Looking for a way to pay for a big contract before it pays you? Steven Palmieri, a Tax CFO, hears one worry more than the others from owners who have just won something large. The win is real, and the first month's bills arrive long before the first payment does.
A large contract asks the business to grow before it earns. You hire people, buy materials, rent equipment and pay for insurance and bonding where the job calls for it. Billing starts after the work is accepted, and the first payment arrives after that. So the early months pull cash out of the business even though the contract is good news. Seeing that on a page, before you sign, turns a worry into a number.
We start with the billing terms in the contract. When can you invoice, what does the customer need to see, and how long does payment take after that? Then we lay those dates beside the costs that begin on day one. Payroll for the new people, the first material order, a deposit on equipment. The result is a month-by-month map showing how deep the gap gets and when it closes.
Earned in the first quarter, billed after acceptance, paid in the second, with the crew on payroll from week one. That is a constructed example, and your contract will have its own shape. The point is to draw it with your own dates.
New hires mean new payroll lines. We set payroll up for them on the provider you already run, which means registrations, correct pay for the owner and the workers, and the provider's feed wired into your books. We do not process payroll, and your provider runs payday. We watch the quarterly and annual filings so the larger payroll does not slip.
There is more than one way to carry it, and we describe them without recommending a product.
A credit line is the usual first choice, because it is flexible and can be set up before the contract starts. The customer's own terms may help too, since some contracts allow a mobilization payment or progress billing, and it is worth asking before you sign. Slower terms with your own suppliers can cover part of the gap, as long as the suppliers agree and you can still pay them. A line of credit is covered on its own page, a credit line before you need it. Each option costs something. Our job is to show what, so that you choose with the numbers in front of you.
A big contract changes the year. Income rises, estimated payments rise with it, and the question of how the business is structured may come up. These are decisions to make while the year is still open, with the first closed months to guide them. We bring the numbers, and you decide. The dates for the whole year, and the rates behind them, are on the page about the taxes a San Antonio business plans cash around.
A lawyer reads the contract for legal risk, and we read it for payment terms. A bond or a surety company may ask for signed statements from a licensed firm, and we will have your books ready for that. Our work is cash and books.
On a free Second Look call we plan the first six months of the contract with you. It costs nothing, and no paperwork comes with it.
You will be talking to the Steven Palmieri practice.