How Contractors Can Manage Cash Flow During the Slow SeasonHow Contractors Can Manage Cash Flow During the Slow Season

The very mention of fluctuating cash flow can cause anxiety for construction company owners. Without sufficient planning for a slow season, even seasoned businesses may find themselves in a cash crisis from time to time. While weather can be an obvious culprit for midsized general contractors—particularly those in nonresidential construction such as commercial, road and highway, or heavy construction—a slow season can also be related to factors such as project life cycles, regional labor shortages, or a poorly quoted or scoped job. In severe circumstances, a company must be strong enough to survive the cash drought without becoming insolvent and remain well-positioned for new projects as the market improves. Consider these tips to financially prepare for and navigate an unexpected slow season.

 Even the Best Plans Require Review

A well-managed job-level forecasting model allows a company to anticipate future cash ebbs and flows. Jobs rarely go exactly as planned, often facing unexpected challenges. But there are many factors a company can control: job design, cost adjustment sales contract clauses, pay-when-paid subcontractor contract clauses, site management and supervision, business processes that provide current and accurate information, efficient billing practices, and invoice collection practices are just a few. Investing time and effort into a well-thought-out forecasting model should be a priority even during the busy season. Waiting until business slows down is too late to implement cash strategies that can mitigate an impending cash crunch.

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