The Hidden Impact of Job Borrow on Contractors and Bonding Capacity
- Paramita Bhattacharya
- Nov 15
- 2 min read
Job borrow is one of the most overlooked financial risks in construction. It does not show up on your bank statement, but it appears clearly on a WIP schedule and can influence everything from cash flow to profitability to bonding capacity. If you are scaling your contracting business, understanding job borrow is critical.
What Is Job Borrow?
Job borrow happens when cash from one project is used to pay costs on another. This usually occurs when one job is overbilled and another is underbilled.
On your WIP:
Overbilling = job borrow (cash pulled out of the job)
Underbilling = job lending (cash owed back to the job)
Job borrow is not wrong. It is simply the movement of cash between projects. The problem is when it becomes large, consistent, or masks deeper financial issues.
Why Job Borrow Happens
Contractors often slide into job borrow because:
A project was billed aggressively to improve cash flow
Another job is behind on billing or awaiting approvals
Costs moved faster than billing due to change orders or delays
Job cost tracking is behind
The business is using today’s job to pay for yesterday’s costs
You do not notice it until you look at your WIP and see the imbalance.
How Job Borrow Affects Cash Flow
Job borrow creates false confidence in your cash position. Money flows out of a job early, but the work must still be completed later.
This leads to:
Cash pressure near job closeout
Trouble paying vendors on time
Increased reliance on lines of credit
Cash crunches even when profits look good
Job borrow is the silent reason many “profitable” contractors run short on cash.
How Job Borrow Impacts Profitability
Overbillings and underbillings distort job margins:
Overbillings can inflate profit early
Underbillings can hide profit you already earned
Delayed change order billing skews job performance
Inconsistent reporting hurts forecasting and planning
Margins look better or worse than reality, and decisions suffer.
How Job Borrow Impacts Bonding Capacity
Surety underwriters pay close attention to job borrow because it signals how disciplined and stable your operation is.
Large or repeated job borrow can lead to:
Lower working capital
More underwriter questions
Higher perceived financial risk
Limits on bond size
Delays or declines on new bond requests
Sureties prefer contractors where each job is self-funding and WIP schedules show stable margins.
How Contractors Can Reduce Job Borrow
You can manage or eliminate harmful job borrow by tightening financial processes:
Bill frequently and accurately
Track job costs weekly
Submit and bill change orders quickly
Review your WIP schedule monthly
Forecast cash flow by project
Strengthen working capital so jobs are not funding each other
Small improvements go a long way in reducing risk and increasing bonding confidence.
Final Thoughts
Job borrow is common in construction, but it becomes risky when ignored. It affects cash flow, job margins, and bonding strength. When you monitor it through accurate job costing and disciplined billing practices, you protect your business and position yourself for growth.
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