We work with a lot of remodeling contractors, and there’s one conversation we have over and over again. It goes something like this:
“Business is great! We’re booked solid for the next three months.”
“That’s awesome! How are your margins looking?”
“Well… that’s the thing. We’re busy as hell but barely profitable.”
When we dig deeper, the culprit is almost always the same:
They’re underbidding projects to win work, then getting destroyed by change orders and scope creep they can’t bill for.
This contractor was doing beautiful work, charging fair rates, and landing great clients. But she couldn’t collect money fast enough to stay afloat.
She had $170,000 in outstanding receivables at any given time. Think about that—she was essentially running a bank that gave out interest-free loans to people who could absolutely afford to pay her on time.
Her cash flow was so bad she had to turn down new projects because she couldn’t afford the upfront material costs. Too successful to take on more success. That’s insane.
If this sounds painfully familiar, here’s exactly what we help our clients fix.
Flip Your Payment Structure Completely
Stop doing 10-20% deposits and balance at completion. That model is killing you.
We recommend 40-50% upfront before you order anything. Yes, some clients will push back. In our experience, those are usually the same clients who’ll string you along for 90 days anyway.
The clients who value professional work understand that professionals need working capital.
Switch to Milestone-Based Billing
Money should come in while you’re actually spending it, not months later.
For a $75,000 kitchen remodel, structure it like this:
- 45% at contract signing ($33,750)
- 25% when demo and rough-in are complete ($18,750)
- 20% when cabinets and counters are installed ($15,000)
- 10% at final walkthrough ($7,500)
You’re getting paid as you go instead of financing the entire project yourself.
Make It Ridiculously Easy to Pay You
We set all our clients up with payment processing that accepts credit cards, ACH, Venmo, Zelle—whatever gets money moving.
“But credit cards cost 3% in fees!” Yeah, and waiting 60 days for payment costs you way more in opportunity cost, stress, and interest on the business credit card you’re using to float everything.
Getting paid in 48 hours instead of 60 days? Worth every penny.
Put Payment Terms That Protect YOU in Every Contract
Net 5 days, not net 30. Include a 1.5% monthly late fee on overdue balances (check your state laws, but this is legal most places). Add a clause that work stops if payment is more than 7 days late.
You’ll rarely need to enforce it. But having it in writing completely changes the conversation when someone’s dragging their feet.
Send Invoices Immediately and Follow Up Fast
The moment you hit a milestone, the invoice goes out. Not tomorrow. Not when you get around to it. That day.
We automate this for our clients so it happens the second they mark a phase complete in their project management system.
Then follow up after 48 hours with a friendly text: “Hi Mike, wanted to make sure you got the invoice for the rough-in phase. Let me know if you have any questions!”
Most late payments aren’t personal—people are busy and need a reminder.
That contractor we mentioned? After implementing these changes, her average collection time dropped from 71 days to 12 days. She’s not using her line of credit anymore. She can actually take on new projects. And she sleeps at night.
Tired of financing your clients’ projects? We help remodeling and design businesses restructure their payment terms, automate invoicing, and actually get paid on time. Book a strategy call and let’s fix your cash flow.