room you know processing uh infrastructure type things if that's not a focus or priority um then you you do see that um suffer in their numbers you see that suffer in their profitability you see the suffrage in their cash flow um it's it's pretty obvious which contractors have spent money to pay attention to these things and which ones have it so it's interesting one of the things i would love about doing these webinars is i've watched lots of webinars and i think that a lot of webinars can point out all the problems but they never offer any solutions and one of the focuses that we always have and what i appreciate about both of you and what you do individually but also whenever we're working collectively is you always have a solution i've talked to many cpas accounting firms or even just cfos that are either employed by a business or they're an owner of a business or sometimes even like your largest fractional cfo organization where you make they're a cfo for hire there's one thing that always resonated with me that unanimously they all say is like the first or immediate second thing that they do when they enter in a business is a 13-week cash flow forecast and anytime i bring that up you guys are not in your head anytime i bring that up in a close relationship with our one of our clients probably 80 percent of the time they say scott what is a 13 week cash flow forecast you know they might whisper it to me on the side and so can can you guys one tell me if that's your also my opinion or my perspective is do you share that and and two can can you explain what a 13-week cash flow is and why that is the first thing you would do before you do anything else when you jump if you were to jump into a business to try to help sure i oh lori were you about to go to bed so uh we do fractional cfo work um and we have a team for that so i'm i'm not always the one the one diving into that specific uh need but the reason is again back to like how is this business going to stay afloat you know how are they going to stay in business that's one of the first things we analyze from a risk perspective as as you know cpa we analyze risk uh so we're coming in they're going okay well is this business gonna be able to make it you know three months or six months you know what's their long-term sustainability um and you know of course we do a lot of valuation work and that's one of the ways you value a company is based on their cash flow so it's one of the most important things for our company to know even if it's just a basic just basic knowledge of what's coming in and what's coming out and you know what what is my forecast for the for the next um you know like you said 13 weeks so it's just important to understand how the business runs you know how do you make money and what's the viability of you existing past 13 weeks yeah yeah and i think we're on different sides of it when i used to work in the credit side suzanne when i worked with the companies the first thing we did was look at their financial statements like you said cash flow page which usually didn't really exist but the biggest issue that we always found was that they didn't have a credit policy in place or they weren't enforcing the one they had and like you said the credit policy is what assesses the risk and lets them know what risks they can take and what risks they can't take so we would work with them not on the 13 plan thing but we would work on setting up the credit policy just to you know know when they should invoice timely you know when they should deal with waivers contracts in writing there's just a lot of different specific things that once they're focused on it it would help that cash flow side a lot better yeah you know and to add um what i look at is a cash flow 13. what it really does for for a contracting business is when you're when you know you have receivables of 100 000 200 000 or 150 or you're going to invoice x amount each month which the funniest part about the construction world is though the business owners instruction world know an amazing amount of detail about their business they can tell you who all their customers are how much is getting invoiced to them what they're estimated to be invoice them there's a tremendous amount of detail broken down into three four five six major categories on a job it's it's just never has all the infrastructure been put together to marry up to it but when it is those contractors with all the knowledge they have are able to make such good a good decision so to explain to the audience in my viewpoint what a cash flow a 13-week cash flow does for you is it tells you basically where your sources of cash are coming from when those sources are expected to come which is in which are inputs that you would provide and then more importantly what the cash flows the uh the cash flow sheet is going to do is then tell you how you can use that cash and when you can use it you might not be able to use that hundred thousand dollars exactly the way you want but when you look at it over a 13-week period it gives you a chance to forecast at least four five six weeks in advance and also look back four five six weeks so you can see exactly what you have going on so you know when you get this specific hundred thousand dollar check-in exactly how you can use that and exactly how much cash you need to leave out of that so you're not in you might be in panic mode one week but you're not going to be in panic mode every week on every monday trying to figure it out it eventually will become a problem that you're solving you might have panic today but as that money comes in if it's used appropriately and it's managed in this way you will not have a panicked monday or a panicked month you'll eventually smooth itself out that's what it will do for you well and i think part of that to add is you know management of your cash flow which a lot of people underestimate how much control they may have over the management of the cash flow so if you're doing a 13-week projection and you can see hey i'm gonna get paid in this week but the expenses are due in this week you know is there a possibility you could call that vendor and say hey you know i need a two-week um you know grace period you