When it comes to cash flow, maintaining a standard of excellence is easy. All you need to do is follow a formula that I call filling the GAP.
This formula has three simple steps that, when followed, produce great results. By filling the GAP, you can ensure that your company maintains positive cash flow.
The first – and most important – step toward filling the GAP is to establish cash flow goals for each project and write them down.
Statistics show that people who write down their goals have more than an 80% higher achievement rate than people who don’t. Writing down your goals will not only make them clear in your mind, but will also give you a gauge to measure results by. Write down:
A) your main cash flow goal for each project and
B) establish milestones that must be reached in order to achieve the goal.
The second step toward filling the GAP is making sure that everyone involved in the project understands their individual responsibilities toward the cash flow goal.
Establish who is in charge of maintaining and meeting the milestones for specific tasks, such as billings, job progress, paying vendors, handling change orders and so forth, and make sure that everyone agrees that the division of work is fair and achievable. Write down each person’s responsibility toward the overall goal to solidify accountability.
By assigning responsibility to individuals – and making them fully aware of what is expected of them – you will dramatically increase your chances of maintaining positive cash flow excellence.
The third step toward filling the GAP is to hold weekly job meetings to track the progress of your goals and milestones.
Revisit each goal to see if you’re on target. If individuals are not meeting their responsibilities, ask them why. Was the original goal unrealistic or did something unexpected happen? If the goal is not being met because of unexpected or unrealistic situations, revise the goal and devise a method to overcome the obstacle.
Weekly meetings that track individual and team performance demonstrate to your staff that you will hold them accountable for their commitments. They also allow your staff to take an active and ongoing role toward maintaining a standard of cash flow excellence.
As this three-part series demonstrates, securing positive cash flow is a dynamic process that requires ongoing effort by the entire project team.
The process begins by using your construction management software to identify and monitor potential cash flow problems.
Next, you must take action to secure positive cash flow by focusing on direct communication, detailed billing and proper documentation of changes to a job’s original scope.
And finally, to maintain a standard of cash flow excellence, you need to “fill the GAP” by establishing goals, assigning responsibility and tracking your progress.
By taking steps to secure positive cash flow now, you will experience the benefits of a secure and stable construction company far into the future.
Learn more from the “Securing Positive Cash Flow” Blog Series:
Josh Stearns is CEO at AccuBuild. He can be reached by e-mail at firstname.lastname@example.org or by phone at 800-728-6853 Ext 801.
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