Dispatch #6 - Cutting Overhead
As you meet with your Leadership Team, two difficult, but important, questions to answer are how much overhead to cut, and when. For the moment, it’s safe to assume “a lot” and “quickly”.
Below are a few tips based on recent conversations with construction company owners and controllers:
Auto-pays: remove from auto-pay or otherwise renegotiate the ones you don’t (or might not) want to keep paying; give your company more control over its cash.
Renegotiate premiums and payment schedules on insurance policies that are driven by volume (revenue, payroll, number of vehicles and equipment in service).
Remove or renegotiate furloughed employee perqs like gas cards, phones, and the use of a company vehicle for personal use.
Payroll - factor into your cash flow PTO and FFCRA (Families First Coronavirus Response Act) payments.
Regarding phones: if possible, reduce the plan or try to find another workaround if an employee’s company-paid cell phone is their only phone and they can’t afford to get their own immediately. We all need this essential communication link, especially now.
Need help with this or other financial matters faced by construction contractors? Let’s talk!
David Stern CFO makes every effort to provide useful and accurate information. This content, however, is not intended as a substitute for specific business-related financial advice. We disclaim all warranties and liabilities from its use.