SECTION 2 OF 4
Ask vendors for help on costs, payment terms, or other forms of value
If you are impacted, reach out to your vendors to see if they can help by offering temporary price reductions, extended payment terms, or other valuable products or services that might help you in other ways. Open your accounting solution, sort your costs from highest to lowest, and start calling. Look at equipment, parts, rent, utilities, payroll processors, etc.
As your partner, they will be in this with you. They want you to succeed because they want you to remain a loyal client in the future when this is over. In return, only do this if you are meaningfully impacted from COVID-19, and when the world returns to normal, reciprocate their help by sticking with them, allowing prices to return to normal, and even referring other contractors to them.
Here’s an example from One Hour Heating & Air Conditioning of Omaha: “In 2019, the Midwest experienced devastating floods. During this time, we partnered with our vendors, who lowered our equipment costs by 5%, so that we could give that discount back to homeowners to help them get through this devastation. It ultimately resulted in a better outcome for the customer, us, and our vendor.”
Remember, the only form of relief isn’t a reduction in costs. Extending your payment terms can really help with cash flow to see you through until the world returns to normal. Have an open conversation with your vendors to extend your payment terms from 30 to 60 or 90 days. Or agree on a custom payment plan. Keep in mind that, like contractors, vendors will likely be seeing the same impact you’re seeing. They, too, will have cash flow needs, employees to pay, and covenants with their banks that they need to maintain. They suffer the same consequences if they see a slow down in their cash flow.
In many cases, vendors have preseason purchasing programs that allow you to buy products on incredible payment terms even during normal times. In some cases, they offer 4 months to pay for your initial order.
If you have a rebate coming at the end of the year, you may want to ask how much of that is accrued. Then, ask if your vendor would be willing to issue the accrued amount early in order to help with cash flow. Many contractors have done this in the past.