know this this month because i'm i'm running a little bit behind you know ask um talk to your you know suppliers and your vendors and have open conversations with them or you know scott what do you do for a living you know look into some you know quit you know financing alternatives to maybe traditional debt or there's a lot of options and that again goes back to managing your cash flow so i think it's really important that you not just do the projection but then you do something with it oh you're right and when we decide to make loans we it's exactly what we do we build out a cash flow forecast for that specific project or groups of projects so we can see where the sources of cash are for when it's needed and then how we're going to use those sources of cash all the way along and we use the exact same information that you would put in to a 13 cash flow for the overall business so seeing that i was just going to say i think that's a big deal too you were saying that you do the cash flow for the job a lot of issues that contractors are having as well is they may not have enough money for one job so they take it from another job and put it into that job so i mean it just messes it up across the board and that's a really bad cycle to get into it can be very dangerous you know and that's a great segue to my next question for you guys you guys are so we didn't plan that at all i don't know how you came up with that but my question is we all obviously you hit the nail on the head we know that cash flow can impact the performance on a job pretty significantly what are some of the ways that each of you have seen with your experience and clients on exactly what has happened when cash flow isn't managed what shows up what other problems or issues show up well like i was saying on the jobs if you can't afford the labor to put out on the job then you're obviously not going to be able to meet your deadlines if you can't pay your bills you may not be able to get the material out there in time for when you need it especially you know right now when it's so far delayed even getting material out there um you see a lot of notices get sent out you see liens possibly filed it's kind of your reputation if you don't have a good cash flow you're gonna unfortunately wind up with a reputation of they can't pay their bills or they can't manage their money so unfortunately like i said i always saw the bad side of it i never saw the positive side of it but i mean knowing that jobs have different parts of them they can change orders they have progress billings if you can't manage any of that stuff it's just going to throw everything up in the air i was going to say the same is that i think it's more long-term than short-term effects so the long-term effect is you have vendors that will no longer you know be your vendor because they're not going to get paid you have you know customers that don't want to work with you because you clearly can't run and you know manage your business so um that it's just long-term reputation is the biggest effect that i see is that if you are especially a new contractor and you want to establish that you know what you're doing and establish yourself in the market as a true player then you need to have your ducks in a row before you go out because you will get a bad reputation and people will not want to work with you specific to companies that are trying to grow or are growing how have you seen cash flow become an obstacle in front of them to grow so obviously you've pointed out some things related to vendors if you can't keep maintaining gender relationships but a lot of companies sometimes they might have hovered at a good level they have a good amount of cash and they get they get a good feeling and and justifiably sell so they step up and start taking on a different project or a bigger project and they the same offense from a cash flow perspective and management of that cash flow that's always worked for them what shows up now and how how does that lack of cash flow infrastructure so to speak where does that show up as a business is trying to grow so i think we haven't you know touched on it yet but um construction in in most areas of construction you're going to require bonds and so there's also this this topic we you know need to address here is the ability to acquire bonds so if you do not have a plan you know if you don't have financing in place if you don't have an open credit line if you don't have six months of backlog to cover your expenses you know all of these things is going to affect your ability to get bonded so it's gonna affect your ability to get work so like you you know you mentioned you know hey they're on this job and they're borrowing from this job to do this other job at some point in time the bonding company is going to hold their hand up and be like yeah we're not bonding you for any more jobs because you you know you're clearly not managing your cash flow and we don't want to get hit at the end of this train you know train wreck um so i think that's a big thing that we haven't really discussed yet you know is your ability to be to be bondable yeah i would think the bonds is a huge deal as well but even you know some states don't require it but even getting your licensing you're getting your insurance you know workers comp any of that stuff you know if they don't see what they want to see when they you submit your application and turn in all your financials and that you're going to have issues getting all of that stuff and i think it's on the same line of things but like if you don't watch your contracts i mean if you do the pay when paid or the paid if paid and you're not managing that because you know you're kind of shooting yourself in the foot saying that hey you don't i'm you don't have to pay me until you get around to it you're not going to have any of that cash coming in to mess around with so it's going to affect you a lot yeah lori when you were in the credit markets or or and maybe suzanne to you as well has have you ever seen the reverse of this where you have a client who has very aggressive very organized cash flow management they have very detailed reports and they and with that also came a comfort level for