Story Time: A Roofer's Journey Part 3, the Downside of Materials Supplier Credit

After deciding between the 6 or 8 inch lift on their truck, cash flow is one of the biggest struggles for roofers and restoration contractors. And look, cash flow can have little to do with revenue—it’s entirely a timing issue. When you have cash going out for materials on day 1 of the job, but you’re not getting paid on the insurance claim until day 60 or even longer, that’s a real problem. It gets even worse when you’ve got several jobs starting in the same week your payroll is due  

That’s why so many contractors—myself included—have looked to supplier lines of credit for relief. I mean, what’s not to like? You pick up your materials without paying a dime, and off you go without a care in the world. Right?

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There’s so much that can go wrong.

Listen, merchants know they’re competing for your business. So to them, floating you for 30 days is no big deal if it helps to close the sale and keep you coming back, job after job. And I guess in some cases it all works out. But trust me, the danger is everywhere:

• You develop a false sense of financial security that leads to dumb spending habits.
• Project delays make it impossible for you to repay on time.
• Painfully slow insurance payments prevent you from repaying on time.
• The merchant becomes a lot less friendly, and hits you with penalties and interest.
• You gain a reputation around town as someone who doesn’t pay their bills. (Ouch.)
• Before long, you’re drowning in debt and living in your ex-mother-in-law’s spare bedroom.

Look. I’m not saying a merchant line of credit is never going to work out. I am saying that they are far too risky to be a smart choice in most situations. And they are certainly not a sustainable, long-term solution to the gaps in your bank balance.

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There’s a better way. I know, because I built it.

We created SquareDash to help roofing contractors like you take the risk out of managing cash flow. You just upload an approved claim, and we front you the ACV at the beginning of the job, and send you the depreciation as soon as the job is complete.

You can email me with questions or to schedule a demo of our platform. And, feel free to connect with me on LinkedIn, and follow us on Facebook, Instagram, and YouTube for more ways to run your business better.  

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About SquareDash

SquareDash is a veteran-owned financial services company based in Dallas, Texas. Our proprietary fintech platform is solving the cash flow crisis for contractors around the U.S. who deal with insurance claims. Learn more at SquareDash.com.

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