Q&A with financial expert Chris Anderson: Finding financial success during COVID-19
It’s never been more important than right now to make smart money moves.
However, remaining financially focused is no easy feat during the Coronavirus crisis as the economy changes each and every day. That’s why we brought in the big guns. We’re talking with the money maestro himself – Chris Anderson.
Anderson is the founder of Monthend, a bookkeeping, accounting and tax consulting company. Monthend’s goal is to help Buildertrend users like yourself leverage technology to become more profitable.
Check out Anderson’s financial tips and tactics to find success during this uncertain time:
Q: Why is investing in tech like Buildertrend at this time a smart financial decision?
A: Construction companies should continuously invest in technology. These kinds of investments should be part a company’s regular budget and culture. Think of it as research and development.
Your competition is constantly updating their tools, designs, floorplans and software. Software like Buildertrend isn’t much different than a new power tool or construction technique. If your competition is using air nailers, do you want to be the one out there still using a hammer? Now is a good time to implement. Now is almost always the best time.
Q: How can construction professionals strengthen their businesses financially right now?
A: The best thing a company can do is to take advantage of all the programs available to them, like the Paycheck Protection Program (PPP).
Construction companies are also reaching out to their trade partners or banks and asking for flexible terms and temporary price concessions in certain circumstances. Big builders like Lennar started negotiating right away, so you may need to ask for cooperation from your trade partners to remain competitive.
Q: Where should businesses look to for short-term funding?
A: First, programs like PPP and Economic Injury Disaster Loans (EIDL) provide quick relief with little red tape. The trick is actually getting funded!
Community banks have been best able to service clients and even non-clients. Some states, cities and counties are also offering relief in the form of grants or forgivable loans.
Next, consider Accounts Payable as a source of financing. That’s just a fancy way to say try to get your larger corporate vendors to carry your bills for 60 or 90 days (or longer) instead of 30. You could ask your smaller partners as well, but they are less likely to be financially strong enough to hold their accounts receivable.
Q: How can small businesses take advantage of current relief provided by the CARES Act?
A: Apply early and apply often.
Yes, you can only actually apply for most of these programs once, but that shouldn’t stop you from talking to all the bankers you know – or don’t know yet – until you find one you’re confident can and will deliver.
Q: Can builders expect any additional support soon?
A: We’ve seen most builders who applied early and with a smaller bank get funding. Both from PPP and EIDL. All signs point to another round of PPP coming soon. Make sure you’re ready to go! If you don’t have an application in yet, get it in immediately.
Q: What can construction professionals do to best manage finances in this time?
A: Aside from the items above, the best thing you can do to ease your mind is create a cash-flow forecast. You can work with your accountant to do it, or you can do it yourself. You want to add up all your expected cash inflows by week and look at them against your expected cash outflows.
This is not an exercise in understanding profitability, margin or anything like that. It’s simply an exercise of “how long will my cash last given a set of assumptions?”
I suggest forecasting by week and updating it at least weekly.
Q: How can construction professionals position themselves for a successful long-term financial recovery?
A: Use this time to find talent – especially administrative talent. That’s not going to be possible for a lot of companies due to cash constraints, but if you’re in a financial position to hire, now is an incredible time to do it.
We are seeing a lot of professionals in healthcare and other damaged industries being displaced and looking for work. Do these folks know much about construction? Usually not. But, if you’re willing to train them, you can get some really smart, really ambitious new employees who are ready for a new challenge.
Q: What’s the number one thing all construction professionals should know to make it through this?
A: We went into March in a housing shortage, and we’re going to come out of May/June still in a housing shortage. Demand has some headwinds, but supply is being held back as well. Like Forrest Gump and Lieutenant Dan, if you can get through this storm, I think you’re going to have sunny skies and some great fishing ahead of you.
There’s more help where that came from …
Going back to Anderson’s first point, having tech on your side is always a good idea – especially now.
If you’re not already using Buildertrend to help your business find a better way, we’re ready and happy to help you. Schedule a demo with us now!
Checking these resources out is one money move you can make today to keep your cash flow flowing.
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