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Penny Wise, Pound Foolish 2.0– for all flooring contractors

To protect your flooring business, you need good quality, cost effective professional advice, says Barry Ashmore.


FEW months ago, I reminded readers if you’re penny wise and pound foolish, you’re extremely careful with smaller, inconsequential amounts of money, but likely to ignore losses owing to larger issues going uncorrected.

And regrettably, being penny wise and pound foolish, is an attitude that still prevails in some specialist contracting businesses. And nothing seems to be changing!

So, come on flooring contractors, don’t let it be yours.

Here’s why I’ve done Penny Wise Pound Foolish 2.0

Apparently 2.0 means embracing something brand new, something different, revolutionary, totally revamped from the old 1.0 that’s just not as good. And allegedly, its simple maths as 2.0 is twice of 1.0.

What I’d like you to embrace are things that might be brand new to you, but things I regularly see specialist contractors being pound foolish about for want of professional support.
Here are a few more things that might be new to you, but you must embrace them. You absolutely must:

  • Do your due diligence about the company you are about to work for
  • Look at their accounts and check they can pay at the end of the day
  • Know what the terms and conditions are
  • Understand the payment terms being offered
  • Negotiate the payment terms
  • Understand why some terms are onerous and refuse to accept them
  • Know how to suspend work if you are not being paid
  • Stop getting knocked back by the Contractor’s QS
  • Stop accelerating your works when you have no obligation to do so
  • Give notice if your works are being delayed or disrupted
  • Do what the contract requires you to do when you should do it
  • Stop accepting a raw deal on your final account just to get it settled
  • Stop accepting the Contractor’s spurious contra charges and set off
  • Stop waiting years for your retention when it should be in your bank

Want some examples?

I appreciate that if you’re in the very fortunate position of never having suffered at the hands of an unscrupulous contractor or client then this might all sound somewhat strange to you. Equally, you may have an aversion to even thinking about this sort of stuff because it’s easier just to carry on regardless and then wonder why you’re flogging yourself to death for little or no profit.

So, here are a few genuine examples from the last couple of weeks:


This is actual text from a contractor to a subcontractor who has just asked for our help:

‘… your EOT claim came in at the very end with no indication of any delay prolongation before this point, as per the Subcontract terms clause 9.6 we cannot award an EOT or assess something that wasn’t detailed at the time it was likely to occur, there has been no records issued to us up until the last valuation so …’

Guess what? The subcontractor is well over £100,000 out of pocket!


Specialist contractor has just signed up for a job worth more than £800K and asked me a question about vesting certificates. So, I asked a few questions:

Me: ‘Did you know the contractor has moved his accounting date by nine months’ and that’s usually a sign of financial difficulty’.

Answer: ‘No I hadn’t seen that.’

Me: ‘What are the payment terms?’

Answer: ‘I’m not sure I’d have to check.’

Me: ‘Do you know how many days’ notice of suspension you have to give?’

Answer: ‘No I don’t.’

Me: ‘Do you not think it’s a bit odd that this contractor is talking to you about his cashflow?’

Answer: ‘Well he has got one project manager and five QS’s so maybe that tells us something.’


A specialist contractor client has accepted three orders totalling £25k. He’s done the work, but hasn’t been paid a penny.

The orders all say: ‘Subject to our terms and conditions’ but he hasn’t got a copy!

Why is that such a problem you might be asking, it’s only a small job? Unfortunately, the very fact it’s a small job, and the lack of terms, makes achieving a cost-effective solution all the more of a challenge.

What are the payment terms? We don’t know.

Is there an arbitration clause that would preclude litigation? We don’t know.

What are the rules for adjudication? We don’t know.

And so not only is he £25k out of pocket, actually getting him his money is hampered by the fact he simply didn’t check what he was getting himself into.

Don’t be penny wise – here’s what to do next

If you want to be successful, and who doesn’t want to do well and make a decent profit, you must manage every stage of the process. That includes taking care of all the ‘must do’s above’.

Here are a few ways in which you can manage and maximise your entitlements:

  • Make sure you understand and deal with all of the points set out above
  • Give your team a thorough briefing or workshop as to the contract etc
  • Use the tender assumptions/plans to instil awareness of how the job should be done
  • Identifying opportunities or risks immediately they appear on the horizon
  • Use a system of site records and notices which help you to maximise your entitlements
  • Allocate sufficient and appropriate staff resources to manage the process
  • Use a procedure for regular monitoring of all aspects of the project
  • Take appropriate action as and when required – don’t dither around wondering

These procedures need to be operated as a matter of routine on every job. This can be done via standard check lists, linked to your company’s QA procedures. But, however you do it, please don’t ignore the opportunities to minimise risk and maximise entitlement.

Ignore this at your peril

Yes, you can ignore all this and avoid spending your pennies on getting professional support.

Yes, you can muddle through and keep your pennies in your pocket.

Yes, you can ask the bloke down the pub because that doesn’t cost you a penny.

Yes, you can lose a fortune and even your business.

But never mind, you’ll still have those pennies in your pocket.

How to protect your business

In a nutshell you should take good quality cost effective professional advice. Of course I’d like you to come and take that advice from us, but whatever you do, please do take advice.

At the risk of sounding like your grandad, or a Monty Python sketch (definitely like your grandad), things were different when I was an electrical contractor some 32 years ago. Back then ‘contractors’ were builders or building contractors, and they actually knew how to build things properly and make money out of doing so.

Now an awful lot of contractors don’t know how to make money out of building and resort to making it out of their supply chain.

Alternatively check out our website, send us an email, or give us a call, our initial advice is free. n

01773 712116



Barry Ashmore is managing director and co-founder of StreetwiseSubbie.com

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