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Construction invoice for R&D

hi I'm Derek Business Systems coach for  contractors I'm going to be sharing with   you the best way to invoice construction  clients so you can get paid faster get   paid more save on transaction fees and  just set up proper system to make it easy [Music] okay so before we get started diving into you know  invoicing construction clients make sure to give   this video a big thumbs likes up really appreciate  it best way to build out your contracting business   and not miss any of the you know awesome content  videos just to subscribe to the channel so make   sure you smash that subscribe button and join  the channel so first things we're going to be   talking about is payment schedule and terms uh  then we're gonna be looking at payment methods   as well as different ways to get paid faster set  up your you know the way that you get paid from   clients you're invoicing the payment processing  all that good stuff so first topic is gonna be   payment schedule and terms and the big thing that  you want to keep in mind when invoicing clients   is cash flow your business needs to maintain cash  flow if you're doing let's say two three projects   and you want to scale to let's say six or ten  projects you want to double your business over   this next year if you've got a lot of money out  for materials for labor on other people's projects   that you're spending you can't scale effectively  without either you know spending a lot of your own   money or taking on loans to finance your growth  which is no way to operate a business and you're   going to be overextended and potentially put a  lot of risk onto your business because you want   to make sure that you are collecting deposits and  invoicing you know in short terms so one week two   weeks even collecting you know large portions  if it's small projects to make sure that you   are protected essentially you want to set up  a client's expectations as well so whatever   your payment terms and you know the way that  you invoice you want to make sure that you're   communicating that up front to the client so that  the client knows what to expect right if they're   like you know I'm gonna make a 20 30 deposit and  then they expect that they're going to pay maybe   you know 50 of the project once you're at you know  30 quarters of the project done or you know almost   near the end well there's going to be some some  conflict there so I'm sure you're communicating   with your client as to what the expectation is  as far as them you know paying you and paying   invoices generally for residential construction  I would say you want to be expecting like one to   three days as it like terms for a client paying  you after invoicing if you are doing commercial   projects or much larger residents projects and  working with you know General Contractors or   property developers investors they'll probably set  the terms and they'll probably put the terms in   their favor more which is could be 30 60 90 days  terms so you want to make sure that you know about   that up front and then you're prepared for it with  large enough deposit and enough cash in the bank   to be able to financially manage that type of uh  you know outflow of cash that you're going to be   putting into the project final payments you want  to make sure that you are doing a final payment on   substantial completion so if you're saying like oh  we'll invoice you when everything is 100 complete   well you know those types of projects where things  can happen you're maybe waiting for you know one   last little material that got back order the  Finish was wrong or what have you and you   know that final completion of the last two three  percent of the project you know can stretch for   weeks or a month or two even depending on the type  of project so you want to make sure that you're   able to invoice the client that's a substantial  completion for the final invoice depending on   your business your clients and how you operate you  know you may have like five percent still you you   know owing or what have you so that the client  feels comfortable but the way that I suggest   most business owners would you know management  payments is collect a sizable deposit 20 to 30   percent of the project up front as a deposit and  then invoice for the project as you would normally   complete it so in the first 20 of the project  is done invoice for 20 of the project all of   the deposit as money in the bank as the funds that  you use to buy materials to fund the project you   shouldn't be putting your own money into a clients  project buying materials for their house for their   project they should have paid for those materials  beforehand and you should have money in the bank   with a deposit as you get to the end you can use  their deposit as you know a payment for the final   invoice I know some contractors who will actually  have hold the deposit you know invoice for the   final payment and then when everything's 100 paid  then they'll return the deposit to the clients I   know a lot of contractors don't necessarily feel  comfortable with that and you've got to check your   area because there are rules about um you know  client hold back liens and different things like   that that it may not even be um lawful by the  bylaws ever of your your county or your state   Province wherever you are so you want to check  that but the idea is you have money in the bank   and you're not funding clients projects all right  so a lot goes into the payments and just like it   seems easy right you send an invoice you collect  a payment from clients but there's so much more to   it I've been through this as well I can remember  multiple you know instances where either you   know you get busy and you're not watching your  books and maybe you're still doing the invoice   and accounting and bookkeeping yourself or you  know not watching or not you know getting your   your bookkeeper to send invoices properly so you  get a new project and you're just making progress   you want to get it done you want to do a good job  for the client and you realize you know oh [ __ ]   you know you've got like 50 of the project into  it you've spent tens that you know twenties of   thousands of dollars possibly on labor materials  and you need to start collecting payments and   then you send an invoice and the clients you know  asking about this asking about that and it takes   weeks to to actually you know reach you know get a  proper payment so that's why this is so important   to be getting paid you know quickly being able to  fund your business as it grows being able to take   on you know as much work as you possibly can  because your payment terms are affording you   the ability to do that because you're not putting  out your own money into projects so second thing   we're going to be looking at is payment methods so  this is payment methods for clients and it could   be for trades as well this goes for trades you  know paying trades as well so cash payments of   course it can be done but I would suggest