Cash Flow Mastery: Never Miss Payroll Again

For builders, the stress of making payroll during a delayed payment cycle or material price spike is all too real. It’s not that you don’t have profitable jobs — it’s that timing kills cash flow. And when cash gets tight, the consequences can range from strained crews to missed opportunities.

The solution isn’t just “more work” — it’s smarter financial structuring that keeps money moving at the right times. Let’s walk through systems you can build into your projects that ensure you stay in control, even when surprises hit.

Rethink the Payment Schedule: Don’t Frontload the Risk

Too many builders default to 50% upfront and 50% on completion. While that may feel straightforward, it leaves you dangerously exposed — especially on larger jobs or with delayed inspections.

What to do instead:

• Break payments into milestone-based draws tied to visible progress.

• Examples: foundation complete, framing done, roof dried-in, inspections passed.

• Use clear language in your contracts to set expectations and reduce disputes.

This keeps client funds flowing in step with your expenses, minimizing the gap between labor/material costs and revenue.

Implement Progress Billing — Even on Smaller Jobs

Don’t reserve progress billing just for multi-million dollar builds. Even a $60K residential remodel can benefit from multiple invoice checkpoints.

Benefits:

• Stabilizes your weekly cash flow

• Helps clients feel in control

• Keeps your books cleaner and more predictable

Tip: Use accounting software like QuickBooks, CoConstruct, or Buildertrend to automate this. If clients know exactly what to expect and when, they're less likely to delay payments.

Negotiate Favorable Terms With Suppliers

Cash flow isn’t just about money coming in — it’s also about how long you hold onto it.

Tactics:

• Ask for Net 30–60 terms with key vendors

• Batch orders to qualify for volume pricing

• Use consignment or just-in-time delivery to reduce upfront costs

Reminder: Good relationships matter. Communicate proactively with your suppliers, especially during slower seasons.

Create a Cash Buffer: Your Safety Net for the Unexpected

Aim to set aside a rolling 2–4 weeks of payroll and operating costs in a reserve account. Treat it like a tax — not optional.

Ways to build the buffer:

• Take a portion of every paid invoice and set it aside (even 2–5%)

• Use off-season or high-profit jobs to build reserves

• Reinvest tax refunds or project bonuses into your safety net

Bonus: A healthy reserve improves your creditworthiness for when you do need financing.

Handle Delays Without Losing Liquidity

Project delays are common — permit holdups, weather, client indecision. The key is structuring contracts and payment terms to absorb delays without draining cash.

Include:

• Defined pause clauses: Establish what happens if a client halts work.

• Stored materials billing: Allows you to invoice for materials on-site even if installation is pending.

• Late approval charges or rebooking fees: Keeps clients accountable for their role in the timeline.

Plan Payroll Cycles Around Cash Flow

If your billing cycle always lags your payroll cycle, you’re guaranteed cash stress.

Options:

• Adjust your payroll calendar to align better with invoicing schedules

• Consider biweekly payroll instead of weekly if legally and culturally appropriate

• Use lines of credit only as a short-term gap filler — not your default

Final Thought

You can have the best team and the most profitable projects — but without smart cash flow systems, none of it lasts. Builders who thrive through economic cycles are the ones who treat cash flow management as part of their craft, not just a back-office task.

At CMS, we partner with builders who understand the importance of consistent cash flow and on-time execution. We offer material supply solutions that support your schedule and reduce financial strain.

Need a building materials partner that understands builder cash flow challenges?
📞 Contact CMS in Grand Rapids — we’re here to help you keep your jobs moving and your crews paid.