Cash Flow and the 5Cs of Credit - Overview

Contractors need strong financial partners, including banking, surety, and insurance to grow sustainably.

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They are putting their capital at risk, making a calculated bet on the business generating consistent financial returns at the lowest risk possible.  

Cash Flow: 5C's of Credit. Character, Capital. Capacity, Collateral, and Conditions.

Whether you are an equity owner in a contracting business, plan to be or are choosing to invest your professional “career equity” into the business, you should look at the same factors an outside financial partner does. This will truly align everyone’s interests and make the business run more successfully.  

Greg Martin does a great job of describing the 5 C’s of Credit in a series of articles below.  

Effectively managing cash flow is about balancing what you can do internally while building and maintaining strong external financial partner relationships.  

  • What are your internal capital management policies? 
  • Are they in alignment with your outside financial partners?  
  • How does this look over the next 5 years or during succession if that is on the horizon for you?

Cash Flow
Great cash flow is a key driver of valuation and successful successions. Running out of cash is is the #1 reason contractors fail. Improving cash flow improves your Return on Equity. Protect yourself and never let cash flow be the limitation to your profitable growth....

Cash Flow
Great cash flow is a key driver of valuation and successful successions. Running out of cash is is the #1 reason contractors fail. Improving cash flow improves your Return on Equity. Protect yourself and never let cash flow be the limitation to your profitable growth....

Premature Optimization
Construction technology innovation has exploded and is continuing to accelerate. The quantity of experienced talent is at a low point and will continue to decline throughout the next 10+ years. There are probably more unknowns than knowns.
Cash Flow Tip 10 - Submittals and Managing All Deliverables
Submittals are one of the first deliverables to your customer on the project and when done correctly, will set you up for success throughout the project.
Increased Value by Lowering Variability
A construction business is capable of providing a very high return to the owners who have their capital at risk as well as the team members that work there. Contractors with lower variability in profitability are both more valuable and more sustainable.