cash flow

E531: Ask Coach – Cash Flow On Larger Projects

Growing your business can strain your cash flow so be sure to plan properly.


Q: I want to chase larger projects to grow my business but how can I better manage the cash flow needed?

A: Planning, projecting and executing.


  1. If you want to grow your business, chasing larger projects is one way
    1. They will require more manpower, materials, equipment and maybe even management staff
    2. Those all cost money so watch the cash flow
    3. Poor planning can force us to make poor choices
  2. Plan during the estimating process
    1. If you will need to borrow money be sure to include the costs in your bid
    2. Need pay when paid terms on materials? That may cost more
    3. Can you find the manpower – maybe consider a subcontactor/partner
  3. When you win the job, project the expenses and execute
    1. Now that we covered the costs, make it happen
    2. Project your spending versus your income
      1. Find your shortfalls and solve them
    3. Execute the plan, review and adjust

E471: Ask Coach – Managing And Scheduling Material Deliveries

Schedule and monitor material deliveries to maximize production and cash flow.


Q: What are some suggestions on managing the material delivery process to avoid having to pay for materials that haven’t even been installed yet?

A: Create schedules for your material deliveries that match production and make the suppliers meet your needs.


  1. Managing the supplier properly will help in many ways
    1. It can help with cash flow, project logistics, storage, damage, theft, etc.
    2. Start the discussion during the pricing stage and incorporate into the PO
      1. Remember, the cheapest supplier may not always be the best
    3. Communicate your schedule early and often
  2. Schedule your deliveries to maximize production and cash flow
    1. Practice the Just In Time method of material delivery
    2. Have suppliers deliver only what you need to keep production up each week
      1. The frequency may depend on your project but try to get smaller quantities more frequently
    3. If you can bill for stored materials plan accordingly
  3. Plan your production and match your materials
    1. Determine and plan your material consumption rates
    2. Schedule deliveries to match your consumption
    3. Monitor your production and increase/decrease your quantities accordingly

E446: Ask Coach – How To Manage Cash Flow

Improper management of cash flow will strangle your business.


Q: Can you give me some ideas on how to manage the cash flow in my business?

A: Know your numbers.


  1. Follow some key metrics
    1. To manage cash you need to know the key metrics for your business
    2. Watch them closely
      1. As a PM I always knew projected monthly billings and costs
    3. Project them, track them and adjust for them
  2. What are the 7 key metrics for contractors
    1. Project monthly billings
    2. Project monthly project costs
    3. Projected project gross margins – Project Billings minus Project Costs
    4. Overhead burn rate – how much it costs to keep the lights on
    5. Average Accounts Receivables aging time – the average time from invoice to cash in the bank
    6. Sales cycle – the average time from estimate to actual billings
  3. Use the numbers to adjust and plan your business
    1. Make projections for the upcoming months / year
    2. Track the actual versus projections
    3. Use the results to adjust accordingly
      1. Increase billings and decrease cost to make adjustments

E434: Projecting And Managing Cash Flow

Stay on top of your cash flow with proper planning and projections.


  1. Cash flow is the biggest small business killer
    1. As contractors we often have to spend money before we can invoice
    2. On some projects it can take 90+ days to get payments
    3. This struggle often causes us to Rob peter to pay Paul – a bad habit
  2. Avoid these issues with good planning
    1. Start with the project – create a cash flow projection for each project
      1. Track costs, billings and receipts – both planned and actual
    2. Summarize the information on a single spreadsheet for the company
    3. Know your numbers
  3. When we plan ahead we can prepare for short-falls
    1. Get the best terms you can on suppliers and subcontractors
    2. Set aside funds from every payment to build a reserve – I recommend at least 3 months of overhead costs in reserve
    3. Control spending when you see a downturn coming
    4. Borrow only when necessary


E426: Ask Coach – Dealing With A Slow Paying Client

Managing our cash flow can be very challenging when dealing with a slow-paying client.


Q: What’s the best way to deal with my slow paying client?

A: Work closely with them to eliminate any hurdles and keep communication going.


  1. Understand why the pay is slow
    1. Paperwork
    2. Money flow
    3. Poor management
  2. Prevent what you can
    1. Know your client – know what they expect
      1. Make adjustments to better absorb the slow pay
    2. Do the paperwork properly the first time
    3. Keep an open line of communication
  3. Be smart and proactive
    1. Don’t make accusations – people in glass houses shouldn’t throw stones
      1. Do you pay your people timely?
    2. Follow-up on your invoices
    3. Protect yourself
      1. Know the time limits on filing any liens or claims and always protect your rights
    4. Don’t make threats until there is no other option

E349: Managing Cash Flow with Todd Dawalt

Cash flow is a key to a successful company and we must keep it flowing.


Todd Dawalt, the host of the Construction Leading Edge podcast joins us again today to share some tips for managing cash flow.

If you want to learn more about Todd and Construction Leading Edge just head over to the website or subscribe to the podcast on iTunes or Stitcher.