not  taking cash payments unless you're you know   building a small deck for a neighbor or something  and it's just like whatever right on the side but   uh not suggestible and definitely you want to  be collecting checks preferably credit cards or   some sort of online bank transfer nowadays with  technology there's so many options available most   of your project management software or your  bookkeeping software accounting software is   going to have Payment Processing as part of you  know built into the system utilize that it makes   things a lot easier you want to be a little bit  you know checking the fees and making sure you're   not overpaying like one to three percent you know  in credit card fees or banking fees can add up   especially if you're doing you know hundreds  of thousands millions of dollars of business   in a year you could be sending tens of thousands  of dollars on unnecessary payment fees when you   could be switching to a different you know payment  a processor or a different software and of course   you want to make sure they're easily trackable  you want to be tracking invoices and payments   know exactly what payment is for on a project  you know with your cost codes and setting that   all up and that's a whole other thing in and of  itself if you want help with like setting the   system up contact me drop a comment I do read  the comments if you got questions or check out   the links in the description below contact me  and I help clients set the systems up in your   business but essentially you want a cost code  structure and an itemized budgeting quoting   from the start so that when you go to invoicing  everything transfers through your system keeps it   very easy and you can track everything so that's  payment methods of tracking moving on to number   three are you still with me here get this set up  it's like a one and done kind of thing right like   yeah you can make improvements may change over  time but systems like this are so essential in   your business you get the system right you're  going to be saving money it's going to make   client experience so much better it's going to  make your experience so much better it's going   to put more cash in your pocket keep the cash flow  flowing and once you set up the system you you can   build and scale it right like it doesn't matter  if you're doing 100 000 dollars a year you have   this system in place for for invoicing or if  you've got 10 million dollar business you're   invoicing and system can expand and grow with your  business so number three getting paid faster right   that's what we're talking about cash flow making  sure we're invoicing you know untimely with terms   so how do we get paid faster here's a couple of  suggestions you know early payment incentive so   if you find that clients are paying late or if  you have like a subscription type service like   you know for lawn care or what have you or maybe  gutter cleaning every year pressure washing to   have an early payment incentive you know maybe  say five percent or whatever to to get people   into a subscription quicker and get paid faster  charge extra right if you are concerned about oh   I don't really want to have to pay you know an  extra two to three percent for credit card fees   or Bank fees if I use like online processing two  to three percent if it can save you time generally   it's going to be worth it but also you can put  that to the client right just to let them know   like hey in order to collect credit card fees make  everything you know keep moving we do charge an   extra two percent or credit card fees if you use a  bank transfer we charge only one percent or maybe   we don't charge anything so you can incentivize  the the type of payment that your client will make   by adding extra fees for you know credit cards  some people they want to pay my credit card it's   easy for them to get the points uh travel points  or you know money back or whatever so it's not a   big deal right other people is like I want to save  that two percent so maybe they do bank transfer or   send you a check so give them the option so for  change orders there's another way to get paid   faster change orders like especially if it's only  you know a thousand a couple thousand bucks ask   for it up front tell them like here's a change  order want it signed like oh we found you know   whatever brought inside your walls is going to  take an extra you know two grand to clean it out   and and get it invaded here's a change order  if you sign it and we will invoice for the   full payment up front so this is a good way to get  again payment you don't want to putting your money   into a project especially for change orders then  later there's discrepancies or even if they've   signed something you know later when it comes down  to Brass tax they may still have concerns or maybe   just signed a paper but not really thought like  ah you know I'm gonna negotiate later or something   on on the final payment so get payment for change  orders up front and you know make sure that you're   getting paid right automated reminders again most  software is going to have this for invoicing send   an invoice make sure there's automated reminders  going out after you know maybe three days five   days you know one week and 14 days to make sure  that if they haven't paid they're getting those   automatic reminders to give them a little nudge  maybe they're busy maybe they're on vacation what   uh what have you make sure that you don't have to  keep following up with them at least you know that   there's touch points happening to remind them to  pay you offer financing so this is another great   one to increase cash flow because people are  struggling with you know finances or they're   not sure if they can start the project offer a  financing solution there's lots of uh lenders   out there that do cater to the Home Services  industry Renovations home builds all that kind   of stuff so offer financing options maybe people  you know can't shell out 10 30 40 Grand right   now to do a renovation project but they can  definitely make you know monthly payments of   500 bucks for the next couple years or what have  you so buffer financing and invoice sooner so if   you are like again waiting too long to invoice  make sure that you are invoicing sooner so when   you are reaching milestones in the project or if  you've set it up that you get invoice every week   for a certain amount every two weeks make sure  you're invoicing often and early to make sure   that you're getting paid what you should right so  hope this has helped you make sure to check out   the description below I've got a link in there how  to build a business that works without you so how   to start systematizing your business get systems  like this set up how to be thinking about it how   to claw back some of your time increase your  bottom line protect it add profit in the bank   and and just create a smooth running business  so make sure you check out the links in the   description below here's the best with invoicing  your clients and getting paid when you should