How Cash Flow Disrupts Construction Businesses

Report: In construction, cash flow problems reduce profits, delay projects and force companies to take out loans

Why is cash flow so important, and potentially problematic, for construction companies and contractors?

Levelset, which describes its mission as helping “contractors and suppliers get payment under control, facilitating smooth payments and successful projects,” commissioned a report detailing how construction companies manage to collect on invoices, pay suppliers and make payroll.

Construction companies tend to be small and mid-sized businesses, and are spread across the U.S. Although the trillion-dollar industry is far from centralized, key issues recur throughout it, from seasonal challenges to difficulty with collections.

To compile its 2021 Construction Cash Flow & Payment Report, Levelset surveyed 764 construction professionals to explore the financial challenges they face. The report looked into how the pandemic affected collection rates, shaped payment practices and impacted cash flow.

Download Now: Cash Flow Guide for Small to Mid-Sized Businesses

Key findings included:

Cash flow problems reduce profits (47%), delay projects (33%), and force companies to take out loans (30%)
97% experience stress from slow payments and cash flow problems
Just 11% are paid in full on every job (an 82% drop from 2019)
Only 9% always get paid on time (down 60% from 2020)
71% have filed a lien over non-payment (41% filed two or more liens in the past 12 months)
83% have the ability to accept electronic payments (79% say it has helped them get paid faster)

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**Deposit placement through ICS is subject to the terms, conditions, and disclosures in the applicable agreements. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through ICS satisfies any restrictions on its deposits. A list identifying IntraFi network bank

Survey: How Cash Flow Disrupts Businesses

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