them to they know them and they use them and then they use those as tools to either get credit they otherwise might not have or get jobs or other ways in some ways they've used those tools to get more work or grow or get credit they might not have gotten before do you have any stories or proactive things that customers did do with that i kind of look at that as our no notice list we have certain customers you know they're big customers or they have great reputations you know we just do a lot of work with them so you just extend and you extend all this credit and you don't notice them because you made that agreement with them and then as a supplier you run out of all the funds from any of those and you don't have any right to get them back so i think that they can put their self out there too far maybe and not have any repercussions for it because you gave up your lien rights so they there's no like pressure to make them pay on time to me it would just kind of throw them off track there i do probably have a specific example of a client back in the the first downturn of the economy uh in recent years uh back in the 09 10 you know area area seemed like contractors got hit a little bit later so it might have been in the 11 12 time frame that i'm speaking of but i had a contractor that was very very tight on on cash flow and they were to the point of like hey we may need to like close our doors because we we can't make it happen so um we advise them to go look for alternative financing so we're like look just you know even if the interest rates are crazy at this point like you've got to get something you've got to get anything to you know get back on your feet you know get get something in a room not long-term but you know just something interim to keep them afloat and they did they were able to find um some short-term financing that was you know like a year it was highly aggressive interest rate and i don't always suggest that but it just happened to be you know at a pinch point and it made sense and and it was a good decision and they made it through they got the short-term financing they were able to finish the jobs they were able to pay their suppliers and they were able to you know keep going so i think to answer your question is yes i probably have more than one example of a contractor with that availability to get cash has been able to you know continue his business where if he didn't even have the ability to get that you know extra you know cash he wouldn't have been able to take on any more work so the contractors that are positioning themselves in the market to have some excess cash or the ability to get excess cash are the ones that are able to capitalize on having that available capital to take on jobs you know that's part of when you're assessing the risk of should i take on this work you have to assess well you know what's my cash flow can i take on this additional work can i hire these extra people and pay these suppliers to get on site and start doing this work if you don't have cash available you may don't you you know you may turn down that work and so cash up front and hand handy cash you know available cash is going to let contractors capitalize and and maybe take work that other contractors can't because they don't have financing available or a line of credit or something like that no i'll add when i was doing the credit and all that i had never even heard of like your company funding options that are out there now i think contractors now have a lot more opportunities to get that cash flow flowing or at least to get the help for it and to be taught how to deal with it to where they can take on more jobs they can pay their bills i think it's a nice thing to have not to you know sell you here but you know what your company does puts a lot of help out there have you guys seen that one thank you very much i appreciate appreciate you saying that but have you guys also have you seen companies use those financial reports to gain new customers or maybe win a job that they might not have won before or in your case like win credit that you wouldn't have given to them that they didn't come in and say hey look this is why i need it i'm i'm running my business like this kind of sorta maybe a lot of our credit was extended based on whatever the job was not really the customer i mean even if the customer has bad cash flow or they don't pay their bills we always have those lien rights to go on to the gc or then go on to the owner so not really it's just whatever the job is if we determine that it was a good job you know then we would fund that what about you suzanne do you have clients that come to you maybe they ask for a capabilities letter or a financial stamp of approval that they can use sort of in their their brag book to kind of win an award or to show a customer of theirs an owner developer general contractor hey you give me the contract you know here's my sort of stamp of approval we can't actually issue those no no really yeah so we get asked a lot um we get asked for financial viability i think was your term that you just used um we're actually precluded from from issuing that that's an opinion that we can't make without doing a formal you know evaluation of the company and a formal engagement um so we don't actually issue financial viability letters um although i do get asked a lot um what has to stand alone is is really your your financials whether they're you know compiled reviewed or audited um or you know again a formal you know projection or cash flow analysis or something like that but we can't just send a letter without doing any subsequent work to support that opinion um for our own risk reasons obviously yeah no that makes sense well you know what we've done at mobilization funding early on i got some advice to always audit our financials so we do a full financial audit of our financials um and at first it felt like an extra expense and i couldn't really understand why we were doing it i mean i knew why but it didn't it didn't feel like it me you're the typical client exactly i i i tell all of our clients all the time like i am exactly the same as you there i've been dragged into all the things i've done so i'm just now part of