Financial management is the cornerstone of success for any business, and the construction industry is no exception. In this article, we’ll explore straightforward strategies for cash flow management, financial control, and expense management tailored for those new to the construction financial landscape.
Financial tools like balance sheets and P&L statements aren’t always good for business decision-making. Balancing manual oversight with automation is key, and while each company is unique, there are common themes.
A business owner shares the lessons they learned from mismanaging finances and almost going bankrupt. Key takeaways include keeping financial models simple, agreeing on key metrics, and not relying on unconfirmed business. They emphasize the importance of regularly monitoring cash flow and having a plan to avoid low cash episodes.
Short-term cash constraints can harm a business’s ability to meet financial obligations. To improve financial resiliency, businesses should implement cash management processes, prioritize outgoing payments, secure access to credit, and diversify revenue streams. Proper planning and management can prevent financial difficulties and maintain smooth operations.
Managing cash flow is critical for business survival, especially in a post-COVID world with tougher trading conditions. Visibility and regular financial control discussions can help, while a simple model can provide real-time data to adapt to changing trading conditions.