Why late payments destroy your trade business

  • 22 Jun 2021

New app that can help businesses get paid

Sponsored by

Do you know where your business will be at the end of 2021? The ongoing affects of Covid uncertainty are likely to be around for some time and it feels like we’re sometimes leaping into the unknown.

Thankfully the construction trades have still been able to work throughout the lockdowns, and over the past few months, the demand for quality tradespeople has been at an all-time high.

A sense of normality is thankfully starting to return, though if there’s one thing COVID has taught us about business, it is that we need to expect the unexpected.  

 

So, where are we at?  

The Federation of Small Businesses (FSB) recently surveyed 1400 small businesses (up to 249 staff) about their hopes for future trading and found that 5% expected to close for good in 2021. Scaled up, this means that 250,000 small businesses could close in 2021, unless they receive further support from the government. Small businesses are the backbone of the UK, employing almost 61% of all private sector workers.   

Whilst many of the businesses will be in the hospitality and retail sector, other small businesses whose cash reserves were temporarily buoyed by a bounce back loan or COVID grant, will need to look carefully at the way they manage cash in 2021 in order to survive.  

The construction sector has some of the longest waits for payments of any industry, especially when contracting to large building companies. And for tradespeople working directly with home or property owners, booked work may be cancelled if the owner’s own circumstances change through illness, furlough or redundancy or payments may be withheld.

What can you do to protect your cash? 

Taking deposits and regular stage payments throughout a project is essential for both parties. Clear explanations about what will happen if a project has to be cancelled or delayed must be in your terms and conditions.   

Explaining the project stages and payments required should be hard-wired into your quoting process so that both parties are clear on the what, how, and when of a project. 

Talking about issues as soon as they arise and keeping clear notes of any changes to the job will help keep the relationship sweet and prevent misunderstandings and/or shocks when invoices are sent. 

 

As a business owner, understanding the difference between profit and cashflow is really important. The amount in your bank is not your profit. There is tax and VAT to pay and materials to buy.  So knowing when cash is due in and what you owe is vital.   

Keeping your quoting and invoicing up to date is crucial, though for many tradespeople, this is the last thing they feel like doing after a long day on site. 

Where can you get help with all of this? 

Kiistone is here to protect your business from uncertainty in 2021 and beyond. Our revolutionary app can be used by both trades and customers to help manage successful projects and protect both parties financially. The introduction of staged payment options at agreed intervals and full visibility on cashflow means that you’ll always have peace of mind.

We know that our construction trades will play a massive part in rebuilding the UK after COVID and at Kiistone we are determined to help tradespeople build robust businesses, with great customer relationships. We aim to bring the pride back to the trades so that our youngsters see construction as a viable and secure career choice and customers enter into contracts with tradespeople with the confidence that they will receive quality and value every time. 

 

Join Kiistone for FREE today at www.kiistone.co.uk, or upgrade to Kiistone Premium Membership to get access to a host of exclusive membership benefits and discounts.

 

 

Related topics