Q: How do you deal with clients’ reduced credit lines and still make projects happen? —Dave Pickenpaugh, Arris Construction Group, Columbus, Ohio

A: It’s no surprise that credit reductions are catching homeowners off-guard, forcing some to cancel and others to shrink their remodeling projects considerably. What can you do to protect your interests?

  • Bill often and collect immediately. Cash is king. Negotiate a biweekly billing cycle and short payment terms. Train customers early.
  • Be financially savvy. Understand how prospects intend to finance the work. If it’s a home equity line of credit (HELOC), suggest that they set aside line-of-credit money in an interest-bearing account so that will be available when they need to pay you. Otherwise, always obtain a bank guarantee letter to confirm the amount and availability of the credit line so that you and your customer don’t get caught short.
  • Establish relationships with local bankers and mortgage lenders who can provide additional funding. Helping your potential customers secure financing is a huge differentiator.
  • Become a return-on-investment scholar. Educate customers about where best to invest remodeling dollars. What adds the most “saleable” value to their home? What kind of return in saved energy dollars can they get from “future-proofing” and other improvements? What are all the benefits of remodeling, both practical and emotional?

—Chris Stanton, The Remodeler’s Advisor, is a long-time strategic adviser and business coach who helps remodeling professionals thrive in uncertain times. www.remodelersadvisor.com.