Tuesday, February 16, 2010

Financial Tips and Tricks.

Have You ever heard of the phrase " Other People Money (OPM)". I guest you do. May be more than I know. However it is good to recall back on what we already knew.

In construction industry OPM is a good strategy to be utilised. This is because in this field it will definitely be a very large amount of financial commitment involved. How do we applied this OPM?

Let we check this following List of resources needed in construction.

  1. Supplier of construction material,
  2. Supplier of construction Machineries,
  3. Supplier for the transportation,
  4. Performance bond or bank guarantee,
  5. Insurance,
  6. Labour force or Manpower.

If we look into the list above , can it be outsource or not? Definitely it can. How does we relate this Into OPM. Bear in Mind all of the area mentioned above involving money which for sure you need to pay. However if you can get an excellent outcome of you negotiation on terms and condition of payment, you can invest you available cash into something that can guarantee you of you return which can be utilised to pay those six item listed above. MAKE SURE THAT YOU CAN GET YOUR RETURN NOT MORE THAN 3 MONTHS!.

Usually you will receive your payment for claim the fastest is within one month and it can be dragging for more than that. Hence to be fair to the parties involved try to close you credit term not less than 3 month or 90days period. Meaning that you need to pay after that particular period. Beware most of the supplier will only give 30 days credit term !

The most easier way to the OPM is Project Financing by the bank. If you are sure of your option , than I wish all managers, Developer and contractor good luck.

Financial Tips and Tricks

Financial Tips and Tricks.