The sector's principal commercial risk.
WHY IT IS THE CENTRAL PROBLEM
Payment periods are long, approval processes are slow, and costs are incurred throughout.
WHAT THAT PRODUCES
A funding requirement that grows with contract size.
WHAT TO CALCULATE BEFORE ACCEPTING ANY CONTRACT
Total cost incurred before the first payment The period over which it is incurred Whether you can fund it
WHY
It is the question that determines survival.
WHAT COSTS RUN CONTINUOUSLY
Personnel Equipment and mobilisation Materials Subcontractors
WHY PERSONNEL SPECIFICALLY
They are paid monthly regardless of whether the client has paid.
WHAT DELAYS PAYMENT
Documentation not complete Approvals in the client's organisation Disputes about scope or quantities Client's own processes
WHAT TO ESTABLISH
Exactly what the invoice must contain and be accompanied by.
WHY EXACTLY
A single missing document restarts the cycle.
WHAT TO DO
Submit complete invoices, immediately, and confirm receipt.
WHAT TO TRACK
Invoices submitted, approved and paid Days outstanding Where each invoice is in the client's process
WHY THAT LAST POINT
Invoices stop in specific places and they must be chased there.
WHAT TO ESTABLISH
A named contact in the client's finance function.
WHAT FUNDING OPTIONS EXIST
Bank facilities Invoice financing against approved invoices Supplier credit Advance payment, where the contract permits
WHAT TO NEGOTIATE
Mobilisation or advance payment.
WHY
It funds the start rather than your reserves.
WHAT TO AVOID
Taking a second large contract while the first is unpaid.
