Cash Flow Problems Could Hinder Subcontractors Growth
Date Posted: July 8, 2021
Posted In: Discussion, News,
From ConstructionDive: Contractor finance company Billd has reported that commercial subcontractors are primed for growth in 2021 but issues around cash flow and access to financing could prevent them from reaching their expansion goals.
Almost 75% of commercial subcontractors that Billd surveyed said they planned to expand their businesses in 2021, but 46% said they have difficulties maintaining adequate cash flow. More than 60% of contractors said they had to pay their supplier bills before their customers paid them; 30% reported that it is “challenging” securing new financing; and 39% expect access to capital to have a major impact on their businesses this year.
The major issues impacting commercial subcontractors this year — difficulties accessing capital, irregular payment cycles and not having a long-enough period of time to pay vendor bills in comparison to when their clients pay them — are ones with which they have always struggled, Billd said.
Dive Insight:
Other takeaways from Billd’s survey are:
- 62% of respondents said they would go after larger projects this year.
- While 28% of surveyed contractors said they helped finance their operations with lines of credit, 44% used cash on hand 8% used credit cards and 7% used invoice factoring.
- 65% reported that their suppliers are flexible with their terms, but 18% reported they were denied a purchase because of an insufficient credit limit.