IDEA: Save money by purchasing materials direct on projects versus having contractors buy them, pay for them and mark them up.

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Consider buying the materials for your company’s projects or farmed out parts versus having contrators buy the material, pay for them and then ultimately mark them up when the project is billed to your company. Contractors most of the time do not want these invoices to have to pay. They must buy these materials, pay for them, then must bill your firm for their cost. They mark up the price to pay for their time and cost of funds during the interim whereas your firm can pay for these items directly and avoid the markup.  The resulting invoice for the contractor will carry a lower dollar amount but higher gross profit margin since the contractor makes most of his money on labor rates.

 

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