Cash flow is the lifeline of any construction project, no matter how big or small. Being able to effectively manage cash flows throughout the lifespan of not only your projects, but also the entire company as a whole, can be the difference between a company that is profitable and one which is approaching bankruptcy.

As mentioned in our previous article regarding late payments and their impact on the industry, cash flow problems can be a big cause of not paying or getting paid on time. In this article, I will focus on providing you with some tips to effectively manage your own cash flow. These tips will equip you with the tools required to mitigate the impact of any external factors that might affect the success of your business.

Cash flow management is the process of organizing and analyzing your expenses and revenue in such a way that it is used to control the flow of money in and out of your business. If you’re using an accounting software solution (which is most of you out there), there should be a simple way to generate a report which highlights this information in an easy-to-read format. As a business owner or executive, it should be your primary goal to make sure that your company is generating enough cash and anything that might impact this negatively needs to be dealt with immediately.

If done correctly, cash flow management allows companies to predict periods of cash shortages and plan their operations accordingly. For example, if you know that you will be receiving a $50,000 payment two weeks from now, this will allow you to make better decisions on what bills you can pay and when, knowing that the $50,000 will be in the account in a couple of weeks. If you didn’t know this you might choose not to pay any bills, ultimately accruing late payment fees or missing out on early payment discounts.

As I mentioned earlier, cash flow is the lifeline of your company. When you assess your company’s cash flow, you are essentially mapping when cash will enter and exit your business, and how much. This is critical because the timing of each of these transactions can drastically affect the financial standing of your organization, and even your ability to accept a project.

Keep reading this blog on Ontraccr.com

• 
• 

• IAPMO Endorses WASH Data Collection Act for Water Access
• ConTech: Latest Trends and Innovations – No. 56
• Great Gulf’s Success: 4 Industry Awards Including Builder of the Year
• Aktion acquires Acumatica and legacy Sage practices from MNP
• Canadian building construction costs rise slightly first quarter 2024