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6 Ways Construction Companies Can Improve Cash Flow
A strong cash flow position is critical to a contractor's success. Here's why and how to make changes.
AIA Contract Documents
August 21, 2024
1 Min Read
Alamay
Having adequate cash flow is always a concern for construction contractors. Pay lags and delays can cripple a construction firm financially and, in the most extreme cases, force them to close their doors. Cash flow impacts every facet of a construction business. From hiring to marketing, investing in machinery and ultimately, the types of projects pursued, there is no getting around the pervasive role cash plays in running a business.
Improving Cash Flow
In construction, cash flows matter and any contractor looking to position themselves to get the most out of theirs must adhere to the following six tips.
Maintain a good credit rating. In business, cash is king, but credit is close behind. Credit is essential in personal lives, but in many instances, it matters more in the lives of a business. With a strong credit rating, a contractor can withstand pay lags that lead to cash flow challenges. As such, contractors must protect their credit at all costs as it gives them the flexibility they need to navigate the cruel financial terrain of the construction industry. The truth for many contractors is that good credit might be the difference between a firm’s doors remaining open or going out of business.
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