Accounts Receivables – Contractors
What is the best way to go about accounts receivable as a sub-contractor?
Basic Flow: Client gives GC the job, who awards it to us if we bid right. We lay out the materials and labor costs prior to being paid and expect to be paid at completion of the job or on terms of X amount of days after they have been invoiced(typically 30-90). The problem lies in that we are putting up the capital for the job, but not receiving payment on many. We cannot get paid until the GC gets paid and sometimes they are not diligent in their collections or they just avoid us or say they cant give us anything. I am wondering how we can better our position so that things like this do not happen to us. We could lien them but the issue in that is we will ruin our relationships with the people providing work for us as well as the other drawbacks of such an action. Any suggestions?
You said you are the student of a university. Is it a problems given to you or you have a business where you have this issue. If it is a problem given to you by the university then you may have to use several phrases connected with the Law. I can give you a practical problem.
The GC ( you mean main contractor) has to give a statement to the client that he is appointing few sub contractors to complete the job apart from his employees who will do the critical jobs and also supervise them. And in any contract there will be a kind of mobilization advance paid by the client – usually 10 to 15% of the total value. And the main contractor will pay 5 to 8% to the sub contractor as mobilization advance. If you have not added this clause in your quotation / offer it is your 1stmistake.
When you are doing work, there will be a authorized person from the main client who inspects the work and make the record and when it is being done, the GC’s rep. will also be present there. This is called ( in this side of world) as measurement book. OR, check what kind of records the GC or the client is using to measure the work so that the payment will be released based on the bill, submitted by the GC which is actually based on the invoice submitted by YOU. The rates will differ. In this kind of situations where you don’t want to be in bad books of the GC and you want to run the business, it seems the GC has understood you fully about your weakness. You better meet the client. There must be some records where the GC should have informed that such and such sub contractor is working on behalf of the GC. And enquire about the clause that if the onus of paying the labor of the subcontractor is on GC in case sub contractor is not able to pay?? If it is there, there will be some crooked way of mending that GC, Wait for a very important component, meanwhile to reduce your actual losses to an extent ( if in case the GC refused to pay any thing) stop buying any material and ask main technicians in your employees to go on leave one by one. Introduce some slackness in the job. Send the bill collector morning and evening … send letters, keep records that ( copy of letters) give indirect threats that you will approach the client. Inform that client is asking me about whether I received the payment or not. Finally do you have a contract in written? Did you and GC signed there?
How to quantify accomplishments for accounts receivable / general ledger accountants
For a finance/accounting team that may currently have a “deadbeat employee” in its ranks (i.e. accomplishes the bare minimum in a given work week with little to no enthusiasm) what tricks or tips can anyone offer on how to set quantifiable measurements for an accounts receivable / general ledger accounting role that would either help motivate the individual, or provide support to eventually separate said employee?
The issue is while you are very accommodating in finding the right way to motivate an individual, that individual need to realize this situation and should come to your level to make him productive. First thing is to call him alone and discuss the reasons behind it. The way he replies, his body language will tell you many things. I give few probable reasons:
He may be working in a bit higher position but due to economy he lost that job and he settled here against his wishes, so he don’t see any reason to get motivated.
He might have joined here without much experience or his qualification may be Male Nurse but forced to join in accounts, OR a team lead in a marketing force.
He must have some personal issues which are eating him 24/7
He may be qualified for the job but not willing to work.
Once you make the analysis you can decide on the metrics
- You take the print out of receivables and ask him to make it “aged analysis”
- Ask him to give you this report – exclusively to YOU to be sent to CEO” every day evening before he leaves the office, through HIS email, without connecting to team leader
- GL – head wise report need to be sent with HIS analytical remarks – every day at 12 noon – to be sent to CEO, so it should be sent to you.
- If he can make an analysis of AR aged statement with innovative recommendations to collect them, he will get one primer point for each accepted analytical recommendation and if that recommendation has worked, he will get letter of appreciation.
- If he can recommend innovative solution / changes in the GL, he will be given a primer point for accepted solution.
These are the few for the time being. Let me know the progress and I will tell you more once I receive your feedback.
You must be congratulated for not recommending his ouster and instead asking opinions to correct him, improve him and retain him. That is where the manager’s quality will come. Any one can send him home, very few people can bring a change.
