Recap of the 4 Myths, 18 Tips, 5Cs, and 4 Metrics of Cash Flow
D. Brown Management
November 14, 2018
Cash flow is critical for the sustainable growth of a construction contractor and one of their key scoreboard metrics. Here's a recap of the 4 Myths, 18 Tips, 5Cs of Credit, and the 4 Metrics & Trends of Cash Flow.
Lead Measures and Outcomes: Starting with the Schedule of Values (SOV)
D. Brown Management
November 13, 2018
It is nearly impossible for a contractor to have consistently great cash flow if they have a Schedule-of-Values (SOV) that isn’t loaded properly and integrated with the project schedule, including a projection of the cash flow.
Collections and Retention Trend Metric
D. Brown Management
November 12, 2018
Assuming that a contractor’s project team has done an effective job of aggressively billing the project, the biggest variable that remains for cash flow is the effectiveness of collections.
Over and Under Billing Metric Trend
D. Brown Management
November 11, 2018
No amount of excellence in collections will help you get close to 100% if you are continuously under-billed on your Work-in-Progress (WIP) as a whole.
Project Cash Metric and Cash vs. Margin Variance
D. Brown Management
November 10, 2018
Contracting is a very capital-intensive business and it is critical to constantly be watching cash flow performance. This metric is the highest level of an “OUTCOME” for cash flow at the project level, summarizing the performance of ops and accounting.
cash flow metrics
Cash Flow Metrics and The Continuous Improvement Process
D. Brown Management
November 9, 2018
Contractors can focus on 3 major metrics to continuously improve cash flow, truly making a “game” out of it.
Cash Flow and the 5Cs of Credit - Conditions
D. Brown Management
November 8, 2018
The 5th of the 5Cs of Credit are the conditions for the loan, which is primarily what the funds will be used for. These conditions are here to protect the contractor as much as they are there to protect the bank.
Cash Flow and the 5Cs of Credit - Collateral
D. Brown Management
November 7, 2018
The 4th of the 5Cs of Credit is how much and what type of collateral the contractor will put up as a guarantee. The collateral requirements change significantly as contractors grow.
Cash Flow and the 5Cs of Credit - Capacity
D. Brown Management
November 6, 2018
The 3rd of the 5Cs of Credit is how much capacity your business has to profitably build the projects, ensuring payback of the loan or minimal risk in the case of insurance or bonding.
Cash Flow and the 5Cs of Credit - Capital
D. Brown Management
November 5, 2018
The 2nd of the 5Cs of Credit is how much capital you are putting at risk, along with your financial partner. Contractors should design and follow their own capital management policies appropriate for their business.
