💰 CASH FLOW IN CONSTRUCTION — WHY DOES IT MATTER?
Cash flow measures the movement of money into and out of a construction business or project over time.
A contractor may have a profitable project but still face financial difficulties if payments arrive later than expenses must be paid.
🔹 Common Cash Outflows
🧱 Materials.
👷 Labour.
🚜 Equipment and machinery.
🤝 Subcontractors.
🚚 Transportation.
📋 Overheads and other project expenses.
🔹 Common Cash Inflows
💰 Client payments.
📑 Approved progress payments.
🏗️ Contract advances where applicable.
💵 Other legitimate business receipts.
🔹 How Can Cash Flow Be Managed?
1️⃣ Prepare a cash-flow forecast.
2️⃣ Monitor actual expenses.
3️⃣ Track submitted and approved payment applications.
4️⃣ Plan procurement around the work programme.
5️⃣ Maintain suitable financial records.
6️⃣ Update forecasts when schedules or costs change.
📌 Important: Revenue, profit, and cash flow are different measures. Understanding all three helps contractors manage financial risks.


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