In the construction industry, cash flow challenges are a significant threat to business survival. 30% of business failures are caused by financial issues. Proper financial management isn’t just a good practice; it’s a requirement for success. Timothy Wingate Jr., EA, President of G+F Business & Financial Consulting, shares expert strategies to help construction companies build and maintain financial stability through cash management.

Setting Financial Baselines and Budgets

Financial stability begins with creating a solid foundation of organization and financial awareness. Wingate says that one of the biggest mistakes construction companies make is not knowing their true financial position.

“You can’t make informed decisions about your company’s future if you don’t have a clear picture of where you stand today.”

Wingate notes.

At the heart of good budgets, particularly for construction personnel, is the financial baseline. Finding the right compensation and benefits for employees is a challenge for many construction owners. Wingate believes budgeting is also important in these decisions.

“Without a proper budget, you’re essentially flying blind. You need to understand exactly how much you can afford to pay employees and what benefits you can realistically provide while maintaining profitability.”

he advises.

Budgets also have to accommodate growth, equipment purchases, and fluctuations in the marketplace.

“Your budget isn’t just about today’s expenses. It needs to account for future growth, equipment needs, and market fluctuations. This is where many contractors fall short – they focus on immediate needs without planning for the future.”

he emphasizes.

Strategic Savings and Owner Compensation

For construction companies, maintaining a financial reserve is non-negotiable. Given the cyclical nature of the industry, reserves are key to stability during economic downturns or slow seasons. Wingate recommends having 3-6 months of operating expenses in savings as a cushion. He says that “Construction is cyclical, and having reserves isn’t optional – it’s mandatory”.

Owner compensation is another big factor in financial stability. Wingate says structured salary payments are better than irregular cash withdrawals.

“Putting yourself on a regular salary through payroll is crucial. Too many construction company owners take draws whenever they need money, without understanding how this impacts their business’s cash flow. A structured salary helps you budget personally and professionally while ensuring the business maintains necessary capital.”

he says.

Also, by formalizing their compensation, business owners get clarity on both personal and business finances.

“When you know exactly how much you can take from the company, you’re less likely to strain your business’s resources.”

Wingate explains.

Not only does this stabilize cash flow, it also gives the business a more professional tone and allows for easier tracking of finances.

The Importance of Professional Financial Management

Specialized financial knowledge is key to good cash management in construction. Wingate highlights the need for experienced professionals who understand the intricacies of construction accounting. He says that construction accounting is highly specialized, and general bookkeeping knowledge isn’t enough – you need someone who understands the unique aspects of construction finance, from progress billing to job costing.

Companies like G+F Business & Financial Consulting offer custom financial services to construction businesses. These services do more than basic bookkeeping, they also provide insight for decision making.

“Proper bookkeeping isn’t just about tracking expenses and income. It’s about understanding the story your numbers tell and using that information to make strategic decisions.”

explains Wingate.

Professional financial management also helps businesses identify trends and mitigate risks before they become problems.

“When you have experienced professionals managing your books, they can identify trends, flag potential issues before they become problems, and help you make data-driven decisions about your business’s future.”

Wingate says.

This is especially important during periods of economic uncertainties. “During economic downturns or seasonal slowdowns, companies with strong financial management practices and professional support are much better positioned to weather the storm,” Wingate observes. These companies have the data and expertise to make tough but necessary decisions in difficult situations.

Also, good financial management enables growth and opportunity.

“When you have your financial house in order, you’re better positioned to take advantage of opportunities when they arise. Whether it’s expanding into new markets, investing in equipment, or hiring key personnel, strong financial management gives you the foundation you need to make confident decisions about your company’s future.”

Wingate concludes.

For construction companies, cash flow and financial management is key to long-term success. With specialized guidance from companies like G+F Business & Financial Consulting, contractors can get their financial house in order and enjoy stability, risk reduction, and growth. By implementing these practices they can navigate industry challenges, seize opportunities, and have a bright future.

About Timothy Wingate Jr., EA

Timothy Wingate Jr., EA, is the founder of G+F Business & Financial Consulting LLC, a specialized accounting and financial consulting firm dedicated to serving the construction industry. As an Intuit tax council member for 5 years and a construction industry specialist, he provides comprehensive services including tax planning, bookkeeping, and strategic business consulting, while emphasizing contractor education and technological innovation. Based in West Palm Beach, Florida, G+F helps construction companies nationwide build sustainable financial futures through industry-specific expertise and practical solutions.