100 Word Discussion Reply 2BryanCridell
Cash flow for construction companies can be difficult if not managed well due to slow, late, and/or partial payments after completing a project. Then to factor materials, labor, and equipment needed effects their cash on hand. Top that off with a pandemic and you have a perfect storm.
One example of a construction company that experienced cash flow issues is Fluor Corporation, an Irving, Texas based engineering and construction company. In 2020, Fluor experienced cash flow difficulties due to a combination of factors including project delays and cost overruns, as well as the impact of the COVID-19 pandemic. The pandemic affected all companies throughout the globe and really taught a lot to everyone. This disrupted their operating cash flow due to their work restrictions and cost of materials during this time.
To address the issue, Fluor Corporation implemented a number of measures to improve its cash flow such as reducing costs, delaying capital expenditures, and negotiating more favorable payment terms with its clients. According to their earnings report during this time frame, Fluor’s expenses in 2020 was fully funded by their investors. Fluor also announced plans to sell off certain assets to raise additional funds. Selling assets allows companies to reduce debt to pay off outstanding debt.
The best way to manage cash flow is proper management of cash on hand and to factor everything to prevent cost overruns.
Killough, D. (2022, December 8). Construction cash flow management strategies. Levelset. https://www.levelset.com/blog/managing-cash-flow-construction/
Motley Fool Transcribers. (2020, December 10). Fluor Corp (FLR) Q3 2020 earnings call transcript. The Motley Fool. https://www.fool.com/earnings/call-transcripts/2020/12/10/fluor-corp-flr-q3-2020-earnings-call-transcript/
- a month ago