When engaged in a construction project that involves a “tier” of contractors, from a GC down to Sub Contractor, getting approval to order and store your materials early can be difficult and getting paid for those materials quickly can be an art in itself. Product needs to be ordered early enough to do the required pre-assembly work like fabricating racks, or programming and to get the materials to the job site on time, but many integrators just do what they have to do to meet the project schedule without regard to the costs of holding inventory while awaiting to be paid. Some contractors simply live with a frustrating time-crunch to keep billing and payment in synch with when the buyer is willing to accept the materials on site and then pay for them, costing time and money.
Many contracts contain language—or can be negotiated—to provide for advance payment for product that is stored “off-site” in anticipation of performing precursor integration work and to have the materials ready to go when the project needs them.
The keys to success are substantiation, organization and protection. Are you willing to show your packing lists, even invoices, to prove you have the products on hand that you are billing for? Are you ready to open up your warehouse for “snap” inspections by the buyer? Are you willing to clearly organize your stock by job or provide dedicated “lock-up” areas of your warehouse so the buyer can see their product is safe and protected? Are you willing to provide insurance to cover the specific materials in storage? The answer to these question should be yes. Because if you do these things you can get materials on hand and paid for well before you have to employ them on the job, pushing forward the cash flow. Cash is King.
Steve Olszweski is Vice President of Stealth Acoustics. This feature is part of SCN's "Hush Hush" October print issue.