How To Get The Growth & Cash You Want in 2014
 

How To Get The Growth & Cash You Want in 2014

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2014 promises to be the year of the recovery. This means two things. First, there is a lot of room for your company to grow. Second, you need to carefully orchestrate your growth to avoid the risk of ...

2014 promises to be the year of the recovery. This means two things. First, there is a lot of room for your company to grow. Second, you need to carefully orchestrate your growth to avoid the risk of running out of cash. This is especially true in the construction industry, where research has found that companies are 3x more likely to fail in a recovering economy than in an economic downturn.

Construction attorney and financial risk expert Scott Wolfe put together this presentation to help distributors, construction suppliers, and contractors navigate the new economy and achieve the growth they want with the cash flow they need.

How is this done?

Growth: Growth is achieved by being cautious about the perils of a recovering economy, and by credit departments empowering their sales departments with options to get new customers.

Cash: Cash is managed in the construction industry by building a predictable pipeline of cash. What enables companies to do this? The preliminary notice document.

Learn more in this presentation, which is great for CFOs, credit managers, and other financial professionals.

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    How To Get The Growth & Cash You Want in 2014 How To Get The Growth & Cash You Want in 2014 Presentation Transcript

    • Construction Credit Knowledge Every Wednesday • 1pm CST http://zlien.us/web-ed
    • Is There Room To Grow in 2014?
    • Recession Story In The Construction Industry $1,200,000 $900,000 $600,000 $300,000 $0 2005 2006 2007 2008 2009 2010 2011 Total Construction Spending Source: U.S. Census Bureau, Construction Spending Amounts in Millions 2012 2013
    • Good News Bad News 2012 and 2013 Overall Growth Growth was tiny increments Jobs Report Solid for most of 2013 Job losses in December 2013 (Blamed on Weather) Recovery Numbers Predicted for 2014 Predicted for 2013 & largely unrealized. Housing numbers are strong. They aren’t that strong. Industry expected to grow in 2014 Growth numbers are still conservative Sources: 1. Construction Executive: 2014 Construction Economic Outlook: Is a Real Recovery Ahead? 2. New York Times: Sudden Rise in Home Demand Takes Builders By Surprise 3. AGC of America: December 2013 Press Release On Construction Employment Statistics 4. AIA: Consensus Construction Economic Forecast Report 5. ENR: AGC Survey Shows Contractors Optimistic About 2014 6. CFO.org: Construction Industry: A Recipe For Growth? 7. WallStreet Journal: Cold Weather Hits Construction, But Not Contractors’ Confidence
    • Good News Bad News 2012 and 2013 Overall Growth Growth was tiny increments Jobs Report Solid for most of 2013 Job losses in December 2013 (Blamed on Weather) Recovery Numbers Predicted for 2014 Predicted for 2013 & largely unrealized. Housing numbers are strong. They aren’t that strong. Industry expected to grow in 2014 Growth numbers are still conservative Sources: 1. Construction Executive: 2014 Construction Economic Outlook: Is a Real Recovery Ahead? 2. New York Times: Sudden Rise in Home Demand Takes Builders By Surprise 3. AGC of America: December 2013 Press Release On Construction Employment Statistics 4. AIA: Consensus Construction Economic Forecast Report 5. ENR: AGC Survey Shows Contractors Optimistic About 2014 6. CFO.org: Construction Industry: A Recipe For Growth? 7. WallStreet Journal: Cold Weather Hits Construction, But Not Contractors’ Confidence
    • There Is Lots Of Room For Growth
    • Part 1: How To Grow
    • FIRST Know Where The Dangers Are SECOND Empower Sales With Options
    • FIRST Know Where The Dangers Are “No one liked the recession, but some contractors are going to hate the recovery, too.” Thomas Schleifer, Ph.D Del E. Webb School of Construction ENR Viewpoints: Beware The Recovery
    • FIRST Know Where The Dangers Are Recovery Makes Things Worse 3x WORSE DURING RECOVERY THAN DOWNTURN ENR Viewpoints: Beware The Recovery failure rates 100% 75% 50% 25% 0% YEARS: 1 2 3 4 5
    • FIRST Know Where The Dangers Are Strong Economy Will Require Companies To Grow Into New Demand Long Recession Made Companies Cash Poor Growth Eats Cash Financial Struggle To Meet Cash Demands With Small Cash Reserves
    • FIRST Know Where The Dangers Are Be open to new opportunities, but don’t over extend your company
    • SECOND Empower Sales With Options Economy’s new opportunities will energize your sales people… But since you don’t want to over extend, you need to stick to your credit policies… Which makes you the party pooper.*
    • SECOND Empower Sales With Options Economy’s new opportunities will energize your sales people… But since you don’t want to over extend, you need to stick to your credit policies… Which makes you the party pooper.* *no one likes to be the party pooper
    • SECOND Empower Sales With Options • Personal Guarantees • Joint Check Agreements • Security!
    • SECOND Empower Sales With Options “We did not have good options for taking on risky customers. We have a lot more options [after using zlien] if we want to work with someone who has risky credit. We have used our security rights many times in these situations successfully.”
    • Credit v. Sales Can’t We All Just Get Along? WEBINAR: February 12, 2014 1pm CST
    • Part 2: How To Be Cash Rich
    • Meet Growth, The Cash Eater
    • Hangover Habits From Recession Hard to Get Capital: Banks & Private Equity Still A Little Gun Shy The recovery may be here, but it’s hard to get equity and financing. Many reports in 2013 confirmed that small business financing is hard to find. Huffington Post. NYT. Starting Cash Poor: Everyone is starting the recovery cash poor Companies that survived the recession are short on cash, and therefore, recovering economy will rely on cash poor companies: ENR: Beware the Recovery. Longer Payment Terms: Pushing out payment terms trend continuing. It is taking longer than ever to get invoices paid. Sometimes, the availability of cash is the issue. Increasingly, it’s strategy by debtors. WSJ: Big Companies Pinch on Payment Terms. Scaling = Delay: Companies must expect costly delays. Scaling operations in housing market resulting in delays and extra expense. See: NYTimes Sudden Rise in Home Demand Takes Many By Surprise.
    • What Your Company Needs • • Low DSOs • Less Aging Consistent & Predictable Cash Flow
    • DSOs, aging accounts, inconsistent collections, economic factors… Everything adds up.
    • Preliminary Notice Your Credit Department’s Secret Sauce WEBINAR On Demand:
    • Fortune 500 Company 6 Months After Implementing Preliminary Notice Policy Before After Percentage of Debt Outstanding: Percentage of Debt Outstanding: At 30 Days 56% At 30 Days 46% At 60 Days 24% At 60 Days 15% At 90 Days 14% At 90 Days 3% At 120 Days 5% At 120 Days 0.04%
    • The More You Notice… The less money problems you have. Percentage Projects Notice Percentage of Projects Liened 50% 25% 0% 2010 2011 2012 2013
    • Credit Policy Tips 6 Weeks, 2 Emails /wk Free Forms & How-Tos zlien.us/credit-ed
    • Ask Us! Interested in learning more or have a question? Ask Us Anything