Anchin is recognized by Construction Executive in The Top 50 Construction Accounting Firms™ for 2024

ANCHIN HAS BEEN RECOGNIZED BY CONSTRUCTION EXECUTIVE IN THE TOP 50 CONSTRUCTION ACCOUNTING FIRMS™ FOR THE SIXTH CONSECUTIVE YEAR.

Anchin’s Phillip Ross shared some best practices for managing cash flow year-round: Cash flow is the heartbeat of any business. Contractors should project cash flow at least one year ahead, scheduling project timelines and anticipating potential changes and their impact. Creating three different budget and cash-flow projection scenarios—what is on pace to happen, the best-case scenario and the worst-case scenario—ensures multiple strategies are available to proactively manage current situations and adapt to unforeseen changes.

Timely billing for completed work is crucial for maintaining healthy cash flow. Contractors should review all their contracts to understand the billing terms. As many adhere to a monthly billing cycle, ideally, invoices should be issued within three days of the close of the month. Contractors should also follow up diligently on overdue payments to reduce days sales outstanding.

Many contractors have diversified the work and markets in which they operate. This helps to smooth cash flow by reducing reliance on any single revenue stream. These firms plan ahead in order to capitalize on shifts in demand by reallocating workers to the busiest sectors, thereby converting potential idle workers into revenue and cash-flow generators.

To be successful in today’s market, cash-flow management needs to take place year-round. Having an updated plan and communicating the plan to management and employees is essential. Finally, working with an accountant who specializes in the construction industry will ensure that you are staying informed and up to date on industry trends, tax-law changes and potential effects.