How long does it take for you to get paid by a client? From the moment you drop an invoice in the mail, how many days does it take to see a check show up in your bank account? Some studies put the average collection period for AEC firms between 70 to 80 days. Can you go that long without getting paid for the work you perform?
What about the money you make per project? Is your firm normally profitable or do you frequently have to eat a certain number of hours per project?
If your firm is struggling to get paid by clients in a timely fashion or is consistently finding project profitability below where it should be, here are 5 simple tips to improve your cash flow using a project management software.
Be efficient
Improving your firm’s cash flow starts with you and your employees being efficient with projects. If your team consistently struggles with efficiency during a particular project phase, your project management software can help pinpoint the tasks and areas that need improvement. The Project Center in BillQuick can show you the efficiency of each phase of a project – hours-to-date, total hours budgeted, and hours-over-budget. You can see your costs incurred by phase and task, analyze your actual hours-to-budget projections, and make informed decisions on how to budget for future projects and increase your team’s efficiency. The Allocation and Forecasting feature in it can help you assign project tasks to available staff based on their workload.
Understand your cost rates
Do you know how much your employees are costing your firm for every hour they work? Salary is just one component of an employee’s cost – there are benefits and other overhead expenses also that should be allocated to individual employees. You should wait to quote a project fee until you know which employees will work on the project and what they will cost. It wouldn’t make sense to bill your client $120 an hour if the average cost of an employee working on a particular project is $125. BillQuick provides all the metrics you need to determine your effective bill and cost rates, utilization rates and realization rates.
Monitor accounts receivable
Don’t hire a CPA and leave it to your accountant to monitor slow-to-pay clients. It’s your responsibility as an owner or principal of your firm to follow-up with clients who haven’t paid their invoices. The quickest way to take care of an overdue bill is to pick up the phone and request a prompt payment from your client. The Collection Center in BillQuick is the hub from where you can run all your collection efforts. The statistics it provides are extremely useful.
Quit misplacing expenses
It’s not just accounts receivable that should be constantly monitored; reports that show detailed expenses to be billed to a client also need constant attention. For example, have you ever submitted an expense report to a client, then several months later discovered another batch of expenses that had been overlooked? Be sure to get paid for every reimbursable expense you incur during a project. $10 here and $25 there can add up in a hurry when cash is running short. BillQuick mobile app can help you capture and submit all your expenses on time, by taking pictures of your receipts, etc. and then attaching them with the entries.
Hike your fees
A simple way to solve a cash flow crisis is to increase your fees. Yes, you’ll likely lose several clients by doing this. But clients that are this fee-sensitive were probably not a good fit for your firm in the first place. Raising your rates will weed out high-maintenance clients and leave you with clients who value your time and work – and won’t argue over paying a premium for your firm’s exclusive services.
BillQuick is an intelligent time tracking, billing, accounting and project management solution, designed to help you increase efficiency, streamline processes and improve performance. Get started with a 15-Day Trial today and begin saving time and money! For more information, visit www.bqe.com or call (866) 945-1595.