How payment terms affect cash flow for contractors

How do payment terms affect cash flow in construction?

The gap between the day you pay out and the day you are paid is the time a job runs on your own cash. Close the gap, by agreeing later payment to subcontractors or earlier payment from the client, and the job needs less of it.

Free, with no sign-up. Everything is worked out in your browser: nothing you type is sent to us or stored. Use figures excluding VAT.

The same job on two sets of terms:

When	What happens	Amount	Running balance
Day 30	You pay subcontractors and suppliers	-£6,650	-£6,650
Day 60	The client pays you	£9,500	£2,850
Day 395	You release subcontractors' retention	-£350	£2,500
Day 425	The client releases retention	£500	£3,000

The job needs £6,650 of your own cash for 30 days before the client's money arrives.

When	What happens	Amount	Running balance
Day 45	You pay subcontractors and suppliers	-£6,650	-£6,650
Day 60	The client pays you	£9,500	£2,850
Day 410	You release subcontractors' retention	-£350	£2,500
Day 425	The client releases retention	£500	£3,000

The job needs £6,650 of your own cash for 15 days before the client's money arrives.

The cash a job ties up

Days are counted from the day the work is invoiced. Leave retention at 0 if there is none.

What the client pays you (£)What you pay subcontractors and suppliers (£)

You pay them after (days)The client pays you after (days)

Retention the client holds (%)Released after (days)

Retention you hold from subcontractors (%)Released after (days)

Cost of borrowing, optional (% a year)

Most cash the job needs

For how long

Borrowing cost

Profit on the job

When	What happens	Amount	Your running balance

Where SUBR comes in

SUBR is AI software for UK contractors who send work out to subcontractors. Its AI reads your client quote, your office names each trade's share, and SUBR builds every scope with your costs, margin and client price left off it. Each subcontractor answers on their own link and sees only their own price.

How do payment terms affect cash flow in construction?

The cash a job ties up

More questions

Where the figures come from

Where SUBR comes in

See it on a quote