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    Construction Company Cash Flow Management System

    Posted by Randal DeHart on Tue, Sep 17, 2019

    A wise business owner once said, "Happiness is positive cash flow." As a business owner, I'm sure you agree. Everything is better when your cash-in exceeds your cash-out.

    A cash crisis can be emotionally devastating, and it can even kill your business. If you've ever had to beg, borrow, and steal to cover tomorrows payroll you know what I mean.

    Composite image of magnet attracting dollars on white background

    Having a proper cash management system allows you to:

    • Know when, where, and how your cash needs will occur.
    • Know what the best sources are for meeting your additional cash needs.
    • Be prepared to meet these needs when they occur by keeping good relationships with bankers and other creditors.

    The starting point for avoiding a cash crisis is allowing your accountant to develop a cash flow projection for you. Your construction accountant can help you develop both short-term (weekly, monthly) cash flow projections to help you manage daily cash, and long-term (annual, 3-5 year) cash flow projections to help you develop the necessary capital strategy to meet your business needs.

    Also, a well kept historical cash flow statements help you gain an understanding of where all the money went.

    Having an accurate cash flow projection has several benefits and will surely make many procedures easier for your construction company. 

    Our services can provide you:

    • Help in obtaining an appropriate line of credit
    • Cash collection acceleration techniques
    • Proven effective collection policies
    • Established effective payment policies
    • Help in getting the maximum rate of return on your idle cash

    In conclusion

    Cash flow is the lifeblood of any construction company and especially the ones with annual sales volume under $1,000,000. Some construction Company experts even say that healthy cash flow is more critical than your contracting company's ability to complete projects. While that might seem counterintuitive, consider this: if you fail to satisfy a customer and lose that customer, you can always work harder to please the next customer. If you do not have enough cash reserves to pay your suppliers, creditors, and make payroll, then your Construction Company is out of business, game over!

    About The Author:

    QuickBooks-Trainer-Randal-DeHart-PMP-QPA-Fast-Easy-AccountingRandal DeHart, PMP, QPA is the co-founder of Business Consulting And Accounting in Lynnwood Washington. He is the leading expert in outsourced construction bookkeeping and accounting services for small construction companies across the USA. He is experienced as a Contractor, Project Management Professional, Construction Accountant, Intuit ProAdvisor, and QuickBooks For Contractors Expert. This combination of experience and skill sets provides a unique perspective which allows him to see the world through the eyes of a contractor, Project Manager, Accountant and Construction Accountant. This quadruple understanding is what sets him apart from other Intuit ProAdvisors and accountants to the benefit of all of the construction contractors he serves across the USA. Visit http://www.fasteasyaccounting.com/randal-dehart/ to learn more.

    Our Co-Founder Randal DeHart - Is a Certified PMP (Project Management Professional) with several years of construction project management experience. His expertise is construction accounting systems engineering and process development. His exhaustive study of several leading experts including the work of Dr. W. Edward Deming, Michael Gerber, Walter A. Shewhart, James Lewis and dozens of others was the foundation upon which our Construction Bookkeeping System is based and continues to evolve and improve. Check out our Contractor Success Map Podcast on iTunes. 

     

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