Epocket Guide

Top Menu

  • Drop Us Email

Main Menu

  • Home
  • Credit
  • Finance
  • Investment
  • Loan
  • Money Saving
  • Mortgage
  • Trading
  • Drop Us Email

logo

Epocket Guide

  • Home
  • Credit
  • Finance
  • Investment
  • Loan
  • Money Saving
  • Mortgage
  • Trading
Finance
Home›Finance›How Payroll and Cash Flow Can Kill a Construction Company

How Payroll and Cash Flow Can Kill a Construction Company

By Joshua Freddie
April 16, 2019
1546
0
Share:

Running a construction business relies heavily on costly manual labor. Construction just happens to be a very cash intense business as well. So when you combine payroll and cash flow together, you have a recipe for either success or disaster. Construction companies that manage both well tend to thrive. Those that do not are constantly in jeopardy of folding.

More than anything else, payroll and cash flow can kill a construction company. From the biggest contractors all the way down to individual subs, payroll and cash flow are the two biggest factors in determining a construction company’s long-term future. It’s important for any new subcontractor to get a handle on these two things before growth kicks in, otherwise there could be big problems down the road.

Construction Industry Payroll

If there is any industry in which payroll is as complicated as the restaurant industry, it is construction. Your typical construction company has at least a few employees on the payroll. However, the majority of the actual construction work tends to be done by contractors and subcontractors who are all paid differently.

Making matters worse is a plethora of paperwork construction companies have to submit to various government agencies to prove legal compliance. They have to document worker eligibility, who gets paid what amounts, and even different pay rates that can change from one job to the next across multiple locations.

The biggest challenge with payroll is having the cash in the bank account on payday. According to Dallas-based BenefitMall, making payroll on time is one of the biggest issues that construction companies face from a cash flow perspective. Simply put, contractors and subcontractors are generally unwilling to wait to get paid. It’s not their problem if a construction company’s receivables aren’t keeping up.

Fortunately, there are specialized construction payroll solutions that increase efficiency and relieve some of the payroll burdens construction companies face. BenefitMall offers one of them. In the digital age we now find ourselves in, it doesn’t make a lot of sense to run a construction company without utilizing a specialized payroll solution.

Cash Flow in the Construction Industry

Even the most sophisticated payroll software will be of limited use if a construction company cannot seem to manage cash flow. How important is cash flow? According to a March 2019 article from Construction Dive, a lack of cash is a big reason construction companies fail.

Construction Dive’s Kim Slowey talked to a number of industry experts to glean information for her piece. One of those experts, an accountant who specializes in the construction industry, told her that “contractors don’t go out of business because they have a lack of work or poor performance on their projects.” He went on to say that “they go out of business because they have no cash.”

Cash flow is always a concern for construction companies for the simple reason that there is so much cash changing hands. Construction companies and general contractors almost always have to foot the bill for the entire cost of a project. Only after they reach certain milestones do they get paid.

Between financing projects and pursuing their own receivables, it’s not difficult for a construction company to suddenly find itself without enough cash. Things are made worse when unexpected increases in payroll, taxes, etc. put further strain on cash accounts.

Payroll and cash flow are among the two biggest concerns for construction companies. Unfortunately, unfettered growth tends to be bad for both. That’s something to think about for any small construction firm looking to take on a ton of work this summer.

Previous Article

Boosting the SME Business for India’s GDP ...

Next Article

Looking to upgrade your machines? A business ...

Share:

Related articles More from author

  • Finance

    Financing for that Unemployed Could Make Holidays Better

    November 21, 2019
    By Joshua Freddie
  • Finance

    Why to Compare Various Credit Cards before Purchasing One

    October 16, 2019
    By Joshua Freddie
  • Finance

    A beginners’ guide to forex copy trading in the UK

    December 27, 2022
    By Joshua Freddie
  • Finance

    The Neo Bank Is Much More Than Just A Traditional Bank

    March 13, 2023
    By Joshua Freddie
  • Finance

    Poor Credit Financing – A Short Guide

    March 29, 2018
    By Joshua Freddie
  • Finance

    What’s A PAMM Account? Here’s All You Need To Know

    February 3, 2023
    By Joshua Freddie

Comments are closed.

  • Mortgage

    How to locate Wholesale Mortgage Brokers

  • Money Saving

    Do you know about the impressive features of PayNow?

  • Finance

    Summary of Corporate Finance

  • Recent

  • Popular

  • Comments

  • The Neo Bank Is Much More Than Just A Traditional Bank

    By Joshua Freddie
    March 13, 2023
  • What Are Slick Cash Loan Payday Loans And Their Advantages?

    By Joshua Freddie
    March 4, 2023
  • Why Forex Trading Is A Lucrative Option?

    By Joshua Freddie
    February 10, 2023
  • What’s A PAMM Account? Here’s All You Need To Know

    By Joshua Freddie
    February 3, 2023
  • 3 Financial Consideration To Think About Before Selling Your Home

    By Joshua Freddie
    January 18, 2023
  • The Neo Bank Is Much More Than Just A Traditional Bank

    By Joshua Freddie
    March 13, 2023
  • Rebuild Your Credit The Proper Way

    By Joshua Freddie
    January 19, 2018
  • Place Your Existence Back in line by Rebuilding Your Credit

    By Joshua Freddie
    January 29, 2018
  • Credit Improvement – A Real Possibility for Individuals With Poor Credit Scores

    By Joshua Freddie
    February 9, 2018
  • Poor Credit Cleanup – How you can Eliminate Bad Debt Using Effective Credit Improvement Methods

    By Joshua Freddie
    February 19, 2018

Archives

  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • August 2022
  • June 2022
  • April 2022
  • March 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • July 2020
  • April 2020
  • December 2019
  • November 2019
  • October 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • January 2019
  • November 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018

Recent Posts

  • The Neo Bank Is Much More Than Just A Traditional Bank
  • What Are Slick Cash Loan Payday Loans And Their Advantages?
  • Why Forex Trading Is A Lucrative Option?
  • What’s A PAMM Account? Here’s All You Need To Know
  • 3 Financial Consideration To Think About Before Selling Your Home
March 2023
M T W T F S S
 12345
6789101112
13141516171819
20212223242526
2728293031  
« Feb    
  • Home
  • Credit
  • Finance
  • Investment
  • Loan
  • Money Saving
  • Mortgage
  • Trading
© 2022- Epocket Guide. All Rights Reserved.