The Contractor's Guide to Managing Cash Flow

More contractors fail from cash flow problems than from lack of work. You can be booked solid and still go bankrupt if you don't manage money properly.

The Cash Flow Challenge

Hardscaping projects create unique cash flow challenges:

• Large material purchases upfront
• Labor costs throughout the project
• Payment often at completion
• Seasonal fluctuations in revenue

The Payment Structure Solution

Recommended Payment Schedule

Milestone	Percentage	Purpose
Contract signing	30-50%	Materials + mobilization
Mid-project	25-35%	Labor costs
Completion	25-35%	Profit + final costs

Why This Works

• Deposit covers material costs (never float materials)
• Progress payment covers labor as you go
• Final payment is mostly profit

Cash Flow Best Practices

1. Never Start Without Deposit

No exceptions. If they won't pay a deposit, they won't pay the final bill.

2. Match Payments to Expenses

Structure payments so money comes in before expenses go out.

3. Maintain Cash Reserves

Target: 2-3 months of operating expenses in savings.

4. Separate Accounts

• Operating account: Day-to-day expenses
• Tax account: Set aside 25-30% of profit
• Reserve account: Emergency fund

5. Invoice Immediately

Send final invoices the day of completion. Every day delayed is money lost.

Managing Seasonal Fluctuations

Peak Season (Spring/Fall)

• Maximize revenue
• Build cash reserves
• Don't overspend on equipment

Slow Season (Winter)

• Reduce expenses
• Collect outstanding invoices
• Plan for spring

Year-Round Strategies

• Offer maintenance contracts (recurring revenue)
• Diversify services (snow removal, holiday lighting)
• Book spring projects in winter

Warning Signs of Cash Flow Problems

• Delaying vendor payments
• Using credit cards for materials
• Borrowing from tax reserves
• Turning down work due to lack of funds

If you see these signs, take immediate action.

The Lead Investment Perspective

Think of lead generation as an investment, not an expense:

• $100 lead → $15,000 job → $4,500 profit
• ROI: 4,400%

The contractors who invest consistently in quality leads maintain steady cash flow year-round.

Tools for Cash Flow Management

1. QuickBooks or FreshBooks: Invoicing and tracking
2. Spreadsheet: Simple cash flow projection
3. Separate bank accounts: Forced savings
4. Weekly review: 15 minutes every Monday

Cash flow management isn't sexy, but it's the difference between thriving and surviving.