One survey of construction companies found that a whopping 28% of them cited cash flow as their biggest concern, which ranked it higher than finding new customers. As you continue to grow your business, maintaining good cash flow management becomes even more critical. If you have issues with cash flow, it can harm every level of your business including your ability to pay employees, order inventory, pay bills and more. How can you improve cash flow management at your construction company?
3 Tips to Improve Cash Flow Management at Your Construction Company
- Plan ahead to align the cash flow from your projects with your company’s cash flow. Some of your most significant expenses are predictable, like marketing costs, quarterly taxes and insurance premiums. You can plan on paying these when your cash flow coming in is significant and when you don’t have immediate expenses for your current projects coming up. We can help you with cash flow management so that you feel confident in knowing when the best time to pay large or quarterly bills is.
- When possible, break up your invoices to space out your expenses more. A long cash-flow cycle can be bad news for cash flow management. Try to purchase smaller amounts of inventory, hire staff just for busy seasons when possible or require payments upon ordering instead of upon delivery. In the same manner, you can also break up invoices into smaller chunks to make things easier on your customers as well.
- Just like sudden expenses can pop up in your personal life, they can also arise at your business. As part of your cash flow management, you should always have a cushion set aside. This will make sure that you don’t need to go into your personal savings or secure extra funding to bridge a cashflow gap. We can help you explore your best options for proper cash flow management and different ways to make sure that you are able to pay your current bills while bringing in payments from your customers.
Improve Cash Flow Management at Your Construction Company with MKS&H
MKS&H provides tax and accounting services to businesses of every size and in every industry, including construction. We can work with you to improve your company and make sure that it is financially secure now and in the future. Contact us today for a consultation.
About MKS&H: McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture and your business goals. This approach enables our clients to achieve their greatest potential.