Common Cash Flow Mistakes Contractors Make

And How to Fix Them Before They Derail Your Projects

Cash flow issues are one of the top reasons even profitable contractors struggle to grow. The problem is rarely about earning enough—it is usually about when cash moves versus when work happens.

Below are three common mistakes that drain cash and create unnecessary stress—along with a few ways to fix them.

1. Delayed Billing: Financing the Project for Free

You complete the work. The crew moves on. But the invoice sits on someone’s desk for a week — or three.

Every day that billing is delayed, you are giving your client an interest-free loan. You have already paid for labor, materials, and equipment. The longer you wait to bill, the longer you wait to recover those costs.

Fix it:

• Make billing a scheduled process, not a reaction.

• Align your billing cycle with job milestones or monthly closes.

• Review your billing cutoff dates and submit early when possible.

Consistency in billing keeps cash moving and reduces the constant “catch-up” stress.

2. Front-Loading Costs Without Matching Billings

Most project costs hit long before payments arrive. Materials and subs demand cash up front, while your first draw might not arrive until weeks later.

That mismatch is what traps even good contractors in cash crunches.

Fix it:

• Map your cost curve vs. billing curve for each project.

• Structure payment schedules that reflect actual work completed.

• Negotiate deposits when possible, especially for material-heavy jobs.

Your cash flow should move in rhythm with your work, not against it.

3. Ignoring Retainage: The Silent Cash Trap

Retainage often feels like “bonus money” you will get at the end, but in reality, it is cash you earned that is sitting in someone else’s account.

A 10% holdback on a $1M project means $100K of your working capital is locked up for months — or longer if closeout drags.

Fix it:

• Track retainage on every project as part of your receivables aging.

• Forecast when retainage will actually be released.

• Include it in your bonding and liquidity planning — not as spendable cash.

Knowing where your retainage sits gives you a clearer picture of your true cash position.

The Bigger Picture

Profit shows you are doing the right work.Cash flow shows you are running the business right.

When billing, cost timing, and retainage are managed together, cash flow stops being a surprise — and starts becoming a system.

This discipline is not only healthy for operations — it also builds confidence with your surety underwriter. Predictable cash flow tells the surety you know how to manage your money, not just make it.

Need help creating a cash flow system that supports bonding and growth?

That is what we do at SuretyCFO.

We help contractors align job costing, cash flow, and financial reporting so your business — and your bond line — can grow together.