RECEIVING PAYMENTS AS A SUBCONTRACTOR
Collecting debt for construction company’s can be a considerable challenge. In fact 92% of construction companies say that they don’t always get paid by customers on time. With this fact, many subcontractors often need to find effective ways to get paid without losing any money. There are many reasons why construction companies and subcontractors need to get paid on time. These include paying expenses in a timely manner, paying vendors for supplies and materials and to avoid bankruptcy. While subcontractors can collect payments themselves, they often turn to a construction debt collection agency to help them as it allows a separate party to resolve this issue.
NEED TO PAY OTHER SUBCONTRACTORS
One of the main reasons why subcontractors need to receive payments on time is because they often need to pay other contractors. In fact 17% say that payroll is the biggest worry when managing cash flow in the business. Subcontractors often use other laborers in order to complete jobs. When hiring these other contractors, the subcontractor needs to compensate them in a timely manner. As a result, they can have difficulty in paying their contractors if they themselves don’t get payments when they need them. As a result, subcontractors need their payments so that they can meet their payroll deadlines.
TO COMPLETE JOBS ON TIME
Many subcontractors look to complete their jobs on time. In order to complete jobs in a timely manner, they need to receive their payments on time. Subcontractors work by receiving payment in advance and then receiving the remainder when the job is finished. During the process of completing a job, contractors need to purchase supplies and materials as well as pay their other contractors. Without compensation, they won’t be able to pay for these things. Therefore, it is important to receive payments so that they can maximize their productivity and meet their client’s deadlines.
NEED TO AVOID LOSING INCOME
A subcontractor needs to receive payments in a timely manner so that they can maintain their stream of income. Collecting invoice fees for jobs completed is vital for contractors who are looking to avoid losing income. If they lose income, they will often have difficulty staying in operation and meeting production quotas. Therefore, subcontractors need a steady stream of payments because they can ill afford to incur losses on a regular basis.
MUST HAVE SUFFICIENT INCOME TO SUPPORT BUSINESS
Like all other businesses and self-employed professionals, subcontractors have expenses that they need to stay in operation. With a regular amount of expenses, they need funds to pay these expenses and ensure that their business can avoid closure. It is important for subcontractors to get paid in a timely manner so that they can maximize overall success and attain consistent profitability. As a result, they must collect receivables in order to ensure that they meet their financial obligations as well as reach their revenue and profit goals.
NEED FUNDS TO SUPPORT LIFESTYLE
Subcontractors are individuals who complete contracting jobs as their occupation. Like all other people, they have personal financial obligations that they need to meet as well. A subcontractor may have a mortgage or rent to pay as well as car payments, utilities and food and groceries. With a steady stream of income they will have the funds necessary to meet their personal financial obligations. In order to ensure that they can pay their living expenses and support their lifestyle, they need to collect payments for jobs so that they have sufficient funds at all times.
TO AVOID BANKRUPTCY
As an independent businessperson, subcontractors may have debts that they need to pay. They need to pay these debts so that they can remain open and avoid losing their personal and business assets. Collecting payments in a timely manner will allow them to avoid filing for bankruptcy. So subcontractors need to receive payments so that they don’t have to face the scenario of losing their business due to inability to pay their debts and other financial obligations. Avoiding bankruptcy won’t just allow subcontractors to keep their business open but also allow them to avoid a poor credit rating which can negatively affect them and their business in the future.
MUST BE ABLE TO PAY VENDORS
As is the case with many other businesses, subcontractors need to pay their vendors. Many subcontractors need to purchase things such as materials and pay certain expenses from specific vendors. Therefore they need to have funds to pay their vendors on a regular basis. By receiving payments on a timely basis, contractors will be able to ensure that they can pay their vendors when they need to. Therefore, it is important for them to receive payments so that they can avoid getting into financial difficulties and disputes with their vendors.
COLLECTION AGENCIES CAN SAVE TIME
While 63% receive payments on time, there are 37% that only receive payment after a project’s completion and a majority of contractors receive payments 30 days late. With this factor in mind, subcontractors will need a collection agency to help them every once in a while. These agencies can help contractors save time as they will focus on receiving payments from customers while the subcontractor focuses on completing jobs.
AGENCIES CAN NEGOTIATE WITH CUSTOMERS
As well as saving time for the contractors, a collection agency can also negotiate with customers on their behalf. The agencies can tell the customer how much is owed and work with them to find a way to make payments in a timely manner. Agencies are very proficient at finding a solution that benefits both the contractor and the customer. As a result, it is a good idea for subcontractors to use agencies so that they can receive payments on the most favorable terms.
CONCLUSION
Subcontractors need to receive payments on a regular basis in order to function. Since many customers don’t pay on time, subcontractors often have to find a way to cope with delayed income. While they can address this themselves with the customer, they can also turn to agencies that collect payments. With the help of an agency, subcontractors will have an easier time ensuring that they receive payments and ensure their overall business success.