One of the most important aspects of managing any smaller business is complete control over your cash flow. Successful cash flow management will allow your business to thrive, both through normal day-to-day operations, as well as long term sustainability and growth. The most common reason for smaller construction contractors having to close is not due to lack of work or bad practices, but from ineffective cash flow.

As such, having a complete handle on your money is vital. Our experts at Lydon Contracting know this and have highlighted their top advice for SMEs in the construction or civil engineering sectors.




1. Keep Written Records

While it may sound obvious, the best way to manage your cash flow is to maintain up to date records that can be easily accessed. By having accurate information to hand, you can see how your money is dispersed, how much you have to pay workers and any debtors that you may have. This will allow you to make choices based on reliable information, allowing effective cash flow management every day. One of the most effective ways to do this is through an Excel spreadsheet (although there are similar software options available), which require little financial output and training.

2. Issue Invoices Frequently

It’s good to get into the habit of invoicing your clients on a weekly or fortnightly basis. Not only will this allow for constant cash flow (assuming you get paid!), but it helps you get into a routine whereby every person in the process knows how the project finances are looking on a regular basis. This will allow overall budgets to be managed more effectively, and will also show the client that your company is efficient and professional. Smaller invoices are also more likely to be paid faster, as frequent small invoices will help with the cash flow of your clients too.

3. Don’t Ignore Debtors

Once you have issued an invoice, don’t just leave it sitting in the debtors’ column of your accounts. This is money that is owed to you and needs to be claimed as soon as possible to ensure steady management of your cash flow. If payment doesn’t occur within your pre-agreed payment time, then chase this up immediately in a polite but firm manner – it can be helpful to reissue the invoice to the client so they have immediate access to it. If a client still won’t pay then it’s worth considering pursuing recovery through formal legal channels. If in doubt, always discuss your options with a legal professional.

At Lydon Contracting, we pride ourselves on helping our clients with a range of services throughout the building and construction industry. For more information about how we can help you, don’t hesitate to contact us.


Lydon Contracting Ltd

Your Total Construction Solution

Tel:  01327 811533