Cash flow is particularly important in the skilled trades industry.
If you want to make payroll, cash flow is king.
Every start-up business learns this (some of them the hard way). But cash flow is just as important to the mid-level and enterprise organization in any industry. It’s especially important to skilled trade companies that often must provide parts and materials up front and wait for client reimbursement at certain project milestones – up to and including the end of the project.
Why Cash Flow is Important in the Trades Industry
You’ve heard the adage, “You have to spend money to make money.” Nowhere is this truer than in the trades industry. Construction and repair work requires significant tools, time, and resources. Equipment, trucks, and vans, as well as communications tools such as cell phones for on-site communication, liability insurance, uniforms, and much more are all imperative to running your business. While reducing expenses and improving profitability are key to cash flow, making sure you don’t have a big line of past due A/R on the books is just as important.
This is especially true in areas where new construction has remained stagnant, however, Plumbing & Mechanical magazine spells it out boldly, “Negative cash flow is the number one reason why contractor businesses become insolvent, and so a primary business objective must be to keep operations in the black.”
Collection Services and the Skilled Trades
Small business debt collection is a big job. Because debt recovery has such a strong impact on the bottom line, and because the industry has extensive laws governing collection services, contractors, plumbers, HVAC companies, and other trade organizations often turn to third-party debt collection agencies for help. This will free up the exorbitant amount of time the office manager typically spends keeping cash flowing, but also will ensure that your company remains compliant within a very complex set of local, state, and federal guidelines.
Past due accounts are especially concerning for the small services firm that simply does not have the margin to carry past due A/R. There is no government agency to help – you are simply on your own. Taking a client to court may require hiring a lawyer, and in the meantime, collection recovery efforts can take you away from the routine work of running your business.
That’s the niche where Rocket Receivables can help the skilled trades organization. We provide a simple, yet effective debt recovery service that is efficient, innovative, and designed exclusively for the small to mid-size business. The platform has automated the laborious steps of sending letters and capturing past due revenue. For delinquent accounts stretching past the 120-day mark, we offer some of the most cutting-edge sophisticated technology solutions to mail, call, and negotiate with past due clients.
Rocket Receivables is an affordable online alternative to traditional debt collection models. Sign up today!