lutz logo
lutz logo
  • Services
  • News & Insights
  • About
  • Client Portal
Search
  • Services
  • Accounting
  • Advisory
  • Financial
  • M&A
  • Talent
  • Tech
  • Accounting Services
Services
  • Audit & Assurance
  • Client Advisory Services
  • Outsourced Accounting
  • Tax
  • Business Valuation
  • Litigation Support & Forensic
View All
Industries
  • Agribusiness
  • Construction
  • Family Office
  • Healthcare
  • Manufacturing & Distribution
  • Nonprofit
View All
News & Insights
Financial Access Checklist
Guide
Financial Access Checklist

Share this information with your spouse to assure you each have access to manage important financial tasks independently.

Read More
  • Advisory Services
Services
  • Accounting
  • Financial
  • M&A
  • Talent
  • Tech
View All
Resources
The Art of Budgeting
Recording
The Art of Budgeting + Smart Saving Strategies
Learn how to get your finances under control and increase your savings! Hear real-life examples and best practices to secure a successful future.
Watch Now
Business Insights
Comparing Business Valuation Methods
Blog
Comparing Business Valuation Methods: Which is Right for You?
Valuation experts rely on three primary approaches to determine the value of a business: income approach, asset approach, and market approach.
Read More
  • Financial Services
Services
  • Financial Planning
  • Investment Advisory
  • Retirement Plan Services
  • Pooled Employer 401(k) Plan
View All
Resources
  • Lutz Financial Blog
  • Our Team
  • Client Portal
  • Charles Schwab Login
  • Send Files Securely
Contact Us
NEWS & INSIGHTS
Website Featured Content Images
Market Commentary
Financial Market Updates

Read our latest financial market updates and sign up to receive them straight to your inbox.

Read More
  • M&A Services
Services
  • Sell-Side Representation
  • Transaction Advisory
  • Exit Planning
  • Business Valuation
View All
Resources
Selling a C Corporation
Blog
Factors to Consider When Selling a C Corporation

Understand the tax issues affecting both buyers and sellers involved in C corporation merger and acquisition transactions

Read More
Business Insights
Post-Acquisition Checklist
Guide
Post-Acquisition Checklist for a Seamless Transition
To help you navigate this critical period, we've compiled a comprehensive checklist covering key areas that demand attention after the deal closes. 
Read More
  • Talent Services
Services
  • Search & Staffing
  • Outsourced HR
  • HR Consulting
View All
Candidate Resources
  • Job Seeker Process
  • Current Opportunities
  • Lutz Internships
Contact Us
News & Insights
Overcoming Bias in Recruitment
Blog
Unconscious Bias in Recruitment: How to Overcome It
Learn how to take the bias out of recruitment and build a diverse, talented workforce with these tips.
Read More
  • Tech Services
Services
  • Outsourced IT
  • Data Analytics
  • Technology Strategy
  • Software Consulting
View All
Resources
When to outsource your IT
Blog
How to Know When It's Time to Partner with an IT Pro

One day your technology seems manageable, and the next you're wondering if you need more support. Here are the clear signs it's time to outsource your IT.

Read More
Business Insights
Untitled design (1)-Mar-08-2024-08-50-35-9527-PM
Video
Pella Client Testimonial
"I've used them for valuation work, stock transfers, hosting all of my technology, and now data analytics. I'd say they lead the pack in terms of anticipating what I'm going to need before I even know I need it."
View Now
Business Insights
BLOG
Explore Topics

Get the latest news and insights on relevant topics that matter most to you.

View All
Webinars & Events
Events
Register Today

Register for an upcoming event or access our library of on-demand recordings.

View All
Market Updates
COMMENTARY
Stay Informed

Catch up on market moves with our weekly update, featuring in-depth insights and analysis.

View All
Resources
EBOOKS & GUIDES
Download Now

Take a deep dive into challenging business topics with these free educational resources. 

View All
  • News & Insights
  • Business Insights
  • Webinars & Events
  • Market Updates
  • Resources
Business Insights
BLOG
Explore Topics

Get the latest news and insights on relevant topics that matter most to you.

View All
  • About
About

Lutz is a business solutions firm for people seeking a partner to help energize and heighten economic and organizational success.

Our Company
Our Team
Offices
Careers
Internships
Contact Us
  • Contact
Client Portal

Log in to your relevant client portal to access your account, upload documents, or make a payment.

Make a Payment
Accounting Client Portal
Financial Client Portal
Charles Schwab Login
Send Files Securely
Contact Us
  • Construction

Construction Cash Management Tips

Ryan Cook, Managing Shareholder
April 27, 2023
Construction Cash Management Tips

Construction contractors, whether large or small, have a unique set of challenges when it comes to running their businesses. At Lutz, we work with a number of contractors and are able to see from an outside perspective what these challenges are and how to best navigate them. As the low-interest rate environment and government programs (PPP Loans and Employee Retention Credits) come to an end, it is important to refocus on cash management. While many businesses tend to reinvest any earnings directly back into the business in the form of buying equipment, hiring more staff, or improving infrastructure, contractors need to consider the following: 

Bonding  

Unlike other industries, construction contractors always need to be aware of their bonding capacity. A bonding agent is always looking at a contractor’s working capital ratio as well as debt to equity when they are making their bonding capacity decisions, and cash is a major factor in both of these ratios. 

