The property development process can be complex, with complicated finance structures and multiple stakeholders. All these moving parts can make managing cash flow a challenge – particularly when delays throw your plans off course.
But keeping on top of your development finance is crucial because a delayed drawdown can easily throw your project off course. To help you keep your project moving, we’ve pulled together our 4 top tips for keeping your drawdowns on track so you get what you expect when you’re expecting it.
Set clear payment terms with your contractor
It’s important that you set payment terms with all contractor(s) from the offset. Once clear terms are in place, make sure everyone involved knows them. Your contractor needs to know how much they’re going to get paid and when. And your funding partner needs to know the timescales you and your contractors are working to, so they can have money in place.
By making sure everyone is on the same page from the beginning, you’ll save a lot of stress later on.
Keep your cash flow and programme documentation up to date
Often, delays feel inevitable with residential property development. Supplies take longer to deliver than expected, poor weather halts work for a few days, and before you know it, your project is a month behind and over budget.
You can mitigate the impact of these delays by making sure your cash flow and programme documents are always up to date and reflective of each other. Otherwise, your development finance lender doesn’t know when to prepare drawdowns, and you risk late payments and further delays.
Keeping all your documentation up to date also allows lenders and other stakeholders to monitor the development’s progress. This helps everyone prepare better for upcoming deadlines or possible challenges.
Make your monitoring surveyor part of your team
All too often, bank-appointed surveyors are kept in the dark because developers feel like they’re looking for any excuse to pull funding. But that couldn’t be farther from the case, especially with funding partners like Hilltop.
Your surveyor should be an integral part of your team from day one so that they have a complete picture of your project. If they know what’s going on, they can make sure you have what you need, when you need it. Remember: they want your development to be as much of a success as you do.
Be realistic about claims
Somes the property development process requires more complex drawdown arrangements, for example if there are advance payments. But make sure you’re being realistic about what you’re claiming for and when. And make sure you loop your development finance partner in before requesting funds so they’re prepared.
If something doesn’t need an advance payment, don’t claim for one. Otherwise, you’re just creating extra to-ing and fro-ing as your funding partner validates the claim and the surveyor chases invoices.
Staying realistic and keeping communication open makes it easier for everyone to receive payment when they actually need to.
Ultimately, many drawdown challenges are easy to avoid with clear, open and honest communication between all parties. If everyone knows where they stand, you reduce the risk of obstacles that can cause delays, frustration and stress.