19 Dec 3 Ways for Building Material Suppliers to Improve Cash Flow
The construction industry is an interwoven network, with each part depending on another. Your business likely relies on contractors and project managers, and they, in turn depend on their own clientele. Unfortunately, when it comes to cash flow, this interconnectedness means missed or delayed payments can have a ripple effect.
1 in 5 construction companies report that cash flow is a consistent problem for their operation. For suppliers, that’s a sobering statistic. If your clients are struggling to maintain positive cash flow, they may delay paying you, and that can lead to cash flow issues for your own business.
Here are 3 ways building materials suppliers can improve cash flow:
1. Create a Clear Credit Policy
93% of businesses report receiving late payments from customers and 49% of B2B invoices in America are overdue. If you provide supplies on credit, managing collections should be incorporated into your day-to-day operations.
The longer an account is overdue, the more time you’ll need to invest in collection efforts—that labor costs you money and could be better utilized elsewhere. In short, overdue accounts cost you even more money over time. So, how do you collect on overdue invoices? This is a process that should be clearly outlined in your credit policy. And don’t wait until it’s too late to start drafting this policy up. Work out a standardized policy BEFORE you’re confronted with an overdue invoice. Here are a few steps to get you started:
1. Know your state’s collection laws. The first step of creating a collection policy is knowing what legal tools are available and what legal limitations are in place. You can learn more about the regulations in your state(s) here.
2. Reach out in advance. Notifying your clients of impending late payments isn’t legally mandated, but it’s a good practice that can increase cash flow and improve business relationships. We recommend reaching out (mail, phone, or even just an email is fine) approximately 7 days before the payment is due.
3. Send an open account letter. Send a formal request for payment that clearly outlines next steps if the account is NOT paid, i.e., “A late fee of 5% will be assessed to your account if payment is not received within the next 5 business days.”
4. Hire a collector. This step is usually necessary only on seriously delinquent accounts.
Put this all into writing for your staff and ensure that the same standards are applied to every account.
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2. Invest in a Business Management Software
Intense competition, changing market conditions, and increased customer demands mean you need to take advantage of every minute of the day and every dollar in your account. A business management software can help you get started by improving the efficiency of every facet of your business, including ordering, inventory management, dispatch, and more. This can be especially beneficial for suppliers because it allows them to take on more business without hiring additional employees. Instead, a business management software allows you to do more with the staff you already have.
Increasing accuracy and streamlining workflows reduces waste and saves time, both of which contribute to better overall cash flow. However, one invaluable function of a business management software is the insightful data it can provide. The right software will inform your business decisions with relevant, up to date information that allows you to operate at peak efficiency and plan for a cash flow positive future.
3. Offer Convenient Payment Options
Accepting credit card payments means you’ll receive funds more quickly, and that leads to an increase in cash flow, freeing up more capital to be used for day-to-day operations, payables, and growth planning. And with credit cards, instead of extending credit to a client, you’re paid immediately, and the debt is instead paid to the card issuer. Effectively, you’re outsourcing risk to the cardholder’s issuing bank.
There are other cash flow-boosting benefits to accepting credit cards as well! Here are a few processing options to consider:
Payment Integration
Enhance efficiency by partnering with a processing provider that can seamlessly integrate into your business management software. This integration should allow you to send digital invoices via click-to-pay links while qualifying for the lowest possible rates on business and purchasing cards. When you make it simple for your clients to pay you, they’re more likely to pay you on time. The very best integrations even feature digital vaults to store credit card information—this allows you to keep payment information on file safely.
Mobile Processing
A mobile card reader unleashes your sales team and allows them to meet with contractors and project managers in the field. This can be a huge opportunity to grow your supply business. Your clients are busy, and they might not always have time to come to you or talk through a complicated order on the phone. Stay competitive and profitable by taking your business on the go and meeting even the busiest crews on site.
Final Thoughts
Your industry is growing. In 2019, the building materials sector added 290,737 jobs and revenue increased to $93 billion. Don’t let cash flow problems deter you from capitalizing on ripe opportunities for growth and innovation. If your business is looking to increase efficiency and improve cash flow, BASYS would love to be a resource for you. Click here for even more ways to improve cash flow or give us a call to learn more.
BASYS Processing as a business partner
Does your current processor understand the unique struggles of your industry? Do they provide great rates and personal customer service? Are they offering solutions to grow your business and being proactive about helping you reduce risk and increase your savings?
Contact BASYS today to learn more about innovative payment solutions that will save you time and money. We make accepting debit cards and credit cards convenient, safe and affordable.
BASYS Processing features:
• A friendly, live voice will answer the phone when you call; no automated phone systems
• In-house PCI Compliance team to walk you through the process step-by-step, improving security and reducing costs
• Accept payments in person, over the phone or online
• Next-day funding options
About BASYS Processing
BASYS Processing provides credit card and debit card processing services, plus solutions that include terminals, virtual terminals, e-commerce, mobile, and point-of-sale, customized to fit any need. Banks, associations, and software partners depend on us to strengthen their reputations and relationships with their customers by providing remarkable service paired with ultimate flexibility and pricing. Merchants depend on us to make accepting credit cards and debit cards convenient, safe & affordable. BASYS was founded in 2002 on one philosophy: to take care of our merchants, partners, and employees so they never want to leave. We are dedicated to working one-on-one with our customers to design the perfect solution. BASYS is Personal Payment Processing.
Learn more at basyspro.com, and connect with us online at: