6 Pro Tips for Maintaining a Steady Cash Flow
Follow this advice to help keep your design or construction firm solvent
Healthy cash flow is one of the most important parts of running a business, but it can be tricky to manage. Here, three home design and construction professionals on Houzz share the tips and tricks they use regularly to maintain a steady flow of cash in their firms.
2. Communicate With Your Clients
It’s crucial to nurture good communication with your clients if you want to keep your cash flow on track, say the pros we interviewed. “I show them I’m comfortable discussing money and charges, and transparent about my charges and invoices, which builds trust and translates to prompt payment,” Auzins says.
Clients will also appreciate having time to organize their budget, says Natascia Fileppi of Interia Design. “To avoid delays, give your clients the heads up that fees or funds are needed a week or two in advance. They could have a lot going on and appreciate the advance warning,” she says.
Learn how Houzz Pro can help you manage projects and communicate with clients
It’s crucial to nurture good communication with your clients if you want to keep your cash flow on track, say the pros we interviewed. “I show them I’m comfortable discussing money and charges, and transparent about my charges and invoices, which builds trust and translates to prompt payment,” Auzins says.
Clients will also appreciate having time to organize their budget, says Natascia Fileppi of Interia Design. “To avoid delays, give your clients the heads up that fees or funds are needed a week or two in advance. They could have a lot going on and appreciate the advance warning,” she says.
Learn how Houzz Pro can help you manage projects and communicate with clients
3. Arrange a Payment Schedule
If you want to make sure clients can pay on time, it’s best to go for a little-and-often approach.
“On larger projects, there can be delays with the build that are out of our control so having a milestone attached to someone else’s delivery can mean having large payments held up, which can affect cash flow in your business,” Fileppi says. “Smaller regular fee payments help maintain a good cash flow in our business.”
Divide your payment schedule into small chunks as this makes it so much more manageable for clients to organize their budget.
How to Explain Price Increases to Clients
If you want to make sure clients can pay on time, it’s best to go for a little-and-often approach.
“On larger projects, there can be delays with the build that are out of our control so having a milestone attached to someone else’s delivery can mean having large payments held up, which can affect cash flow in your business,” Fileppi says. “Smaller regular fee payments help maintain a good cash flow in our business.”
Divide your payment schedule into small chunks as this makes it so much more manageable for clients to organize their budget.
How to Explain Price Increases to Clients
4. Be Quick and Clear When Invoicing
It’s a good idea to get invoices over to clients as soon as possible, while everything is fresh in their minds, and to outline each item clearly.
“We’ve found clients tend to query more when they’re presented with a large fee and if there are longer gaps between when you did the work and when you billed for it,” Fileppi says.
“When requesting funds from clients, we make clear the date it’s due and what it’s for,” she says. “We also highlight the impact if the payment is late, such as missing build deadlines or trades becoming unavailable as dates move.”
12 Ways to Ensure Customer Satisfaction
It’s a good idea to get invoices over to clients as soon as possible, while everything is fresh in their minds, and to outline each item clearly.
“We’ve found clients tend to query more when they’re presented with a large fee and if there are longer gaps between when you did the work and when you billed for it,” Fileppi says.
“When requesting funds from clients, we make clear the date it’s due and what it’s for,” she says. “We also highlight the impact if the payment is late, such as missing build deadlines or trades becoming unavailable as dates move.”
12 Ways to Ensure Customer Satisfaction
5. Set Up a Retainer
Fileppi recommends not being tempted to pay for something to take advantage of an offer or delivery timeline before the client has sent the funds. “It’s crucial that you don’t open your business up to liability if the client changes their mind or if there’s a build change,” she says.
“We request funds upfront to make purchases, and they’re logged on Houzz as a retainer,” she says. “As purchases are made, it allows us to assign the cost against the retainer so you have real-time visibility on project spend. Clients receive itemized invoices through Houzz software with an image and cost of the purchases, so they can reconcile it with what they’ve paid.”
Stay on top of your finances with Houzz Pro’s financial management software
Fileppi recommends not being tempted to pay for something to take advantage of an offer or delivery timeline before the client has sent the funds. “It’s crucial that you don’t open your business up to liability if the client changes their mind or if there’s a build change,” she says.
“We request funds upfront to make purchases, and they’re logged on Houzz as a retainer,” she says. “As purchases are made, it allows us to assign the cost against the retainer so you have real-time visibility on project spend. Clients receive itemized invoices through Houzz software with an image and cost of the purchases, so they can reconcile it with what they’ve paid.”
Stay on top of your finances with Houzz Pro’s financial management software
6. Add a Contingency
Renovation projects aren’t always straightforward, and any unforeseen challenges can be costly. If you want to avoid the scenario of extra costs eating into your cash flow, make sure you plan for the worst.
“Plan for a 30% margin knowing this will get eaten up, so you are at least always 15% up,” Gentle says.
Being proactive rather than reactive is the best way to stay on top of unexpected issues so you’re never caught off guard.
More for Pros on Houzz
Read more stories for pros
Browse millions of photos for inspiration
Learn about Houzz Pro software
Talk with your peers in the Houzz Pro Forum
Renovation projects aren’t always straightforward, and any unforeseen challenges can be costly. If you want to avoid the scenario of extra costs eating into your cash flow, make sure you plan for the worst.
“Plan for a 30% margin knowing this will get eaten up, so you are at least always 15% up,” Gentle says.
Being proactive rather than reactive is the best way to stay on top of unexpected issues so you’re never caught off guard.
More for Pros on Houzz
Read more stories for pros
Browse millions of photos for inspiration
Learn about Houzz Pro software
Talk with your peers in the Houzz Pro Forum
Sponsored
DC Area's Award-Winning Interior Designer | 12x Best of Houzz
The most effective way to ensure a healthy cash flow is to keep yourself up to date with what’s going out and what’s coming into your business at all times.
“Use cash flow sheets and have monthly meetings and assessments to ensure you’re on track and booking ahead,” says Jay Gentle of Prestige Build and Management.
“I keep a spreadsheet of which invoices need to be sent, when they have been, and when they’ve been paid,” says interior designer Anna Auzins. “I know how much I need to invoice each month and schedule invoices accordingly.
“I also know how much is in the pipeline, again with a spreadsheet showing the total amount to be billed for each project, which invoices have already been sent and how much is left to invoice,” Auzins says. “I use that as the basis for scheduling invoices each month.”