What cash management techniques should contractors employ in order to be successful as the economy recovers?

November 21, 2016

A critical component of a construction company's bondability is employing best practices for cash flow management. As the economy recovers, the danger of default becomes even more prevalent as companies ramp up operations.

     Company leaders should practice regular review of cash flow management techniques to ensure the long-term success of the company regardless of the ebb and flow of the company.

     A disciplined approach to keeping overhead from outpacing revenue, regular reviews of business areas that can tie up cash and maintaining the ability to maximize cash on hand are successful ways to avoid surety losses. Surety losses are often the result of cash flow failures.

     Strong banking relationships are also a key component of a company's cash flow picture and are viewed favorably by the surety.

Source: Contractor's Guide to Surety Bonding, Construction Executive, November 2016.