Cash Flow Management for General Contractors

General contracting is one of the most financially complex businesses to run. You can be profitable on paper and broke in practice — because the timing of when you get paid rarely matches when you spend money. Here's how to manage it.

The core challenge: cash timing

A contractor might sign a $500,000 project, complete 40% of the work, and still be waiting on a draw. Meanwhile, subs are due, materials need to be paid, and payroll doesn't stop. The gap between earned revenue and received cash is where most contractor cash flow crises happen.

Progress billing basics

Progress billing (also called AIA billing or schedule of values billing) lets you invoice for work completed in stages rather than waiting until project completion. Getting your billing schedule right — and submitting applications for payment on time — is one of the highest-leverage financial moves a contractor can make.

Retainage: the cash you've earned but can't touch

Most commercial contracts hold back 5–10% of each payment as retainage until project completion. This needs to be tracked separately — it's revenue you've earned but not yet received. On a $1M project with 10% retainage, that's $100,000 you're owed but waiting on. Your bookkeeping should show retainage receivable clearly so you can forecast when it will be released.

Job costing: know if each project is profitable

• Track labor, materials, equipment, and subcontractor costs by job — not just in aggregate
• Compare budgeted vs. actual costs at each phase
• Identify which job types are most profitable for your business
• Catch scope creep before it eats your margin

The 90-day cash flow forecast

For contractors, a rolling 90-day cash flow forecast is essential. It shows you when draws are expected, when major payables are due, and whether you have enough runway to take on a new project. This is built into our CFO Lite Advisory plan and updated monthly.

What Graphene does for contractors

We set up job-cost tracking in QuickBooks Online, reconcile accounts monthly, track retainage receivable, and build a cash flow model specific to your project pipeline. Our contractor clients know exactly where they stand financially — not just at year-end, but every month.