Top 7 Financial Moves Construction Companies Must Make This Year
- sonali negi
- Sep 14
- 3 min read
Updated: Sep 29
Running a construction company is no small task. Between juggling tight project deadlines, fluctuating material costs, labor shortages, and ever-changing regulations, staying financially strong can feel like building on shifting ground. The truth is, in today’s environment, financial planning isn’t optional, it’s the foundation of long-term success.
Whether you manage large infrastructure projects or smaller residential builds, your ability to make the right financial moves will determine if your company thrives or struggles.
Top 7 financial strategies construction companies should prioritize this year
1. Strengthen Cash Flow Management
Cash flow is the lifeblood of any construction business. Even when projects are profitable on paper, poor cash flow can stall operations, delay payments, and damage supplier relationships.
Key steps to improve cash flow:
Implement progress billing: Invoice clients in phases tied to project milestones rather than waiting until completion.
Negotiate better supplier terms: Stretch payables without straining vendor relationships.
Use digital invoicing: Shorten collection times by making payments easy and automated.
Build a cash reserve: Aim for 3–6 months of operating expenses as a cushion for unexpected delays.
A company with predictable cash flow can take on bigger projects, pay workers on time, and negotiate from a position of strength.
2. Control Rising Material and Labor Costs
With global supply chain issues and skilled labor shortages, cost overruns are one of the biggest threats to construction profits.
Practical financial strategies:
Lock in supplier contracts early to avoid sudden price hikes.
Adopt inventory tracking software to reduce waste and theft.
Leverage subcontractor agreements with clear terms to avoid disputes.
Budget labor overtime carefully to prevent margin erosion.
Forward-thinking companies also use cost forecasting tools to spot trends early and adjust pricing models before it’s too late.
3. Invest in Construction Technology
Digital transformation isn’t just for tech companies—it’s reshaping construction finance as well.
Tools worth adopting:
Construction ERP software: Integrates accounting, payroll, project management, and procurement into one system.
Cloud-based payroll: Automates wage calculations, taxes, and compliance.
Project cost management apps: Track real-time expenses against budgets.
AI-driven forecasting: Predict delays, overruns, and profit margins with data-driven insights.
Not only do these tools save time, but they also reduce costly financial errors that often creep in with manual processes.
4. Prioritize Tax Planning and Compliance
The construction sector faces unique tax challenges—from equipment depreciation to subcontractor classifications. A proactive tax strategy ensures you keep more of what you earn.
Key tax moves this year:
Maximize capital cost allowance (CCA) deductions on heavy equipment.
Claim input tax credits properly for GST/HST.
Review contractor vs. employee classifications to avoid CRA penalties.
Take advantage of industry-specific tax credits for innovation or green construction projects.
Working with a financial advisor familiar with construction tax rules can save companies thousands of dollars annually.
5. Secure the Right Financing Options
Construction is capital-intensive, and projects often require upfront costs long before payments arrive. Choosing the right financing method can make or break profitability.
Financing solutions construction companies should consider:
Lines of credit for short-term working capital.
Equipment financing to spread out the cost of new machinery.
Project-based loans tied to specific contracts.
Alternative lenders for faster approval when traditional banks are too slow.
The goal is to match financing terms with project cash flow cycles—so you’re never left overextended.
6. Improve Risk Management and Insurance Coverage
Every project comes with risk—delays, cost overruns, accidents, or disputes. If not properly managed, these risks can sink even profitable companies.
Financial risk management practices:
Regularly review insurance coverage for liability, equipment, and workers’ compensation.
Use surety bonds to protect against contract defaults.
Build contingency funds into every project budget.
Adopt strong contract management practices to reduce disputes and legal costs.
Smart risk management isn’t about eliminating risks but ensuring they don’t derail financial stability.
7. Focus on Profitability, Not Just Revenue
Many construction firms chase bigger projects to boost revenue, but without proper controls, revenue growth can actually hurt margins.
Ways to strengthen profitability:
Track project profitability individually instead of only company-wide results.
Benchmark against industry averages to spot inefficiencies.
Cut overhead costs by outsourcing non-core functions like bookkeeping or payroll.
Review pricing models regularly to ensure they reflect rising costs.
A company that grows profits, not just revenue, builds resilience in tough markets.
Conclusion
The construction industry is evolving rapidly, with higher costs, tighter margins, and growing competition. Companies that treat financial strategy as a priority, not an afterthought, will not only survive but thrive.
From cash flow management and cost control to tax strategy, financing, and risk management, these financial moves are the building blocks of a stronger, more profitable future.
At Contivos Financial, we specialize in helping construction companies make smarter financial decisions that drive real results. If you’re ready to strengthen your financial foundation, let’s talk about how we can support your growth this year.
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