Cash Flow Systems & Planning

Implement a systematic follow-up process: we encourage final payment pick-up when conducting the final project walk-thru, but if that isn't possible, a friendly reminder at 5 days past due, a formal notice at 30 days, a phone call at 45 days, and final demand at 60 days. Offer payment plans when appropriate, but always get agreements in writing. Prevention is key — require deposits and progress payments upfront.

Plan ahead during busy seasons by setting aside 5-10% of peak-season revenue in a separate account. Use winter months for equipment maintenance, planning, and smaller interior projects. Consider offering winter-specific services or partnering with contractors in complementary seasonal trades.

The goal is to match material payments with customer payment schedules. Use trade credit when available (30-day terms), but only if you can pay on time. For large purchases, negotiate extended terms or progress deliveries. Avoid high-interest credit cards except for true emergencies.

With active contracts, you can forecast 60-90 days with reasonable accuracy. Beyond that, use historical patterns and seasonal trends. Focus on rolling 13-week forecasts that you update weekly—this gives you enough runway to make adjustments while staying current with changes.

Depending upon your business structure, you may need to take a regular salary for compliance reasons, but regardless: take regular, planned draws rather than sporadic large amounts. Base draws on your cash flow forecast, not your bank balance. A good rule: if taking the draw would reduce your cash below your 60-day operating reserve, wait or take a smaller amount.

Stagger project start dates when possible, negotiate staggered material deliveries, and require larger upfront deposits on overlapping projects. Use a detailed cash flow forecast to identify peak cash demand periods and plan accordingly. Consider a line of credit for peak periods.

Confusing profit with cash flow. You can have a profitable month but still run out of cash if customer payments are delayed or you've tied up too much cash in inventory. Always track both —profitability shows long-term health, but cash flow determines daily survival.

It depends on your cash position and the equipment's productivity. If the equipment generates enough additional revenue to cover financing costs and you need to preserve cash for operations, finance it. If you have strong cash reserves and can get a significant cash discount, paying cash may be better.

Build a 5-10% material cost buffer into your project budgets and cash flow forecasts. For large projects, consider locking in material prices upfront or including escalation clauses in contracts. Track material cost trends and adjust your planning accordingly.

Start small — even setting aside $100-500 per week adds up. Use windfalls (larger-than-expected jobs, insurance claims, tax refunds) to jumpstart reserves rather than increasing lifestyle expenses. Consider it a non-negotiable business expense, like insurance.

Yes, but calculate the true cost. A 2% discount for payment within 10 days versus 30 days costs you about 37% annually — but it might be worth it if you're paying higher interest on credit lines or missing supplier discounts due to cash constraints.

Growth often worsens cash flow short-term because you're funding more projects before payments arrive. Require larger deposits on new projects, negotiate faster payment terms, and consider invoice factoring or a line of credit to bridge the gap. Don't grow faster than your cash flow can support.

First, create a daily cash flow forecast for the next 30 days. Prioritize payments: payroll first, then critical suppliers, then everyone else. Communicate proactively with vendors about payment delays. Consider emergency factoring of receivables or equipment financing to create immediate cash.