helping people drag along so i can at least say what it feels like on the other side and you know what what happened what i realized is when i did as the business grew and i did need to go get more capital for which we used to make loans it was a lot easier when i sat down with an individual with audited financials and certainly when we went to the bank who basically thought we were insane bank is like here bank was like you know there's no chance why would we ever make loans to you scott so that you can make loans to people we would never make loans to and you know having audited financials that they could trust and verify that basically just eliminates their questions often i mean they're going to have questions but they don't it doesn't they're not trying to figure out if you're lying or not or if you're you know that's an extreme word they don't think you're lying per se but they don't know if they can trust it when you want a third party assurance you know it's totally reasonable their their risk is at a certain level and from our standpoint you know bonding companies and banks are some of our obviously biggest referral sources because they need those things to to do their work um so it depends on what level they need so if you need a large line of credit or a large term loan or something that may require an audit if it's a smaller line of credit or smaller terminal then you they may be able to get away with a review or a compilation and those are three different levels of our assurance that we put on that but the audit is the gold standard you know or platinum um you know that says hey this is that we did the most work for this one um and obviously our risk is the highest there as well because we're opining saying that yeah these people their financial statements are not materially misstated you know you know it's kind of funny we assume that everybody has financial statements but when you're extending credit 90 of people don't have them and if you can actually get financial statements from somebody you actually do award them more credit you treat them back because they actually you know you know that it's putting orders when they're paying attention to their house you know back to the house comment they're paying attention they're managing their house and and they're getting themselves positioned um and you know in this market uh it's very hot right now obviously for transactions and we notice that a lot in transactions is somebody will get a deal on the table and they haven't had an audit or any sort of assurance from an outside you know person and now all of a sudden they've got caught with their pants down and they're scrambling and rushing you know trying to get due diligence work and financials prepared and all of these things and so you know part of that is getting your house in order you know having these financial statements ready and the cash flow projections ready because when someone comes knocking and right now there's a lot of people knocking you know you're going to be like bam here's my folder you know and i'm ready so it's just good business i mean one of the things we talked about that just just to your point lori and suzanne is when we get those financials we care what they said but what we really wanted to see first and foremost is does the does like does the company owner care enough to get that monthly score card like do you really do you care if you really care you want to know how you're doing and how you're doing as a business is your financials that's how you that's your score card in a business world at least in my opinion the lack of that certainly can demonstrate to someone regardless of the size of your business it demonstrates that it doesn't mean you don't care but it does mean that you only care to a certain degree and if you're trying to lend money to someone or you're looking for someone to lend you money and trust you and care about what your business is and partner with you it's a really key important thing and when you're working with your suppliers they're lending you money extending credit is no different than giving you cash they want you to be paid back sure they have lean rights and sure they have other things but at the end of the day they're trying to run a business too and they're trying to find the right people to partner with so it is important and i'm sort of letting people know a little bit of the secrets behind what we do and why we look at it preach scots it's important to look at that but um so important one other thing is cash flow management one of the key things that is getting paid on time and lori do you guys have tips at level set that you recommend for every contractor to do to basically ensure their timely payments absolutely so you definitely want to make sure you invoice timely i mean that's going to be your biggest thing with a lot of gcs they also have specific pay applications that you have to submit so you want to make sure you understand how and what you're billing for otherwise it's just not even going to matter you're not going to get paid you want to protect your lien rights even on your jc a lot of people get scared they won't think that they won't get any more jobs if they like send a notice on their gc or something it is so common in construction people just you know goes in one ear out the other so protect your rights you never know what's going to happen uh we say to definitely send reminders you know if they're not paying in time uh like susan said you can call your supplier ask for a little more leeway on that like i mentioned the contracts definitely make sure you do not sign any pay when paid or pay if paid contracts you i mean you don't want that uh risk put on yourself um we also just uh sorry i lost my place there but now i'll pick up this you know maybe you touched on there is um your contract negotiation is really big a lot of contractors feel like their hands are tied and they have no you know ability to negotiate their contract but when you start a relationship with someone new you need to be very transparent about hey this is you know these are the deals that i think would be mutually beneficial don't just take it you know if a gc is saying hey you know this is