For many construction businesses the biggest obstacle they face isn’t finding enough qualified workers or even bidding for jobs, it’s actually cash flow — specifically, not having enough of it to pay for liabilities like bills and payroll. According to a recent study conducted by TSheets and zlien, 1 in 5 construction companies faces a cash flow problem.
The surprising cause of cash flow problems
After 10 years in business, Brooke and Kevin Smith*, the husband-and-wife owners of an Illinois-based construction business, are no strangers to cash flow problems.
The Smiths say they often have to rely on their personal savings to live and shell-out their business cash to pay employees and vendors and to purchase supplies to complete jobs. While the Smiths say they always end up getting paid, more often than not it takes longer than they would like, adding unneeded stress to their business and personal lives.
Brooke says the majority of the couple’s cash flow problems came with the growth of their business. When they started, they were primarily working in the residential realm for “neighbors down the street.” Getting paid never seemed to be a major issue, but that changed when they moved to doing remodels for large corporations. The jobs come with “game-changing money” but more unknowns about payments and billing.
“Corporate America seems to slow-pay you,” said Brooke. “If you do Bob and Mary’s house down the road, it’s for less money, but they pay you because they know you. The big corporations just seem to take forever. We always get paid in the long run, but it just