As we hit the midpoint of this year, it has already been an interesting one for the integration industry. Economic uncertainty — driven by confusing and ever-changing tariff discussions — has left many leaders of integration companies asking a lot of questions:
- Will we be able to get the products we need to deliver customer solutions?
- Will those products carry hefty tariffs that increase costs?
- Will customers hold off on projects due to ambiguity around all this?
A Sense of Panic
It’s not surprising that many company leaders have responded with a sense of panic. Others, however, seem more composed — perhaps because they’ve been through something similar before: for example, the pandemic, the housing crisis or even post-9/11. Over the decades, the integration industry has weathered economic uncertainty and difficult times.
Perspective is hard to maintain, but the best advice that NSCA has heard or given is simple: Avoid being a victim by controlling what you can control. Times of economic uncertainty are an opportunity to step back and focus on terms and conditions (T&Cs) and other operational best practices. If tariffs introduce uncertainty, then you should combat it by tightening up your contract language and reinforcing internal controls.
A recent webinar from NSCA, Commercial Integrator and Security Sales & Integration, entitled “Improving Your T&Cs to Mitigate Risk,” outlines concrete actions that integrators can take to improve contract language, choose and manage projects more effectively and reinforce financial discipline. These due diligence steps help integrators navigate uncertainty — whether from tariffs or from other disruptors.
Moderated by CI+SSI’s Dan Ferrisi, the panel featured NSCA director of business resources Mike Abernathy; former NSCA Board president and Communication Company CEO Dan Schmidtendorff; and NSCA Financial Leadership Council member Eric Morris.
Their advice — wisdom grounded in NSCA’s Tips to Reduce Risk in Product Procurement — offers a practical playbook for stability in turbulent times.
Strengthen Your Contract and Proposal Process
- Shorten proposal expiration dates: Amid volatile vendor pricing, some integrators are shortening proposal validity to as little as 14 days. Doing so minimizes the risk of margin erosion between bid submission and project start.
- Clarify language; don’t just change it: Rather than challenging contract terms directly, frame adjustments as clarifications. This subtle approach reduces defensiveness from clients or GCs, while still protecting your business.
- Start early with contract conversations: Sales teams should introduce important clauses — like force majeure, termination terms or escalation clauses — before a letter of intent is issued. Beginning conversations earlier increases the chances of acceptance.
- Implement a “walk-away mandate”: Define non-negotiable risk thresholds in writing and then stick to them. This protects your company from high-risk/low-reward work, even when the project seems tempting.
Monitor and Improve Financial Health
- Create a rolling cash forecast: Forecasting cash flow over the next six to 12 months is more important than analyzing profit alone. Knowing when you’ll have enough cash to cover fixed costs is crucial when downturns materialize.
- Use a backlog burn rate: Understand which projects are contributing to revenue now — and which are months away. Ranking projects by size, margin and timing helps you better manage cash and staffing.
- Track Days Sales Outstanding (DSO) by project: Use business software tools to monitor aging receivables in real time. This prevents surprises and flags issues early.
- Remove quick-pay discounts: In unstable times, some integrators are backing away from quick-pay terms and tightening up their payment policies to protect their bottom line.
Operate with Discipline
- Don’t chase bad work: Prioritize profitability over volume. Being busy doesn’t always mean being successful — especially if you’re chasing low-margin, labor-intensive projects.
- Enforce project selection criteria: Use NSCA’s “go/no-go” tool to evaluate projects before accepting. Having a written risk-evaluation process ensures consistent decision-making.
- Track every detail: Measure installation labor units, monitor proposal status and maintain cost visibility across the entire pipeline. Automation tools can make this easier and more accurate.
Stay Proactive with Vendors and Clients
- Negotiate pricing holds with manufacturers: When possible, register projects early to lock in pricing. Don’t be shy about requesting longer-term commitments from suppliers.
- Communicate early about storage costs: If materials are delivered early or stored, invoice for those costs to avoid becoming “the bank” for your customer.
- Anticipate tariffs and pass along real costs: Whether as line-item surcharges or as baked-in price increases, make sure unexpected fees don’t erode your profit margins.
- Use client language when possible: If clients resist terms like “surcharge,” consider using softer terms like “mobilization” as an alternative. It’s all about alignment and perception.
Economic volatility — whether caused by tariffs, supply-chain issues or broader global forces — is out of integrators’ hands. But what is within integrators’ control is how they prepare. By revisiting terms and conditions, refining project selection and strengthening financial oversight, integrators can protect margins and make smarter decisions — even in uncertain times.
Tom LeBlanc is executive director of NSCA. Learn whether becoming an NSCA member makes sense for you by visiting NSCA.org.
