Question 1

Where does cash leak out of a construction company?

Accepted Answer

The most common cash leaks in a subcontracting business are billing too slowly after work is completed, not front-loading the schedule of values on Pay App 1, absorbing the financing cost of pay-when-paid terms without pricing it into bids, letting job costs run over estimate without adjusting billing, and carrying overhead that has grown faster than revenue.

Question 2

How do I find out where my construction company is losing cash?

Accepted Answer

Start with your billing cycle — how many days between completing work and submitting a pay app? Then look at collections — how many days between submitting and receiving payment? Then compare job costs to estimates on your last five closed jobs. Those three checks surface the majority of cash leaks in most subcontracting businesses.

Question 3

What is a cash flow diagnostic for a construction company?

Accepted Answer

A cash flow diagnostic examines the specific points where cash gets stuck or leaks out of a subcontracting business — billing timing, collections lag, pay-when-paid exposure, job cost overruns, retention balances, and overhead ratios. The output is a prioritized list of what to fix first to stop the bleeding fastest.

Question 4

How do I stop cash flow problems in my construction business?

Accepted Answer

Fix the biggest leak first. For most subcontractors that is billing cadence — getting pay apps out faster after work is completed. Second is pricing pay-when-paid terms into bids so slow-pay jobs fund themselves. Third is job costing that catches cost overruns while there is still time to act. The cash leak check identifies which one is costing you the most.

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