One the final key pieces that I changed in my business when I attempted to overhaul the way money worked in my painting business was changing to weekly invoicing.
In the past I would take a large deposit - 25 to 50%, a progress payment on large projects, and final draw upon completion. I operated that way for 12 years or so. As mentioned in part one, the large deposit carries risk for both the homeowner and myself as the business owner. The large span between deposit and final payment also caused stress on cash flow because I often have little control on the project. There were times where general contractors would botch the scheduling or change specs and there went my profit. Other times homeowners would take 12 months to complete the other trades prior to me returning for final coat. Even with a 50% deposit, most of that goes to paint and materials, other job costs like fuel, business operating expenses and a little bit of labour. So I quickly found myself upside down on projects and that could last several months sometimes. Not ideal...
So when I decided to stop asking for significant deposits, I also had to change my billing cycles. I decided to invoice at the end of every week for work completed. This neither party was exposed to risk and the money would flow quicker and smoother through my business. If there were going to be issues, they could be dealt with right away, rather than 3 months down the road. This also allows for billing add-ons or scope adjustments right away so clients can manage their budgets and conflicts averted. All in all this has worked very well and there has been no push-back from residential re-paint clients.
An added tweak that I have made is switching as many of my bills as possible to weekly payments. These amounts are smaller, helps me stay current and reduces interest expenses on debt repayments.
Weekly invoicing has been good for lowering risk, increasing cash flow and maintaining maximum flexibility.
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