Even companies earning good profits can go out of business for lack of cash. Yet few remodelers take the trouble to align client payments with their own need to pay suppliers and subs within a week to 10 days. Those who do employ a variety of strategies to keep the cash flowing.

Frequent billings are the key to cash flow for Gary Stokes of ADR Builders in Timonium, Md. After receiving a deposit of 10% to 20%, Stokes bills biweekly for completed work and materials stored on site. Payments are updated on a schedule of values that includes an early-pay line item for general conditions.

Eric Borden of ESB Contracting, Toms River, N.J., likes to keep his subs happy. "I pay them a week after they submit an invoice," says Borden. "Some don't want to wait that long." To keep the cash flowing, Borden invoices clients on the third week of every month for completed work. Payments are due on receipt and the timing enables him to meet supplier discount deadlines.

On large projects, Borden avoids asking for a deposit. Instead, his fixed-price contract includes a schedule of values with a $25,000 line item for "mobilization," for which he bills immediately after obtaining permits. The schedule also breaks costs down into some 40 line items. Because Borden bills based on progress, the breakdown enables him to collect payment incrementally without having to complete an entire phase of construction.

By contrast, Tim Cross consistently receives 10% at signing and another 20% the day the job starts, regardless of job size. "Sometimes the windows alone cost $50,000," says Cross, owner of Merrick Construction in Rumson, N.J. "I have to order them eight to 10 weeks in advance, and once I order them, I own them."

Bill Hamilton of Paragon General Contractors amp; Cabinetmakers in Point Richmond, Calif., has to find another way to stay ahead on payments because deposits of more than $1,000 are prohibited by law in California. "A lot of guys still get commencement payments," says Hamilton, "but it could be challenged in court."

Hamilton's solution is to use a cost-plus-fixed-fee contract with a guaranteed maximum. The payment schedule is based on progress billing in monthly statements that enables him to pay subs and suppliers within 30 days. Hamilton occasionally dips into cash reserves, however, to cover payroll -- understandable, given his 100-person payroll sometimes tops $700,00 per month. "The bottom line for me is that the cost-plus generates a focus in the company about how important it is to generate invoices on time," says Hamilton, "and to do what's necessary to ensure that there are no objections to charges."