Contractor Cash Flow: How to Stop the Feast or Famine Cycle
Video from Carpenter CPAs' Contractor Success Forum. Watch on YouTube.
What you'll get
A construction CPA and a bonding and insurance agent describe the early signs of a cash squeeze, such as paying suppliers late or scrambling for payroll, and why contractors hit it: slow-paying customers, retainage, weather and paying for materials up front. Their fix is separate bank accounts for income, job expenses, profit, owner pay, taxes and operating costs, each fed by a set share of every payment; it suits trades, and both hosts sell services to contractors, with the CPA also selling a book on the method.
Do this week
Open a separate account for taxes and one for your own pay, choose the share of each client payment that goes into each, and move that amount the day each payment arrives.