Contractors will often face the dilemma of needing funding to complete their clients' projects, but they may not be paid until the work is completed. While this is a common issue for contracting firms, those that are new to managing their own firm may be unsure of what they should be doing to best balance these competing and conflicting needs.
Aggressively Preserve Your Firm's Credit History
As with individuals, your contracting firm will have a credit history and score. When you utilize short-term contractor funding services, they will typically review your firm's credit score and history before issuing the loan. This will determine the amount of the loan that is granted along with the interest rates that are charged. For these reasons, you should aggressively work to protect your firm's credit standing. While paying your firm's bills on time is one of the best ways of protecting its score, you will also need to regularly check and monitor the firm's credit report. This will allow you to identify instances of errors or potential identity fraud.
Have Separate Accounts For Long-Term And Short-Term Funding
As part of being issued a contractor loan, you will need to agree to only use these funds to complete the stated project or order. Unfortunately, it can be difficult to accurately track these funds if they are included in your firm's general expense account. To avoid accidentally mismanaging these funds, you should have a separate account that is only used for these short-term funding needs.
Regularly Review Your Funding Options
Contractors will often face the need to regularly apply for this type of short-term loan. This can lead to them falling into the habit of simply using the same lender each time. While this may be more convenient, it is advisable to periodically check with other lenders to see what they are offering. This will allow you to compare the terms that the new lender is offering with what you can expect from the service you normally use.
New contractors that are faced with the need to provide short-term funding for their projects will often find themselves at a loss as to how to proceed. If you are to address this need, it is important to understand your options for contractor funding services. By appreciating the need to protect your firm's credit history, separate the short-term loan from your general funds and to regularly compare offers, you can more easily and affordably meet this need for your contracting enterprise. Contact a company, like Genesis Contractor Solutions, for more help.