how we do business ask you know ask and maybe maybe ultimately they say no that's fine but you know be very transparent about what your needs are as a subcontractor as well i think communication is is really key and i know some of those conversations can be very difficult to have but um they're so worth it in the long run absolutely a lot of those contracts they'll even throw the indemnification clauses in there i mean you definitely want to make sure you're looking through it and make edits you know have something initial it off and just have them make changes yes most people don't say anything so that you know they don't they're just like oh i better do whatever they tell me and yeah um that's not always true i i think that's a mis uh a myth yeah we we actually did a webinar on that topic um we have an attorney that we worked pretty closely with and they went through basically there are five or six things that you can negotiate in a construction contract as a subcontractor to a general contractor that are just key three four things that are usually pretty negotiable most general contracts will accept um but they can make a huge difference when it comes to indemnification payment um and the key real important things to help you within the in the event of a disaster or a bad situation prevent you from being the only person that gets hurt and you can go to that webinar right on our youtube channel and find that is posted but it's great they lay out the five six main areas and tell you exactly what you can negotiate you know for a couple hundred bucks you can have those sections redlined by an attorney and in the front end and it will save you tens of thousands of dollars or more um i'm back and give you a little let me add one more thing to that last um maybe question is lori brought it up is you know friendly reminders to to get paid you know uh one of the things we do which is why i'll tell you no one likes audits because we come in and ask a bunch of hard questions that they don't have answers to and uh when you know you're asking things like hey who's your collections person do you have a person that's assigned with collections you have someone calling and they are like hmm i don't think so let me check with my accounting department and no that's increasingly no yeah no it's amazing how many contractors do not have anybody calling for their payments maybe not they're gonna pay for it yeah they feel like that would be inappropriate or they're too pushy or they're very scared you know they're scared of it and and don't let fear drive your business you know that that should not be driving your business and so when we ask this question almost 98 of the time it's it's no we don't have anyone doing collections or they'll say oh the project manager is in charge of that so then we call the project manager and they're like oh yeah i don't do that you know and so there's nothing wrong with asking for payment especially if someone has passed due you know so that's just good again good business uh structure is to have someone that's in charge of paying attention to your collection rate and you know calling people and saying hey friendly reminder you're passed through 25 days well that's how you find out too if your invoice wasn't accepted you know maybe right because it may have been declined and you didn't even know it and that's you know part of the you you mentioned also lori was you know some people have very specific pay ups that they require to be filled out to the you know the decimal in perfection and if there's one thing wrong with it or they just don't really like the font it's in they'll decline it yeah and so if you don't have somebody following up on those pay apps you your invoice could just be sitting there and you think oh they're not paying us because they think our work was crappy but really they're not paying you because they thought your font was bad you know so you need to make those calls and understand why you're not getting paid two other things on the contract side of things with the invoicing is you have to watch the billing dates as well a lot of contractors will have like the 15th cutoff or the 20th cut off if you don't get your invoice in before that time they're going to push it off to the next one and then also retain it you really got to watch your contracts of when retained it's easy to hold it out of your drawers that's fine but to find out when you're going to get paid retainage is that when you're done with the job is that when the job is totally complete is it when somebody buys the property i mean you definitely want to make sure because otherwise that money is just sitting out there and you can't count on it for anything absolutely good point and you know if know what you're know in reality what how many days it actually takes for your business to get paid because if you think it's 30 days or that's the terms in your contract but you're really not you're 35 or you're 45 planning you're that impact that has a dramatic impact on your cash flow yeah and showing that maybe you can't pull your cash flow forward maybe your customer is going to pay you in 45 even though you are contracted for 30. but you can make those adjustments and modifications to planning and helping yourself so you're not in that weekly or daily or monthly stress of cash and managing it so the other thing is be really honest with yourself do the work don't just look at the terms that you have but look at what is in reality you are is actually happening and you are getting paid because a lot of times it's net 30 after inspection and maybe the inspection takes an extra six days so it's really 36 days from when you submitted the invoice i mean there's a lot of things but just be really really really hone in on that and lock in that real number that when you're doing your planning i can tell you on that same note is there is a lot of contractors out there that won't pay until you call and ask for it because they get interest on that money as long as they have it their money there you go you gotta watch that well guys is there any questions that i should have asked you that i did not maybe not questions but just a maybe additional comment on um you know it was