Seasonality  

More than other industries, construction is heavily influenced by nature. Whether your company is completely seasonal (such as lawn care) or is dictated by weather (concrete, for example), you need to make sure you are accumulating cash when your crews are able to work to account for shifts in the weather you did not anticipate. 

 

4 Important Cash Management / Bonding Capacity Tips:

 

1. Understand Your Contracts

Know how your contracts are written —especially when it comes to payment submission dates. How long is your billing process? 30-60 days is relatively standard in the construction industry and should mean that cash is coming in on a regular basis. However, you must make sure that your staff is billing at the correct time and submitting proper documentation. If they miss the submission dates, you will likely have to wait until their next scheduled payment day, therefore causing you to carry accumulated construction costs for the next month. 


Another important aspect of your contract is mobilization costs. Are you charging your customers for the time it takes you to set up a project, or are you trying to recoup those costs throughout the project or at the project’s end? Charging for mobilization costs upfront is a great way to improve cash flow. 

2. Watch the Distributions

Many contractors make the mistake of paying out a large percentage of their profits in the form of distributions instead of letting that cash accumulate in the company. While owners should certainly be getting paid a fair wage and taking money out to account for tax estimates, problems arise when they take out excess distributions and decrease their company’s working capital and bonding capacity. 

3. Don’t Pre-Pay if it isn’t Necessary

Many contractors think they are getting ahead of the game if they pre-pay costs such as insurance bills upfront or materials to earn a discount. However, if you’re pre-paying a bill for the upcoming year, you are probably doing yourself more harm than good. A bonding company will consider that money already spent and will no longer consider it an asset. Better to pay the bills when they come due or at least wait to pre-pay until the first of the year. 

4. Keep Year-End in Mind

Your bonding company wants to see that your business is liquid when it comes to year-end. That means, if you have a large purchase to make, it may make sense to wait until after year-end to do so. For example, if you are looking to purchase a large piece of equipment, you should consider holding off until after year-end, as this could affect both working capital and debt-to-equity ratios depending on the terms of the financing. Waiting until after year-end can make a big difference when it comes to bonding capacity. 

It is also important to point out that each individual company’s tax situation is different, and in certain circumstances, it may make sense to pre-pay items or make purchases at year-end. Understanding the balance sheet considerations of tax planning is very important. 

At Lutz, we know your construction company's unique needs and can help you navigate industry challenges. Remember bonding and seasonality, and always keep this phrase in mind: CASH is king. If you have additional questions, contact us. 

 

Contributor: Clarke Beller

Large Headshot Crop + Web Crop (1)
  • Command, Woo, Competition, Self-Assurance, Ideation

Ryan Cook

Managing Shareholder
Ryan Cook, Managing Shareholder, began his career at Lutz in 2006 as an intern. His professional trajectory exemplifies the firm's commitment to developing talent from within. After serving on the firm’s leadership committee for many years and acting as President of the Accounting division, Ryan assumed the role of Managing Shareholder in 2025. Ryan is an active member of the Lutz Board of Directors and is responsible for the strategic vision of the firm.
 
Leading the firm, Ryan works closely with leaders across all divisions, ensuring top-tier client service and positioning Lutz for long-term success. While his focus is on firm-wide direction and collaboration, he remains a trusted advisor to clients and an active presence in the business community. Ryan’s expertise spans audit, valuation, M&A, and other consulting services. He is committed to growth, long-term sustainability, client generation, and high-quality relationship building.
 
At Lutz, Ryan embodies the firm's dedication to embracing change through his dynamic and visionary leadership. His entrepreneurial spirit and ability to connect with stakeholders of all generations position Lutz for continued growth and innovation.
 
Ryan lives in Elkhorn, NE, with his wife Katie and their children Keegan, Collins, and Griffin. Outside the office, he can be found watching his kids' activities and playing golf.
 

 

402.514.0008

rcook@lutz.us

Connect on LinkedIn

Recent News & Insights

Market Commentary
Time in the Market + 5.28.25
For anyone interested in following the markets, there has never been a better environment than ...
Read More
Manufacturing
Tax Considerations for Remodeling or Expanding a Manufacturing Facility
Planning to modernize or expand your manufacturing facility? The tax implications could have a ...
Read More
Accounting
Tax Highlights of the Proposed “The One, Big, Beautiful Bill”
On May 22, 2025, the U.S. House of Representatives passed a sweeping 1,116-page bill titled ...
Read More
Recent News
Lutz Announces Redemption of Ron Nebbia’s Shares
Lutz, a Nebraska-based business solutions firm, announces the redemption of ownership held by ...
Read More
module-bg-desktop module-bg-mobile

Let’s get you where you want to go.

We work to simplify complexities, help make critical business decisions, and confidently focus on the things that are truly important to you. We embrace your business as our own to spark the right solutions and help you thrive.
Contact Us
Lutz-Logo-white
  • Services
    • Accounting
    • Consulting
    • Financial
    • M&A
    • Talent
    • Tech
  • About
    • Our Company
    • Our Team
    • Offices
    • Careers
    • Internships
    • Current Opportunities
  • Client Portal
    • Make a Payment
    • Accounting Client Portal
    • Financial Client Portal
    • Send Files Securely
    Submit RFP
TOLL-FREE: 866.577.0780 | © Lutz & company, PC 2025 | Privacy Policy
Follow us on Facebook Follow us on LinkedIn Twitter - X Logo Follow us on Instagram Follow us on Facebook