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Next week is the U.S. World Standards Week conference in Arlington, Virginia and, in Washington, D.C. at the U.S. Chamber of Commerce, the U.S. World Standards Day will be celebrated on Tuesday, the 23rd of September.
“How can I drive results as a business coach for a Trade Contractor?”
This week’s challenge is led by Dulcee Loehn.
Dulcee Loehn offers over 20 years of executive management experience in the contracting industry. She is seasoned in all aspects of small to medium businesses including sales, financial management, process improvement, client retention, and operations management.
Dulcee left the corporate environment to pursue her passion of business coaching and founded Focalpoint Business Performance of Tampa Bay, which partners with clients to enhance their effectiveness, profitability and quality of life. Dulcee’s clients enjoy anywhere from $5 to $15 Return on Investment for every $1 spent on coaching. Dulcee is also a Certified Trainer and Coaches Coach for FocalPoint International.
Here’s what Dulcee had to say about this week’s challenge:
Most trade contractors face similar challenges.
One of those is cash flow.
Many contractors invoice their clients for very little up front and collect most of their money, if not all of it, when the job is complete. In addition, many contractors have a considerable amount of accounts receivable.
These two areas impact cash flow the most for the majority of contractor clients. So this is one area that I focus on early in the coaching process.
For example, with my electrical contractor client, we discovered that they did no advance billing, even on large jobs. We immediately implemented advance billing of 25% on jobs over a certain dollar amount. This immediately removed some of the pressure on their cash flow.
In addition, we determined that they not only had 13% of their annual revenue tied up in accounts receivable, but also were taking up to a couple of months to mail an invoice to the customer.
We immediately put an accounts receivable process in place and over the next month, they collected about half of their total AR; about $50,000.
We also reviewed the current billing process, eliminated some unnecessary steps (and people), and reduced the billing time to 24-48 hours after the job is complete. This has had a significant impact on keeping their accounts receivable to lower levels even after the old AR invoices were cleaned up. We know that the sooner a customer is billed, the sooner they will pay the invoice.
Looking at these three areas; advanced billing, accounts receivable, and timely billing, and making improvements will produce sizeable results early for your contractor clients.
Thanks so much Dulcee – right to the point and good points they were. Now for everyone else to respond. Have you seen similar situations to the one Dulcee has? What are other challenges you’ve seen when working with trade contractors?
Post your answers in the comments section.