What are the right steps to tackle the growing problem of client unprofitability in the construction industry? Here I offer some straightforward pointers from my recent interview with ABC&D magazine which will keep your business on the right track during tough times.
The construction industry has been one of the sectors hit hardest by the recession. In their attempt to maintain business viability, and keep staff employed, some construction firms have been tempted to take on projects with narrow profit margins and over-deliver to retain the client’s business in an aggressively competitive marketplace.
Although this is an understandable course of action, it’s not a sustainable way of doing business, especially given that construction work is affected by so many outside factors. Healthy cashflow is crucial and companies need to ensure that their work is as profitable as it can be.
There are some straightforward steps that companies can take to ensure that profitability remains priority.
Scrutinise your current client base
Getting to grips with client profitability starts with reviewing your current client base which can lead to tough and radical decisions. As difficult as this is, your business will never thrive if you work on unprofitable projects. We have all experienced ‘mission creep’ with long-standing clients, when the original terms of the partnership have not kept pace with rising costs. When these relationships become closer over time, it’s understandable that you are reluctant to set different expectations or boundaries. It doesn’t matter how much business is available, turning work away is never easy to do but it does free up expensive resources to focus on where they can bring the best return.
Click here to find out more
Model what your ideal client looks like
To build a sustainable business, you need to focus on the sectors, projects and clients that are most profitable, rather than trying to be all things to all clients. It’s worth stepping back, analysing each project your business works on and then modelling ‘a perfect client’. By doing this exercise you will be able to divide your clients into three categories – those who are already profitable, those who could become profitable and clients who are unlikely to ever become profitable. By gaining a better understanding of what each client is worth to your business, you can decide where to invest resources for optimum return, both in retaining clients and pursuing new business.
The customer is not always right
Traditional thinking says that because customers hold the purse strings, they are always right. While customer satisfaction is vital to your business, honesty and transparency are the firmest building blocks for maintaining a working customer relationship. Clients will not only respect you if you highlight potential flaws, but by doing so you will also give them time to find and implement solutions to deal with the problem. Don’t forget, the reputation of your business is impacted by every delayed project, so don’t be afraid to raise a red flag if you think that a client’s expectations are not possible to fulfil.
Click here to find out moreReporting, reporting, reporting
None of the above will be possible without efficient reporting, so as tedious as it sounds, make sure you get your house in order. Being able to prepare and present a wealth of reports with confidence will give you solid ground to stand on when discussing budgets with your customers and is crucial for your managers to keep projects within deadlines and budgets. The right software should reduce the length of time you spend on reporting while also enabling you to present a project’s progress or results as easy-to-understand ‘management dashboards’. By presenting information this way, companies can share detailed, financial or technical data to clients in a format they can easily understand and act on.
Analyse where internal processes are undermining your profitability
As well as identifying which clients are affecting your profitability, you need to consider how your internal processes could be streamlined to improve efficiency and reduce costs. Are you deploying your resources to the best effect? Can you spot instantly where actual costs are getting disproportionate with the budget? It’s a real challenge to strike the right balance between under-utilising sources and over-committing them. Drawing on a database of information from previous projects of similar complexity will speed up this process and increase the accuracy of your decisions.
Dealing with unprofitable clients is challenging and can be emotional especially if you have developed a relationship on a personal level. However, it will not only boost your profits but also staff morale so it is definitely worth the effort in the long term.
For further information on IRIS Project Solutions please click here.
Article originally published in ABC&D magazine published November 2011.
Tags: construction, construction industry, IRIS Project Solutions, business software, accounts software
IRIS ABS News
Remote working is not a new working practice, but is one that as a society, we are becoming increasingly reliant on. It is now the norm that today’s working environment demands instant access to key business data and the emphasis falls on IT systems and software developers to be able to provide this access, in a secure and reliable fashion.
Today’s technological advancements can enable an ‘anytime/anywhere’ working philosophy, if organisations choose to invest in software capable of facilitating access to live systems from remote locations. But just how important do organisations view remote working to be and is it a priority, in particular for finance departments to be able to work remotely? In this post I’m going to look at how remote working is affecting the modern day finance department and consider how organisations are responding to changes in technologies.
