The Formula For Consistent Cash Flow In 7-Figure Contracting Businesses

You just closed a great month. So why is there nothing in the account?

Contracting businesses rarely go under because the work isn't profitable. They go under because they run out of cash.

On this episode of Contractor Evolution, Danny Kerr sits down with accountant Bob Gauvreau. His firm works with thousands of contractors across North America, so he has watched this play out plenty of times.

Profit and cash flow are two different scoreboards. You can be winning one and losing the other badly. Here's what Bob says to fix first.

Key Ideas You Can Apply:

• Move collection forward in the job. His floor is 25% at signing and another 25% at start. Every point you don't collect up front is payroll, materials and subs you're funding yourself.

• Put payment terms in the contract and walk the customer through them. People follow the process you set. Set one, or they'll set one for you. Show up at the end asking for a check nobody was expecting and you just built your own receivable.

• Automate receivable follow-up at 10, 15 and 20 days. Let the software chase the easy ones. Save your phone calls for the accounts that go quiet. And know the collection deadlines where you operate, because a lien stops being an option eventually.

• Stretch your outflows on purpose. Negotiate longer vendor terms. Then run those purchases through a card you pay off in full. Thirty-day terms plus a 30-day billing cycle keeps 60 days of your own money in your account.

• Pay yourself on payroll, not in lump sums. Build a personal budget. Match it to your company pay cadence and kill the one-off draws. It steadies your cash flow. It also proves the business can carry a real salary in that seat when you hire out of it.

• Reconcile the books before you trust a single number. Bob sat down with a builder whose books showed $400,000 in profit. Nobody had reconciled the accounts in a year. The real number was just under $100,000. So he had spent twelve months making decisions off a figure four times too big.

Bob gets into how to ask a vendor for longer terms without wrecking the relationship, when financing an asset over eight years beats paying cash, how to handle bank draws and government clients who dictate their own terms. He also touches on what to do when a slow market stretches everybody's receivables at once.

Worth the hour if you've ever made money on a job and still couldn't find it in the bank.

Want help implementing this in your own business? Book a complimentary implementation call with Breakthrough Academy and we'll find where your cash is getting stuck.