Cash Flow for Contractors: Why a Busy Month Can Leave You Broke

Profitable is not the same as having cash

Here is a trap that catches good contractors: the month is full, the jobs are priced right, and the bank account is still empty on Friday. That is not bad luck. It is timing. You pay for materials and payroll before the customer pays you, and the more work you take on, the bigger that gap gets. A business can be profitable on paper and still run out of cash.

Know your next four weeks

Most owners know their bank balance today. Few know what it will be in three weeks. Make a simple list of the next four weeks: the money you expect to come in, when and from whom, and the money going out, like payroll, materials, the truck payment and insurance. The lowest point on that list is the number to watch, because that is the week you could come up short.

Close the gap at the front of the job

The easiest cash fix is a deposit. Taking part of the price up front covers materials, so you are not lending your customer the money for their own project. On bigger jobs, bill in stages as the work gets done instead of waiting for the end.

Close the gap at the back of the job

Send the invoice the day the job is finished, not at the end of the week, and make it easy to pay with a card from a phone. Then follow up on anything late, on a schedule, without feeling bad about it. Money that is owed to you is not money you can spend yet.

Do not let growth eat your cash

A big new job or a second crew feels like progress, and it can be. But it also means more materials and more payroll before any of that money comes back. Before you say yes to a big jump, look at your four-week list and ask: can I carry the costs until they pay? If the answer is no, ask for a bigger deposit, bill in stages, or wait a month.

Keep a cushion

Set a target for cash you never spend, a few weeks of payroll and fixed bills, and build it a little from every job. A cushion turns a slow-paying customer from an emergency into an annoyance. Your accountant can help you pick the right number for your business.

Jetsy sends your invoices with a Pay now button, takes deposits by card on quotes, and follows up so unpaid invoices do not go quiet. The money goes straight to your own bank. $25 a month, the first 7 days free, no card.