I have watched talented contractors lose projects not because they lacked skill, but because cash ran out at the worst moment. Cash timing in construction is brutal. You pay crews every week, suppliers want payment in 30 days, yet your customer might not cut a check for 60 to 90 days after you submit a pay application.
Rabbet’s 2025 Construction Payments Report says slow payments act like a 14 percent hidden tax, costing U.S. construction about 299 billion dollars this year. Levelset finds that fewer than four in ten contractors get paid within 30 days, and PwC puts average collection cycles near 83 days in this sector.
I wrote this playbook to give you a practical system for diagnosing your gaps, building a forecast that actually works, and picking the right funding tools without overpaying or losing leverage.
Strong Cash Control Is What Decides Your Project Results
Cash flow decides whether crews stay productive, suppliers ship on time, and your bonding capacity stays intact. The biggest drains are slow payments, retainage holds, and change order timing that never lines up with payroll. Retainage is the portion an owner withholds from each invoice until work hits agreed milestones.
Mapping Cash Gaps To Your Timeline Gives You Control
Different gaps show up at mobilization, mid-project execution, and closeout, so treat cash solutions as modular tools instead of a one-size-fits-all fix. Map your weekly payroll cycles against pay application submission, architect certification, and lender draw schedules. The goal is to see exactly how many days each project is unfunded.
Retainage creates additional drag. Many contracts withhold 5 to 10 percent, and American Institute of Architects (AIA) forms encourage that hold to reduce as work progresses. Quantify your accounts receivable ageing buckets at current, 30, 60, and 90 plus days using the last 12 months of receivables to see your true collection curve.
Checklist to Complete Your Cash Map
- Latest contracts with pay terms, retainage, and assignment rights flagged
- Three months of payroll calendars and supplier payment terms
- Accounts receivable (A/R) ageing with customer-specific trends in certification delays
- Historic submission to certify days and rejection causes per project
Linking A 13 Week Plan To Pay Apps Prevents Crunches
A rolling 13-week forecast tied to submission dates and lender draw calendars turns guesswork into precision. Import your schedule of values, layer labor curves by cost code, and model retainage accumulation with expected release points.
Create a days funded metric by dividing cash on hand plus undrawn sources by average daily burn. Track it weekly and use industry benchmarks as stress inputs. If your customers average 60 to 90 days to pay, pressure test a two-cycle lag scenario.
Choosing The Right Funding Tool Protects Your Margin
Pick the least cost, fastest fit instrument that covers your exact unfunded window. Do not consume long term credit for short spikes if a short-duration tool is cheaper.
Bank Working Capital Line of Credit
This is slow to set up but fast to draw once active. It typically offers the lowest APR (annual percentage rate) with covenants and borrowing base limits. For a deeper look at how these facilities fit into a broader funding strategy, see this guide to working capital finance and how it supports business growth.
Use it for recurring payroll and overhead as your baseline cushion. Watch for ineligibles over 60 to 90 days and cross-ageing rules.
Receivables Factoring
Factoring converts approved invoices into cash within days once customers are approved. Costs commonly run 1 to 5 percent of invoice value per month, depending on risk and structure, per NerdWallet data.
If slow-paying owners or primes are stretching your cycle, review options from Redline Capital Inc and similar providers, then stack fees against your days outstanding to confirm the lowest all-in cost for the exact gap you need to cover while protecting margin on each affected project phase, using invoice factoring as a quick framework for evaluating offers. Watch for contract anti-assignment clauses and plan customer communication carefully.
Material Financing
This option shines for long lead items that would strain your line of credit. Costs vary by term extension but may be cheaper than tying up a line of credit headroom. Manage joint check agreements and lien waiver sequencing tightly.
Trimming Days Out Of The Process Lowers Funding Need
Before adding debt, cut days from submission to funding with tight administration. Standardize AIA G702 and G703 with airtight backup and consistent change order references. Track two key performance indicators (KPIs) per project, submission to certification days and rejection rate by reason code.
Autodesk’s acquisition of Payapps brought technology that processed close to 50 billion dollars in pay applications through 2023. Automate lien waivers so approvals do not stall waiting for manual signatures.
Staying Compliant Keeps Your Lien Rights And Leverage
Protecting lien rights while financing requires careful waiver language tied to collected funds, not submission. Confirm state retainage caps and prompt payment rules. A mechanics lien is a legal claim against the property for unpaid work, so know the filing deadlines in every state where you operate.
Automate reminders for preliminary notices and filing deadlines. Align Uniform Commercial Code (UCC) notices with your funding strategy so notices of assignment do not conflict across facilities.
Conclusion
Your first win usually comes from process, cleaner pay apps, automated waivers, and contract lender alignment. Then layer the right instruments by gap length and cost math.
Protect leverage with disciplined lien rights, document your controls, and earn cheaper capital over time. Start the 30 60 90 plan now, measure results, and scale confidently across projects.
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