maybe a few questions ago if you have bank covenants or you know financial ratios that you need to meet for whatever financing you have or you know uh for bonding or anything like that so you're paying attention to those before you fail them is always a good policy yeah so if you do have cash flow metrics that you need to be aware of i cannot stress how many times i have met with a client and said hey um what are your you know does your loan have any covenants and they're like no no i don't have any and then i open up their loan document and there's like seven you know and i'm like well um i think you missed this page um so let's go over them and usually they're cash based you know they and and that's you know service coverage and debt to equity and all these other fun you know uh covenants and so if you're on this call right now and you haven't looked at your debt covenants you may want to take a peek at those because they may relate to cash flow or when you're closing new financing you know make sure that you're asking what are my covenants what are my responsibilities to not be in default for this you know financing whatever it is line of credit loan whatever um good questions to ask so write them write them down a lot of people are just completely unaware of of some of their covenants and and cash flow directly ties into them so another good reason to track it yeah and i was gonna say just as far as your suppliers ask for help if you need it i mean i don't know any credit manager out there that wouldn't help somebody that asks for it we're used to people just not wanting to pay their bills or they're ignoring it yeah but if you actually want help say you have a new gc that has a path they will help you you know learn how to fill it out and they'll help you close the gaps on your aging especially if you do good work yes yeah you don't want to be thrown in a bucket or have someone make an assumption about you because of previous experiences that aren't justified so it's always good to be honest up front with why there is a cash flow concern there is so they don't think you're just not trying to pay them so um and you know to the point you made about covenants actually suzanne i think it's great those should become part of the scorecard that you managed yourself to every month so when you get those financials get a list of where are you in those debt coverage ratios those loan covenants those other items and um know what they are so you can know ahead of time so you can make you have a month or two to manage to that versus all of a sudden it's a problem and it's getting exacerbated over the next two months you can start to fix it and adjust it which is also the reason why accountants don't just do your taxes we don't we're not once a year people you know if you have a once a year cpa start calling yeah on around right i noticed a question in chad based on our contracts about getting paid when paid so we're not saying that you can always have that leverage and you may not always be able to negotiate it so it sounds like it's not worked for you in the past and you know perhaps perhaps that's true perhaps the gcs you were working with or the people you were working with said no that's just not something we negotiate on that may very well be the case but that's not the case with everyone um and also this goes back to the more valuable you make your work and and your service the more apt they are to negotiate with you so that's just something to consider also is that if someone knew that you're working with they may say hey we don't know these people we're not really comfortable but the more you know work that you do with them and the more comfortable you are with your relationship you get to the point where you can negotiate those things so just think of it as a you know maybe it didn't work today but it might work next year and as you go through you'll learn which tcs will negotiate on that which won't and you just decide if you want to take that job right you decide who you want to work with on the flip side as well yeah and working with an attorney will let you know what the risks are of accepting that clause so you can then at least make a good business decision whether you want to accept those risks or not exactly awesome thanks guys i just wanted to jump in real quick and let our participants know that i will be sending a replay of this webinar in an email um later today or possibly tomorrow morning really just depends on how long it takes youtube to process the video um true blame it on youtube um but in that email i will also include a link to the ben house um uh webinar since you guys were talking about that that would be great i haven't actually seen that so i would love to watch that oh he's he's fun it'll it's a good one it's an attorney are you sure i know that's why we asked him specifically um that's what i always hear too i'm like fun cpa i don't buy it i don't believe it break them all suzanne just gonna say you're not your typical cpa so i always i always hear that they're like you're a what are you i'm like no i forgot what i am yeah and a link to our cash flow tool and instructions so that's awesome to pop in and say all of that will be coming shortly i don't think we have any other questions in the q a do you have any last-minute questions for scott suzanne or laurie not me don't ask me ask now will never be available again i know what your shirt says oh yeah my shirt says i'm the emma love it which i think lori and suzanne both have i was gonna say when i wore mine my daughter said it out loud it was a little awkward perhaps yeah that might be awkward yeah i didn't know i didn't get the memo on the matching shirt so i i did not wear mine next time we'll do it next time we don't have any size anyway so it's fine i put one on once but it did it wasn't pretty and you couldn't read it anymore okay everyone who joined you you have 10 minutes left three three minutes from us you're welcome ten minutes back to your day i appreciate you guys joining us um all the participants and lori and suzanne thank you guys so much it's always a pleasure autumn and next time we'll do it again soon yeah thank you i appreciate it right now see you next time