How to minimise Costs within a Job.

[Mattysparks75]

Ive been given a question on "state how the electrical contractor may minimise costs, with particular reference to CASH FLOW?

I do not really understand how cash flow can minimise costs only that you ensure you price up a job correctly.

Please can you enlighten me on this question

Thanks

 

[SPARTYKUS]

If cash is flowing, you get to pay your debts before you get stung for interest, etc. Therefore your costs are minimised. The quicker you get paid (as in the quicker you invoice, and recieve the wonga) the quicker you can pay your bills .... ?

 

[Guest111]

a simple example as follows, you do a job and buy 100m of cable but only use 80m but you dont give the customer the bit thats left 20m,ok so a guy wants a couple of sockets fitted needing 15m of cable, out comes the bit left over off the other job (20m) now although you charge him for it along with other parts reqd you haven,,t actually paid for it so you are say 20 quid up or whatever you charge for the cable,thats called cutting wastage and maximising profit.I never throw any cable away unless its less than about 5mtrs,it all comes in handy.

 

[SPARTYKUS]

a simple example as follows, you do a job and buy 100m of cable but only use 80m but you dont give the customer the bit thats left 20m,ok so a guy wants a couple of sockets fitted needing 15m of cable, out comes the bit left over off the other job (20m) now although you charge him for it along with other parts reqd you haven,,t actually paid for it so you are say 20 quid up or whatever you charge for the cable,thats called cutting wastage and maximising profit.I never throw any cable away unless its less than about 5mtrs,it all comes in handy.

much better than my post. Bl00dy stella

 

[Octopus]

Always run your business account in surplus, i.e. always have cash in hand in the bank, over and above your immediate debts.

Also make sure you bill the clients for everything, even if it means adding a few pounds for "consumables" such as raw plugs, new drill bits, etc, etc

 

[Mattysparks75]

Thanks for all the Posts guys, thats made complete sense of that nw cheers!

 

[alarm man]

staged payments from the main contractor would be one,only order the gear needed for certain phases of the job,and if they drag their heels sting them on dayworks and devations from the original spec,

 

[ACEELEC]

Simplees - The key to this question is that you have to make the money work for you, to decrease your risk and increase your profitibility
1) Get quote for materials required from wholesaler and then add margin for quote
2) agree on price for works, use contract with customer and take deposit up front
3) renegotiate price if possible for materials with wholesaler
4) ensure all materials , labour , etc are available to complete job
5) ensure work is completed and paid before payment date for goods
that way you are always in a positive cashflow situation
no Profit is like cancer it will kill your business over time - No Cashflow is like a heart attack that will instantly kill your business

 

[GT1]

If possible buy your "gear" ie stuff for the job on best possible credit terms. Buy the gear as near as possible to when it's used then invoice immediately.
That way your cash flow is inward, not outward..!
Or even, on a larger job, invoice for materials prior to work starting.

 

[mackers]

if poss by materials at begining of month then that gives u 60 days before u after pay wholesaler!

 

[alarm man]

if poss by materials at begining of month then that gives u 60 days before u after pay wholesaler!

i would buy them all for the job,because after 30 you'll be on stop..

 

[mackers]

no you wont ,buy on 1st no due till 31st of that month not due for payment till 31st of next!

 

[ipf]

Great idea, unless the job's at the end of the month.:thinking:

 

[mackers]

ye sometimes it cant be helped but if you know in advance somtimes you can get payed before you pay for the goods!

 

[alarm man]

thats the problem with contracting,if you get terms from suppliers for 30 days you need the money in quick if your a good customer you may get 60/90 days it may seem good if the contractor is paying you in 30 days but if the contractor is paying you on 90 days or more your back to square one.