Cash Flow Metrics and The Continuous Improvement Process

Contractors can focus on 3 major metrics to continuously improve cash flow, truly making a “game” out of it.

D. Brown Management Profile Picture
Share
Cash Flow: Cash Flow Metrics and the Continuous Improvement Process.

Contractors can focus on 3 major metrics to continuously improve cash flow, truly making a “game” out of it.  

  • Cash Metric Trend: This is the ultimate outcome-based cash metric at the company level that operations has control over. It looks at your open Work-in-Progress (WIP) projects and compares the net cash against the earned gross margin. Below 100% and you are financing the construction of the project.  
  • Over / (Under) Billing Trend: A great leading measure and 100% within the control of the project management team utilizing the 18 tips.
  • Collections & Retention Trend: Another leading measure that is a joint responsibility of the project management and finance team.  
  • Identifying the TOP 3 jobs that are the biggest drivers of these lead measures over the last month and then drilling down into them using Root Cause Analysis (RCA) tools to help you see potential improvements.  
  • Prioritize and execute improvements in the short and long term. Get better during the next cycle just like you do with Field Productivity.
  • Utilize A3 Thinking / Reporting techniques for the best results.

Contact us about using a template and process like this for your business.  




Contractor Exit Strategy 4 of 6: Merger with a Similar Contractor
Contractor Exit Strategy 4 of 6: Merging with a contractor that has a complementary market position and management team can be both a great exit strategy as well as an effective growth strategy.
Production Tracking - Doing the Math as a Habit
Today contractors have amazing tools for tracking field production such as Rhumbix. We spend a lot of time developing very tightly integrated systems with our clients focused on production feedback.
Doing What You Don't Want to Do
It is natural for all of us to focus on our strengths and the things we love to do. Things we love to do are usually things that we are good at doing; our strengths. None of us were born with great business acumen or technical competency.