Time to Review Quotes and Costs, as the New Normal Kicks Off
One area that you need to focus on in this economy is understanding your true costs and making sure that your outstanding quotes are still accurate. It has been my experience that many companies do not completely understand their true costs of doing business, often because they don’t make it a practice to keep all costs up to date. Outstanding quotes in your company can be a real liability as pricing fluctuates, lead times get extended, and fuel and energy costs increase.
Recently, I have noticed a lot of companies are starting to change the terms on their quotes. If they used to be good for 60 or 90 days, they are converting them to 30 days. Price escalation terms are also being added for jobs that they’re quoting past their stated terms. You want to make sure that you pay attention to fines or penalties for not meeting project completion dates, which a lot of general contractors add to their contracts. Lead times can also be unreliable as the economy gets started again.
It is a good time to follow up on your outstanding projects to see if they are progressing and making sure that your customers know that you will have to review quotes as they expire. A lot of customers may ask for extensions on your quotes or offer to prepay for products to hold the price. You want to be overly cautious in this market to agree to any special terms. It is a good time to check with your key suppliers to understand any changes they are expecting to prices or lead times. Staying on top of transportation costs and timing is another area that needs to be monitored on every order. Some imported products are being shipped on time, but transportation lead times may vary by weeks.
This is also a good time to follow up on quotes to help your customers communicate these items to their customers to get commitments and close the sale. Most customers I have spoken with say that business is picking up, and I believe the economy will even out again as restrictions get lifted. To keep your customers happy and your business profitable you need to make sure you really understand your costs.