The Benefits of Remote Working
The competitive nature of the working economy depicts that key decision makers need to have instant access to live, accurate information at their fingertips. Remote access can empower employees, enabling them to make informed decisions at anytime. This can be critical in today’s competitive business world, especially in a fast paced sales environment. Competent business software should not only facilitate remote working, it should also make it easier and be able to automate the delivery of essential and valuable information directly to a mobile phone or PDA device, providing a ‘snapshot’ of organisational KPIs.
On another level, remote working also allows employees the attractive and flexible option to work from home, from a different office or location or even whilst commuting. From a green point of view, I believe it has a positive impact on the environment encouraging reduced travel.
The Importance of Remote Working
To understand how important remote working is, IRIS conducted a recent survey with 167 UK finance professionals. The results highlight and re-enforce the ever growing importance and reliance on the benefits of remote working. You can see more in the Slideshare presentation below.
76.6% of those asked felt that remote working was essential or important to their organisation. Only 6.6% had no remote workers within their organisation. These statistics clearly demonstrate the increasing dependence on software capable of facilitating such mobile working environments.
The survey also indicated that the demand for remote working is on the increase with 96.4% claiming that over the last 6 months remote working had stayed at the same level or increased. Over a third of respondents claimed an increase.
The Role of Software in Remote Working in a Finance Environment
It appears that software providers have been responding to the demand. Only 15.6% of those questioned stated that their accounting solutions software prevents them from accessing the financial data they need. When asked specifically what financial data they required access to, respondents cited a variety of requirements:
These responses highlight the need for accounting solutions and business systems to provide live access to all spectrums of the data in a secure, reliable and safe environment, and also represents the breadth of workers who take advantage of remote access.
In terms of the technology adopted to facilitate remote working, respondents used multiple methods, with 65.9% using their home computer and 43.7% using a lap top or notebook. Nearly twice as many respondents use a RIM Blackberry as all other forms of PDA or Smartphone. Surprisingly, considering many accountants work away from the office visiting clients, only a very small number of accountants in practice use a Blackberry or Smartphone to access financial information. The vast majority of hand-held devices are used by FDs. It will be interesting to see how this trend develops in the next 12 months as the iphone and other devices become more readily adopted.
Instant access to accurate and relevant information is essential to organisational agility and success and therefore remote access has become a crucial feature of modern accounting systems. Developers therefore need to consider carefully a number of methods for accessing their systems remotely, including via web-browser as well as through more mobile forms of technology. Due to the sensitive nature of the data, software developers need to provide a secure access route, ensuring security is not compromised. Users need a fast and reliable connection to the data they need to work from so efficiency is also not compromised.
Recent external environmental events beyond our control have pinpointed how crucial it is for workers to be able to access systems and data remotely and organisations need to ensure that their software developer can provide a secure and reliable platform to facilitate this.
IRIS Exchequer LIVE
IRIS is committed to responding to customer and market demands and as a result, has further developed the remote working capabilities of its award-winning product, IRIS Exchequer. IRIS Exchequer LIVE uses the latest technologies to enable users to operate and collaborate efficiently by providing real-time access, irrelevant of location, through an intuitive and highly functional new interface (IU). By taking advantage of leading edge developments, IRIS has created a new ‘Rich Internet Application’ (RIA), which enables both office-based and remote users to have access to live data, providing an essential gateway to accurate business information.
IRIS Exchequer LIVE is not purely for remote workers; the solution delivers the capability for office-based users to access, manage and tailor transactions to their individual working requirements. Key to the design of this all new solution is the ability for users to create a personalised view of key information. An intuitive panel provides a ‘snapshot’ view of activities, unique to each specific user.
IRIS Exchequer LIVE has responded to the challenge of the demands of the changing working environment by providing a fresh and dynamic approach to accessing critical business data from both an office and remote environment.
To find out more about IRIS Exchequer LIVE, please visit www.irisexchequerlive.co.uk
Tags: accounting software, business software, IRIS Exchequer, Remote working, web enabled solutions, accounting solutions, accounts software
Our expert contributors provide news and views on business and finance issues, accounting software and industry solutions.www.exchequer.com