Fall 2012 issue of Horizons

CONSTRUCTION

Managing Construction Risks During Lean Times by Frank Hogg, CPA

T he construction industry is inherently subject to higher levels of risk. The economic slowdown of the past several years has changed the construction landscape and increased the importance of managing risk. Proactively identifying and planning for these risks is the key to effectively managing and controlling the effect they have on your company.

because of poor cash flow than from a lack of work or fading profits.

Effective cash flow management begins with maintaining 12-month cash flow projections. These projections help identify potential problems that can be addressed before they become critical issues. In addition, maximizing cash flow through managing receipts and payments (while staying within payment terms) remains very important. For example, ensure that remote checks are scanned and deposited on a daily basis.

Liquidity Risk Cash is the lifeblood of every contractor. Maintaining a strong cash flow is critical. More contractors will go out of business

page 14 | horizons Fall 2012