How to Break the Paycheck-to-Paycheck Cycle in Your Construction Business


Are you stuck in the can’t-get-ahead cycle? Trying to grow your business but finding that cash flow problems lead to paying higher prices for materials, which leads to the inability to bid bigger, more profitable jobs (that would help with the cash flow problems in the first place)? 

This is a frustrating situation that many contractors find themselves in, so you’re not alone. The good news is there is a way to break the cycle. It’s time to look beyond traditional funding sources and try something new that’s tailored specifically for your construction business.

The Pain of the Long Repayment Cycle

We’re all familiar with how long it can take to receive payment for a job completed. Even if you complete your work toward the beginning of a project, many owners and/or GCs withhold retainage until the project is further along in the process.  

Because of this typical practice, it can be nearly impossible to begin new projects without some sort of funding for materials. You’re still waiting to be paid for your last job, so you can’t afford the next one. It’s a vicious cycle, and many contractors resort to bank lines of credit or business credit cards to get by. 

Why Traditional Funding Falls Flat in Construction

But these typical ways of obtaining funds don’t work for construction companies, especially those in the growth stage. In lines of credit, you may be able to secure enough funds to bid your next immediate project, but if you’re trying to grow and bid multiple jobs at once, terms are frequently unfavorable for you to take on additional funding from other sources for other jobs. You’re also subject to liens placed on your business by the bank, leaving you at risk if you’re unable to make payments. 

Business credit cards are even less realistic for growing contractors because of low credit limits – useful only for general business expenses but not for large material purchases – and exorbitant interest rates.

Alternative Funding Options Custom-Built for Contractors

Project-based contractor financing is a lesser-known option in the construction world, but it’s a lifeline for those contractors who are ready to take their business to the next level. STACK partner Billd offers one of the best platforms we’ve seen for this type of financing. 

Partnering with Billd (or another provider – just be sure they’re experienced in the construction industry) means that once you identify the project you’ll be working on, Billd pays your materials supplier upfront in cash and you pay payments over an extended period of time (120 days with Billd). Often you can get approval the same day you apply, rather than waiting weeks for the bank to review your application. 

The Benefits of Cold Hard Cash

Material suppliers are feeling the strain of pricing volatility and supply chain issues more than ever. Paying upfront gets you perks you just can’t access when you’re busy negotiating terms.

Lock in Lower Prices

Suppliers spend a lot of time chasing down money and they’re pressured by manufacturers to pay up. If you offer cash payments for a project order, they’ll often respond with significant discounts – up to 1-5% off the financed price, which can really add up when you’re looking at tens of thousands worth of supplies. 

Solidify Relationships

When you can be a source of consistency for your suppliers, they’ll reciprocate by prioritizing your orders and offering the best discounts whenever they can. You’ll also open doors to shopping around to find the best partners for you.

Up Your Accuracy

When you lock in prices for materials upfront, you’re no longer at the mercy of fluctuating prices. You can bid with confidence, knowing that what you estimate for materials is exactly what you’ll pay. This means more in your pocket at the end of the day.

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Bonus During the Build

Increased bid confidence and more accurate estimates significantly reduce the amount of rework required during the construction phase, which is even more important to your profit margins as labor shortages in the industry continue.  

Make sure you’re making the most of your funding by setting yourself up for the most accurate estimates. See how STACK and Billd can help.


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