By Kim Slowey of Construction Dive.
For many contractors, financing existing jobs while investing in new work is a big balancing act that forces them to constantly weigh one financial obligation — i.e. payroll, taxes, subcontractors, material suppliers — against another. Contractors don't go out of business because they have lack of work or poor performance on their projects. They go out of business because they have no cash.
Money problems can affect more than internal operations, said attorney and construction litigation expert Barry MacNaughton, managing partner at Ervin Cohen & Jessup LLP in Los Angeles. They can also negatively impact client relationships if they prevent a contractor from properly manning the job or result in mechanics liens because of unpaid bills."