We’re down to a production staff of two, plus one helper. This is from 4 and 2 a couple of months ago.
(my PM position is currently history!)
So, our cash flow is not only down, but comes in at a slower rate.
I have told the boss that we needs to break up our payment schedules into smaller amounts, that this will at least help to keep it flowing in, rather tham waiting for larger milestones of completion.
I’ve always felt that our payment schedules were too lopsided anyway, and I have heard as much from more than a few of our clients.
Am I heading in the right direction?
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View ImageThe best description and guide to creating a payment schedule that improves cash flow for the contractor while also providing security to the client/homeowner (that I've brought up here before) is the Oct 99 JLC article Getting the Final Payment by Brian Sutton.
One of the things in it that I really liked was how while he has a basic milestone based payment schedule he adds to it the language:
That allows the contractor some scheduling flexibility so that the contractor can make decisions as to what to work on as project conditions dictate rather than being bound to a hard ordered payment schedule that force you to work on the roof in the rain and snow to reach the next payment in some kind of absolute hard order.
While the sample schedule described in the article is for a whole house the technique can easily applied to kitchen remodeling. Depending upon the size of the project a kitchen remodel could creativly be broken up into anywhere from two to eight payments.
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Thanks Jerrald,
That article looks familiar, but I did print it out.
So, in regards to my post directly, am I heading in the right direction or not?
EricPaulson — "...So, in regards to my post directly, am I heading in the right direction or not?"
While I think your thinking regarding improving your employing company's cash flow position is an extremely wise one it's very obviously not a cure. In fact it's only a short term help. There is a much bigger problem lurking around you that I think you are probably very well aware of. Unless your employer owns the building the showroom your overhead costs are still going to be high. While it certainly makes no sense to employee people you have no work for cutting the production staff which in have means your ability to generate revenue has been cut in half too while the operation overhead remains the same. Not a good sign.
I'm sure you will recognize this as being duh, obvious but you need to do something marketing-wise to increase sales. One thing for sure, and this is a mistake many businesses make, it's certainly not the time to cut the advertising and marketing budget to reduce overhead. that aid however it might be a good time to look at changing how the marketing budget is applied and/or looking at or exploring other free or low cost avenues. Something along the lines of perhaps the owner writing an article on kitchen design or kitchen remodeling for a local newspaper or volunteering to teach a kitchen remodeling course with the local continuing education program or at the public library.
If you do manage to resurrect sales it might also be in your company's best interest to try and sub out as much of the installation work as possible. On the one hand the cost of subbing might appear steep to using your own employees but if you don't have a steady reliable flow of work hiring and then furloughing or laying off employees will cost you more in the long run.
I do hope your employer recognizes and appreciates the attention and concern you have as well as the business research you are doing and someday rewards you for it.
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Thanks for the reply .
We cut staff due to lack of work for the most part.
Owner owns the buildings but pays rent to his RE Co. But that's another story.
Fortunately, he has kept up most of the advertising and that is mostly what is bring in leads currently.
We're limping, the wound may heal, or amputation may be in order.
Time will tell.
I do hope your employer recognizes and appreciates the attention and concern you have as well as the business research you are doing and someday rewards you for it.
Yeah..........
Jerrald, I must tell you that is it refreshing to see a post from you that comes directly from you and not a bunch of links. It's a different experience and a better feeling.
Eric
I often say that there is not a single original idea in my head. Everything I write about I learned from somewhere and just repurposed and /or reinterpreted. Geez there are people out there that I think think I invented Capacity Based Markup! My thoughts here regarding payment schedules weren't at all original. The article was on the JLC site and I even copied some of my text here from another post I wrote here four years ago (Payment terms).
I post links to articles and content that interests inspires or gets me to think in the hopes that it gets others to do the same. While I may not comment myself at the start of the discussion that a very conscious decision on my part to write that way. In many cases that I want to hear what other people think before I throw my two cents in. I feel that writing my opinion right off the bat comes off as me lecturing to the crowd "hey do it this way". I instead prefer a discussion and that's just how I sometimes approach getting things started.
I really don't see myself changing my style that much in that regard.
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