Contractor Strategies for 2022: Cash Flow Forecast and Budgets

Earlier this week, we kicked off our Top 5 Contractor Strategies for 2022 with helping you Get Ready for Your PPP Audit. Now learn about our second strategy, cash flow forecasts and budgets.

Enough cannot be said about these tried-and-true construction financial management tools – they are the life blood of any successful contractor. When done properly and pushed throughout the organization, a culture of “cash is king” can be cultivated and maintained. Each project is its own profit center with its own cash flow cycle.

By forecasting cash flow on a project-by-project basis and globally, management will be able to identify cash peaks and valleys. This insight will enable the construction financial professional to proactively redeploy cash resources if a project is forecasting in the red or employ an investment strategy with excess cash. After all, contractors don’t go out of business due to lack of work, but rather due to lack of cash flow.

The companion piece is a strong operating budget. Of course, this is going to outline and help track overhead, but it will also help the contractor identify the levels of administrative support the company will need to yield an industry accepted profit and, not to mention, meet the expectations of creditor providers, who are asking for these practices now more than ever.

Click here to learn more about cash flow management and how our Construction advisors can help you make your next financial move with confidence.

This article is the second in the series, Top 5 Contractor Strategies for 2022, from Grassi’s Construction team.

Carl Oliveri Carl Oliveri is the Construction Practice Leader and a partner at Grassi. He has over 25 years of experience advising owners and executives in the Construction industry, particularly in project-centric and companywide financial modeling, operational strategy development, financial statement accounting services and income tax method analysis. This extensive industry experience allows him to provide insight and advice to construction clients on marketplace trends and... Read full bio

Categories: Advisory, CFO Advisory