You had your best month ever in March. Then April was dead. May was okay but you had three late-paying customers. Now you’re stressing about making payroll.
Sound familiar? You’re not alone. Cash flow problems kill more contracting businesses than bad reviews or tough competition. Here’s how to fix it.
Why Contractors Have Cash Flow Problems
The typical contractor cash flow cycle looks like this:
- Buy materials (money out)
- Do the work (time invested)
- Send invoice (money owed)
- Wait 15-45 days to get paid (stress)
- Repeat
You’re constantly funding the next job with money from the last one. One late payment throws off the entire chain.
7 Strategies That Actually Work
1. Collect Deposits Before Starting Work
Stop financing your customers’ projects. A 30-50% deposit before work begins is standard in every trade. It covers your material costs and commits the customer.
If a customer won’t pay a deposit, that’s a red flag — they’ll probably be slow to pay the final invoice too.
2. Invoice on Completion, Not “When You Get Around to It”
The #1 cash flow mistake contractors make: waiting to invoice. Every day between job completion and invoice delivery is a day of unnecessary float.
Send the invoice from the job site. Include an online payment link. Customers who can pay by card on their phone pay 2x faster than those waiting for a check.
3. Set Up Automatic Payment Reminders
Day 3: friendly reminder. Day 7: second reminder. Day 14: firm notice. Day 30: final warning.
Don’t do this manually — automate it. You’ll feel uncomfortable sending “stern” reminders, but your customers expect them. They’re juggling 50 things and simply forgot.
4. Offer Payment Plans for Large Jobs
A $5,000 fence job is a big ask for many homeowners. But 4 payments of $1,250? That’s manageable. Payment plans increase your close rate on large jobs by 20-30% and reduce the risk of non-payment.
5. Track Your Accounts Receivable Weekly
Know these numbers every week:
- Total outstanding: How much is owed to you right now?
- Aging buckets: How much is 0-30 days? 31-60? 61-90? 90+?
- Average days to payment: How long does it typically take to get paid?
If you don’t know these numbers, you’re flying blind. AR aging reports highlight problems before they become crises.
6. Build a 30-Day Cash Reserve
This is the single best thing you can do for your business’s survival. Set aside 10% of every payment until you have 30 days of operating expenses saved.
It won’t happen overnight. But once you have it, you’ll sleep better and make better business decisions (because you’re not desperate for the next payment).
7. Diversify Your Revenue Streams
Maintenance contracts, recurring services, and membership plans create predictable monthly revenue. Even if it’s just 20% of your total — that 20% covers your fixed costs while you build the rest through project work.
The Math of Getting Paid 1 Week Faster
If you have $50,000 in outstanding invoices and your average payment time drops from 30 days to 23 days, you unlock an extra $11,600 in cash flow annually. That’s the difference between making payroll comfortably and sweating every Friday.
Start Today
Pick one strategy from this list and implement it this week. The contractors who manage cash flow well aren’t the ones with the most work — they’re the ones who get paid on time, every time.
Try CrewRivet free — online payments, automatic reminders, deposit collection, and AR aging reports built in.