At Knowify, we see it every day: trade contractors land great jobs, run tight operations, and post profits, yet still find themselves scrambling for cash. It’s a tough spot, and you’re not alone. According to the U.S. Bank, 82% of business failures are due to poor cash flow management. That’s not just a number. It’s a reality for too many hardworking contractors.
As Steve Coughran, construction profitability expert and founder of Coltivar, shared on The Cost Codes Show, “When I was running my landscape business, I was just 16 years old, starting out of my sister’s garage. As the business grew, I grew with it. Before long we were doing several million dollars a year and I was still only in my early twenties.
I had no financial background. Operationally, I knew how to design and build projects, but I didn’t know how to read an income statement. I could see our revenue and I could see our profit, but everything in between? No clue. If you had asked me how to influence gross margin, I would have either made something up or admitted I didn’t know. If you’d asked me what cash flow was, I would’ve said, “Isn’t that just the balance in my bank account?” So there I was, running this business on sheer grit and heroics, and I made a ton of mistakes along the way.”
Profit is important. But cash flow keeps your doors open, your team paid, and your projects moving. Let’s break down where contractors get tripped up, and how you can master cash flow with the right strategies and technology.
Construction is unique. You win a job, invoice for mobilization, get a deposit. But actual work, and actual payment, rarely line up. Progress billing, retainage, and slow customer payments create “cash flow gaps” even when jobs appear profitable on paper.
Steve put it plainly:
“In construction, we accept money upfront for mobilization. We have to estimate cost to complete. You’re trying to track all these costs related to a job. Every single project is almost like a business in itself.”
These timing mismatches wreak havoc on your cash flow. You may see revenue hit your income statement before you’ve even started work. Then, when costs roll in, you might already be out of sync.
How Knowify helps:
Knowify’s progress billing features let you track every phase and invoice with pinpoint accuracy. You’ll always know what’s been billed, what’s outstanding, and what’s actually cash in the bank.
It’s easy to lose track of the details, especially on busy jobs. Missed change orders, untracked expenses, and surprise vendor bills can nuke your cash position fast.
Steve highlighted this risk:
“If you’re not doing percentage of complete billing or the correct revenue recognition, then yeah, your financials are a mess and it’s so hard to run a business that way.”
Practical tips:
How Knowify helps:
With the Knowify mobile app, field teams can log expenses in real time, snap receipts, and update jobs on the fly. No more lost paperwork or guessing where the money went.
The faster you invoice, the faster (in theory) you get paid. Delayed billing is one of the most common (and fixable) causes of cash flow headaches. This means you need buy-in from your in-office team.
Steve’s advice:
“It’s the responsibility of everybody in the organization to know how their work and their actions and their behaviors impact the financials of the company.”
Action steps:
How Knowify helps:
Knowify’s invoicing automation triggers reminders and allows customers to pay online, reducing friction and speeding up collections.
Every dollar out matters. Prioritize payables, negotiate better terms with suppliers, and keep a tight grip on discretionary spending.
Checklist:
How Knowify helps:
Expense management tools in Knowify let you track bills, manage approvals, and see upcoming obligations, all in one place. This means fewer surprises and more control.
Every contractor faces slow seasons or emergency expenses. The difference between surviving and thriving? Planning ahead and building resilience.
Steve shared:
“You have to understand contract terms, you have to set your own terms that are advantageous to your cash position, and you really have to look out for those two things: working capital and CapEx.”
Risk management tips:
How Knowify helps:
Reporting features in Knowify give you a clear view of future commitments, helping you make smart decisions before cash gets tight.
You can’t manage what you can’t see. Too many contractors rely on gut feel or outdated spreadsheets. That’s a recipe for trouble.
With Knowify:
“Once you put in place a WIP (Work-in-Progress report) and you’re tracking it on a regular basis… without a WIP you’re totally guessing on your numbers.”
—Steve Coughran
Mastering cash flow isn’t out of reach. Every contractor can develop the financial clarity and confidence to keep their business strong. Start with the basics: track every dollar, invoice promptly, manage expenses, and plan for the unexpected.
Every small step you take—reviewing your numbers, tightening up processes, adopting the right technology—adds up to greater security and growth. Celebrate that progress.
Ready to take control of your cash flow and unlock new success for your contracting business? Request a demo of Knowify today and see how real-time cash flow management can keep your business strong, resilient, and ready for anything.
