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Margins are tight across the construction industry, and cash flow is often the deciding factor in whether a business can maintain stability or face mounting pressure. Rising material costs and mid-project rate changes can quickly erode profits, while clients continue to expect projects to be delivered on time. Relying on spreadsheets or outdated job-costing tools only makes it harder to stay in control.

Many construction leaders are turning constant juggling into confident decision-making by improving visibility over cash flow and project costs. With the right systems in place, cash flow pressure can be managed in a way that supports stronger strategic outcomes.

Across Australia and New Zealand, waiting 60, 90 or even 120 days for payment remains common. When 5 to 10 per cent retention is held back until months after project completion, it is easy to see why cash reserves can feel tight.

In practice, this often means contractors cover labour, materials and insurance well before payment is received. Cash that could be funding growth is instead locked up in retention. If a client or Tier 1 contractor experiences difficulties, the wait can be even longer.

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Recent initiatives such as Western Australia’s retention trust schemes and New Zealand’s strengthened retention-in-trust rules are positive developments. They show that the industry is working to protect contractors and improve transparency, while also reinforcing the need for proactive management.

Extended billing cycles influence far more than bank balances. When retention money is held back, it can slow investment in equipment or staff. Some businesses turn to short-term finance, which brings additional costs, while others adjust project pipelines to smooth cash flow.

Real-time visibility is a key advantage in these conditions. A connected system can track what is committed, what is tied up in retention and where adjustments can be made to protect margins. This enables more accurate forecasting and keeps projects moving, even in challenging conditions.

Material and labour cost volatility

Even with a strong pipeline, imported material prices remain unpredictable. Tariffs and supply chain shifts can add thousands to costs almost overnight. Labour shortages are also pushing wages higher across the board.

According to RICS’ Q1 2025 Global Construction Monitor report, these pressures are likely to persist into 2025, meaning projects priced months ago may already be eroding margins.

The daily impact

Late invoices, reconciling across different systems and re-entering data to check project status have become the norm for many construction businesses.

One delayed payment can have a domino effect, pushing back payroll, straining supplier relationships and requiring the use of overdrafts or short-term finance. The administrative burden takes teams away from strategic decisions and leaves little time for forward planning.

A cloud enterprise resource planning (ERP) platform designed for construction can change this dynamic. By unifying financials, project data and workflows in one system, it becomes easier to track cash flow, monitor costs in real time and make informed decisions without the inefficiencies of manual processes.

“We can build quite complex projects in the platform and can easily keep a measure on back costing and labour hours in real time,” says Michelle Thompson, finance manager at Thompson Construction and Engineering.

Strategic consequences

When cash flow is uncertain, bidding for larger projects or running multiple jobs simultaneously becomes difficult. Opportunities may be declined not due to lack of capability, but because the financial risk appears too high.

The construction industry consistently records the highest rate of small-business insolvencies in Australia. With tight margins and long payment cycles, even one underperforming project can push a business to the brink.

Warning signs include:

• Frequent payroll crunches or over‑reliance on overdrafts
• Underestimated costs appearing in reporting
• Increased write-offs or underquoting to win work
• Difficulty tracking committed costs in real time

The first step towards regaining control

Staying solvent in this environment requires more than cost-cutting. It demands a clear strategy and real-time visibility over job costs, progress claims and retentions. This means moving beyond spreadsheets and siloed systems to a connected platform that offers clarity on every project, every day.

MYOB Acumatica supports Australian and New Zealand construction businesses with back-office solutions that address the sector’s unique payment practices, subcontracting models and compliance requirements.

With MYOB Acumatica Construction, businesses gain real-time cost tracking, consolidated financial oversight and the confidence to make decisions that protect margins.

If cash flow pressure is influencing how projects are quoted, teams are hired or growth is pursued, now is the time to act.

Discover how MYOB Acumatica Construction’s connected systems can help regain control.