Backlog versus cash flow reality

RCS Influencer Katie Clymer says that intentionality is key to structuring cash flow.

One of the biggest misconceptions I see in our industry is that a full backlog automatically means a healthy business. From the outside, a packed schedule looks like success, but those of us running roofing companies know that isn't always the reality. The simplest way to explain the two is this: Backlog is what's coming. Cash flow is what you have. You can't operate your business this week without cash flow. At the same time, you need a strong backlog of contracts to keep work moving in the weeks and months ahead. 

Understanding the difference is one thing. Managing it is another. You can have months of work under contract and still find yourself carefully managing payroll, supplier payments, insurance and overhead while waiting on progress payments or retainage. Especially in commercial roofing, it's not uncommon to have a significant amount of money tied up long after you've completed your work on a project. 

As an owner, I've become much more intentional about aligning our production schedule with our cash needs. We look closely at payment terms before signing contracts, monitor outstanding receivables and communicate proactively with owners and general contractors to keep invoices moving through the approval process. Staying on top of receivables is just as important as winning the next project, because delayed payments can quickly impact your ability to operate. 

I've also learned that growth can create financial pressure if you aren't prepared. Taking on every opportunity isn't always the best decision, especially if it stretches your working capital too thin. Being decisive and selective about the projects we pursue has positioned our company in a stronger place. It allows us to dedicate our attention and resources to every project we take on, deliver the highest quality workmanship and maintain the financial stability needed for long-term success. 

Running a roofing company, or any construction business for that matter, requires more than providing quality products and workmanship. It requires building a financially healthy business behind the scenes. A strong backlog is important, but it doesn't guarantee financial health. Understanding your cash flow, making intentional business decisions and planning for sustainable growth are what keep your employees working, your vendors confident and your company positioned for long-term success.