American Express

Cash flow is the transfer of money into and out of a company. As indicated previously, the developer needs to know what financial demands are going to be made during all stages of the development. Equally, contractors need to know about their predicted cash flow to be able to cover any deficit in funding. Remember the contractor aims to cut this to a minimum as the margins on a contract are small and any interest paid on money borrowed  will eat into this.

In practice, on a traditional contract using the bills of quantities the timescale is as follows. To save time the contractor’s quantity surveyor will produce an interim valuation of the work that has been carried out by the contractor during the month. A meeting then takes place with the client’s quantity surveyor (PQS) on site at the start of the following month and this valuation will be agreed. It normally takes one week for the PQS to submit this valuation to the architect.

Usually the architect takes two weeks before issuing a certificate, and depending on the clause in the contract the employer is obliged to pay the contractor the agreed amount within 14 days. This can sometimes be 28 days. Generally, from completing the month’s work the contractor is paid within four to five weeks.