• Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Jobsite

  • Business
  • Real Estate
  • Safety
  • Technology
  • World
    • Australia
    • Canada
    • United States
  • More
    • Cover Stories
    • Slideshows
    • Weekly Grind

5 Cash Flow Tactics of Successful Contractors

September 28, 2021 by Jobsite Editorial

So you’ve laid the groundwork to keep the cash flowing by addressing the strategic aspects of managing cash flow. But, experts will tell you that managing cash flow also requires tactical actions designed to get you the results you want. Make sure you take into account these five vital strategies to keep your cash in check.

1. Schedule Your Cash Flow

The schedule determines when activities take place, and scheduling also determines when you get paid for portions of the work. Often, there are activities that affect other activities that are two, three, or more steps removed. So, pay close attention to the schedule of values and try to shorten the time you carry the costs for work put in place.

2. Avoid the Resource Poverty Trap

Each construction project is different, and, if you are handling multiple projects at the same time, your exposure to cash flow problems related to resources is high. Equipment is one resource that can quickly devour your cash when things don’t go as planned.

For example, imagine you have three projects underway and when you started the second project you added three pieces of equipment to your fleet. Because of things beyond your control, you didn’t need that equipment for the third project, but you are still paying for it. Meanwhile, your cash flow has tightened, and even though there’s a fourth project waiting in the wings where you’d likely use the equipment, the start date is still months away.

Now you’re left with one painful option of liquidating the equipment quickly, and most likely not going to get what you need to pay it off. A less painful option is to lease or rent the equipment to others who need it. But, that comes with its own set of issues such as paying for too much office space or hiring too many people. But, the bottom line is this: Resources can sink your cash flow so don’t make them long-term obligations unless you are absolutely sure they’ll get used when and where you need them.

3. Claim and Collect

Getting highly efficient with how you handle billings for change orders can help offset money you have floating on activities that might have been completed weeks or months ago. The same goes for claims. And, in both cases, if payments are delayed, then you should require interest so you can recoup the cost of extending this form of credit.

4. Question the Budget

If you’re working with a budget that isn’t accurate, you’re in for some surprises. When you initially review the budget, check on the processes people use for reporting work completed. These processes need to return highly accurate numbers. If they don’t, payments will be delayed. Furthermore, have a deep budget review on a regular basis where you ask yourself, and others, all the tough questions about what’s getting done, and what it’s costing.

5. Look for Cash-Saving Opportunities

Reductions in costs that don’t affect quality can bolster your cash position. One area where contractors often bleed cash is in the insurance and bonding they carry. Your risks change with every project, and they change as projects come and go. You need to regularly review your coverages so that you are covering only the risks that exist, and are getting the best value for your money.

Finally, don’t confuse cash flow with cash on hand. Your cash should always work for you, collecting interest or other forms of return. You also need to consider the state of the economy when making decisions about your cash positions.

Having cash available during times when economic growth is slow, or nonexistent, puts you in a position to jump on opportunities. Getting top returns on cash when things are booming allows you to invest for the future. 

Procore’s complete financial management solution can help you create a cost management strategy that drives healthier cash flow.

Learn More

Categories: Business, Featured, United States Tags: Cash Flow Management, Construction Financials

Jobsite Editorial

Launched in 2016, Jobsite, Procore’s news platform, covers a mix of engaging and informative construction news, trends, tech and customer spotlights for the U.S., Australia and Canada. Contributors include construction news writers, thought leaders and industry professionals from around the globe.

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Primary Sidebar

Featured

How Utility and Transmission Companies Successfully Tackle Building Challenges with Tech

Eight Infrastructure Projects Built With Procore

Dormant to Dominant: Evolving Role of Data on Civil and Infrastructure Projects

Value of Connected Project Data on Civil and Infrastructure Projects

Build Better Bridges by Creating a Culture of Innovation and Harnessing AI

Subscribe to Jobsite

Footer

Jobsite Favicon

Jobsite News

  • Business
  • Real Estate
  • Safety
  • Technology

World

  • Australia
  • Canada
  • United States

Resources

  • eBooks
  • Partners
  • Webinars

Education

  • Building Inclusion
  • Certification
  • Continuing Education
  • Safety Qualified

Procore

  • Procore Platform
  • Groundbreak
  • Procore Blog
  • Procore.org

© 2025 Procore Technologies, Inc. Privacy Notice Terms of Service