You've just completed a $500,000 project. The work is excellent, the client is happy, and your crew has moved on. But there's one problem: $25,000 to $50,000 of your money is sitting in someone else's bank account for the next 30 to 90 days or longer. Welcome to construction retainage, where owners and GCs hold back 5-10% of your payment "just in case" there are issues. Meanwhile, you've already paid your suppliers, met payroll, and covered equipment costs. That retained mone

Winter hits construction companies like a sudden frost projects slow down, payment cycles stretch longer, and your cash flow can freeze up faster than a job site water line. If you're a construction owner, general contractor, or subcontractor in the US, you know the drill: November through February can make or break your entire year. The reality is harsh. Construction activity can drop by 30-50% during winter months in many regions, yet your fixed costs insurance, equipment p

For Small to Mid-Sized Enterprise (SME) construction owners in the U.S., completing excellent work only to face delayed or rejected payments due to paperwork mistakes is a common fear. This situation often leads to cash flow problems and jeopardizes years of client relationships. Lien Waivers are a key tool in overcoming these challenges. While crucial for protecting payment rights, they can also pose risks if not handled correctly. Managed properly, Lien Waivers can ensure p

Many successful subcontractors face a serious cash flow crisis, not because their projects are unprofitable, but because they can’t manage the timing gap between when they need to pay bills and when they get paid. This issue becomes especially critical when working with general contractors (GCs) who hold back retainage (a percentage of payments) for months, further complicating the situation. Take the example of a successful electrical contractor, he had profitable projects a

You’ve finished the work on time. Your crew did an excellent job, and the project is ahead of schedule. But it’s been 45 days since you submitted your invoice, and you still haven’t been paid. Sound familiar? The average construction payment cycle stretches to 83 days, nearly three months from invoice submission to payment. That’s not just frustrating, it’s a cash flow crisis that can disrupt your entire operation. The problem isn’t always that clients refuse to pay, it’s oft

Last month, a general contractor landed their biggest project yet a $2.3 million commercial build. Excited to expand their fleet, they took out an equipment loan and purchased two new excavators. Three weeks into the project, they couldn't make payroll. The problem? They financed long-term assets when they desperately needed short-term cash flow. This costly mistake is more common than you'd think in construction. The difference between working capital and equipment financing

You’ve just secured the largest contract of your career but you need $150,000 upfront for materials, equipment, and labor before the first payment is released. You approach the bank with confidence: your projects are profitable, your reputation is strong, and your pipeline is full. Yet days later, you receive a denial citing “insufficient financial documentation” or “concerns about cash flow management.” In reality, the bank is not rejecting your business, they are rejecting

For construction owners, general contractors, and subcontractors selecting the correct accounting method isn't just a compliance checkbox, it's the primary financial strategy for optimizing your cash flow, securing bonding capacity, and maintaining working capital when you need it most. Two methods dominate the construction accounting landscape: Completed Contract Method (CCM):  Defers all profit recognition until the project reaches 100% completion, maximizing tax deferral a

Most contractors believe "change orders are where we make our money." The logic seems sound you're already mobilized on site with crews ready to work, and you get to mark up the additional scope. What could go wrong? Everything, it turns out. The line item price you charge for a change order rarely captures the true cost of executing that change. Hidden beneath are disruption costs, coordination overhead, schedule impacts, productivity losses, and a dozen other expenses that

Your surety agent just asked for your "liquidity ratios," and you froze. You know you have a balance sheet. You think your numbers look fine. But quick ratio? Current ratio? Which one matters, and what do these numbers actually mean for your bonding capacity? Here's what just happened: Your surety is trying to answer one critical question "If this contractor's projects all go sideways tomorrow, can they cover their bills without liquidating equipment or begging for emergency

Picture this: You just completed a $150,000 commercial renovation. Your crew worked 800 hours, you came in on schedule, and the client is thrilled. But when you run your job costing report, the numbers tell a different story, your estimated profit of $22,500 (15%) has shrunk to just $4,800 (3.2%). What happened? The culprit is often hiding in plain sight: inaccurate labor burden calculations . While you carefully tracked material costs and equipment rentals, your labor esti

Three weeks into a project, the owner requests a design modification. Your crew is already on-site, materials are ordered, and the schedule is locked in. You verbally agree to make the change to keep the project moving, figuring you'll sort out the paperwork later. Fast forward to billing time, and suddenly there's a dispute about what was agreed to, how much it should cost, and whether you're even entitled to payment for the extra work. This scenario plays out on constructio

You just wrapped up a profitable quarter. Your jobs are on schedule. Your clients are happy. Then your surety agent calls with news that makes your stomach drop: "We're reducing your bonding capacity by 40%." You pull up your WIP report, scanning the numbers. Revenue looks solid. Costs are under control. Profit margins are healthy. So what's the problem? Here's what most contractors don't realize: your surety isn't just reading your WIP report, they're interrogating it.  And

It's 3 PM on a Thursday when your project manager walks into your office with the month-end cost report. The commercial project you thought was tracking nicely? It's actually $47,000 over budget. Your stomach drops. The worst part? Most of those overruns happened three weeks ago. If you'd known then, you could have done something about it. Now? The damage is done, and you're left trying to salvage whatever profit margin remains. This scenario plays out in construction compan

Imagine bidding on a project, confident in your numbers, only to watch your profit evaporate as unforeseen expenses pile up. This scenario plays out more often than you might think in construction. Inaccurate job costing represents more than a minor hiccup, this silent profit killer can cripple even the most seasoned contractors. Getting job costing right goes beyond crunching numbers; understanding every dollar spent and earned on a project makes all the difference. When tho

You just won a $2M federal construction project with an 18% profit margin around $360K. Six months in, you're barely breaking even. By close, you've lost $150K. What happened? Prevailing wage requirements. And you didn't account for the real costs. Contractors see the higher wage rates and adjust their labor costs, assuming they're covered. But prevailing wage requirements multiply your costs through fringe benefits, payroll taxes, insurance premiums, and administrative overh

You're profitable on paper, but your bank account says otherwise, sound familiar? If you're a construction owner, general contractor, or subcontractor, you've probably experienced this frustrating disconnect. You look at your QuickBooks income statement, see a healthy profit margin, and wonder why you're still struggling to make payroll or cover material costs. The problem isn't your business, it's how your financial reports are set up. Standard QuickBooks income statements a

Last quarter, a Phoenix GC completed a $1.8M renovation with 8.5% gross margin all direct costs controlled, client paid in full. Three months later: $68,000 loss. The culprit? Overhead spiked 340% during mobilization and closeout while everyone focused on "visible" costs. The PM burned 140 hours post-revenue managing punch lists. Retention sat uncollected for 73 days while overhead kept running. Overhead costs are construction's silent profit killers.  Most contractors track