Avoid Disputed Invoices On Your Next Construction Job

Let’s be honest coming in under budget on a renovation or build is not as common as going over. Things happen that are often out of the control of the company that causes the client’s budget to be blown. Going over budget without properly managing your client’s expectations and understanding can leave you with disappointed clients, loss of revenue, reputation management issues, and in some cases legal issues. We see it all the time in the news where construction companies are under fire and bills are being disputed.

All of this can be mitigated and at most times avoided if you follow these three simple rules of thumb.

1) Communication Is Key

Be honest with your clients from the start. Set their expectations from day one. Let them know that you will do your best to stay within their budget but there are times when budgets are exceeded due to ABC. Give examples of past clients who have exceeded their budget and explain why so it’s really clear that this may happen to them.

Continue this open line of communication with your clients throughout the process. Let them know how things are going and prepare them for budget issues. They will be much more understanding when increases arise if you take this approach.

2) Get Everything In Writing

Whenever you make an order change make sure you do so in writing and the client signs off on the change. Articulate that you are doing this at their request to accommodate their needs and remind them that the change is likely to increase the cost of the project.

This will give you a legal advantage if the client tries to dispute the bill. It will also add to the clients understanding of the cost increase.

3) Know your numbers

At times going over budget is the fault of the construction company. If you don’t manage your numbers and keep your spending up to date you won’t know you are about to exceed the budget until it’s too late. This can lead to disputes with your client and ultimately to lost profits if they refuse to pay the excess.

Use a spreadsheet or bookkeeping software to manage your expenses. Update it regularly and ensure the client receives sufficient warning and communication if the build is costing more than expected.

If you need help managing the numbers on your next construction project contact Homeroom today.

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