Reputation alone is no longer enough for field services firms.
As we emerge from the recession, field services firms must be able to prove they’re financially stable and capable of completing projects.
An article on the Construction Executive website outlines four questions every field services firm should be prepared to answer.
- What does your most recent financial statement look like? Make sure your operations systems are feeding into your financial systems and are accurate at all times. You need to know where your revenue is coming from. That means having good integration between your software systems so you have the visibility you need for both your projects and your finances.Your financial system must show an accurate level for your liabilities. This ensures that working capital is also accurate. With this kind of data readily available, your customers can confirm you’re a vendor they can count on.We all know cash flow is king. Getting your invoices out the door on a timely basis will also drive cash into your business. Software that can feed your financial system with project expenses, material commitments and subcontractor costs provides accurate liabilities to give you the true state of your working capital.
- Can you be bonded? Show the last bonded job you completed as well as the surety you were bonded with.
- What does your backlog look like? The Construction Executive article notes that this is an important indicator of any field services firm’s financial health. A financial statement worked up by a CPA will include this in the footnotes.
- Have you been involved in any recent litigation? While not a clear indicator that anything is wrong with a company, being consistently involved in lawsuits is a red flag.
Source: Construction Executive, August 2012