Cash Flow as a Weapon: Outside The Box Cash Flow Improvement Ideas

I think we may have talked about this years ago, but I had a concrete contractor that they were growing big time and they were struggling.

They got a huge job.

The general loved their work, but they were stretched pretty thin, especially covering concrete material prices.

This general contractor was stretching about 60 days.

They were struggling to cash flow this thing.

It was a huge growth job for them.

They were trying to negotiate with this general contractor They had been providing all the materials and the sub really liked picking up the markup on that.

But he was thinking, I can't really cash flow this.

Long story short, he gave up the material and let them pay for it directly.

They didn't have that burden, but they negotiated, you keep this margin and you're going to pay us every two weeks like clockwork.

no retainage and stuff like that.

So they were able to actually grow through it.

Part of the message today is a lot of people do not understand how much financing a job or an owner or general contractor really costs them.

And so they were able to cash flow this job that they really wanted it bonded, but they were in a position they couldn't bond and there was no way they could have cash flowed it.

So it was a win-win for everybody.

And they actually turned out it was one of the more profitable jobs when it was all said and done, the way it worked.

Yeah, that's great.

And it's thinking out of the box, figuring out a way to solve your problem.

I guess it's a good point, Wade, about materials, giving up their margin on the materials.

If a contractor went in and said, first of all, they bid the job as a unit price and the materials are in there with their margin built in.

Maybe you should go in there with your materials at the unit price and put the margin in other places on the line item.

So you can go back and negotiate that off.

I'm just saying most contractors are going to say, why in the world would I give up my margin on my materials? I'm not even doing any work for that.

And so I guess it's the mindset of you're paying the material suppliers directly and negotiating the best price you can get.

That game kind of goes away when you let the owners pay for the materials and it doesn't have to cost you out of the job.