<abstract xmlns="http://www.w3.org/1999/xhtml"><p>Contractors must carefully manage their cash outflows (e.g., for materials to enable their work) and inflows (after the work) to be profitable, particularly in an economy that is still recovering from the 2008–2012 recession that grew out of the mortgage crisis. Their importance for business success is undisputed, as bankruptcies due to insufficient cash flow underline. Therefore, this study investigated current business practices of electrical contracting companies of different sizes with respect to their financial planning and management. A detailed questionnaire was developed with best guidelines on survey studies and pilot testing. It was sent to members of the National Electrical Contractors Association. Respondent anonymity was ensured. The survey recorded demographics, business practices, operating conditions, and other important factors using 57 subquestions. Each section allowed feedback to clarify the numerical responses. Responses were well distributed across company sizes, so that the results are representative for the entire industry. The results indicated that contractors generally have a substantial amount of experience in financial decision making. Their approach is conservative and focuses on healthy growth. Yet, opportunities to fine-tune business practices are identified, e.g., immediate invoicing, considering discounts to accelerate payment receipts, attempting to negotiate and use favorable credit terms, reviewing payment performance, and performing frequent cash flow forecasts. Some of the differences in the responses can be attributed to different company sizes. To help especially smaller companies in planning their cash flow, a spreadsheet for implementation has been created.</p></abstract>

Contractors must carefully manage their cash outflows (e.g., for materials to enable their work) and inflows (after the work) to be profitable, particularly in an economy that is still recovering from the 2008–2012 recession that grew out of the mortgage crisis. Their importance for business success is undisputed, as bankruptcies due to insufficient cash flow underline. Therefore, this study investigated current business practices of electrical contracting companies of different sizes with respect to their financial planning and management. A detailed questionnaire was developed with best guidelines on survey studies and pilot testing. It was sent to members of the National Electrical Contractors Association. Respondent anonymity was ensured. The survey recorded demographics, business practices, operating conditions, and other important factors using 57 subquestions. Each section allowed feedback to clarify the numerical responses. Responses were well distributed across company sizes, so that the results are representative for the entire industry. The results indicated that contractors generally have a substantial amount of experience in financial decision making. Their approach is conservative and focuses on healthy growth. Yet, opportunities to fine-tune business practices are identified, e.g., immediate invoicing, considering discounts to accelerate payment receipts, attempting to negotiate and use favorable credit terms, reviewing payment performance, and performing frequent cash flow forecasts. Some of the differences in the responses can be attributed to different company sizes. To help especially smaller companies in planning their cash flow, a spreadsheet for implementation has been created.

Financial Planning and Management Practices of Electrical Contractors

Organization, Technology and Management in Construction: an International Journal

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

{"article-title":"Financial Planning and Management Practices of Electrical Contractors"}

Contractors must carefully manage their cash outflows (e.g., for materials to enable their work) and inflows (after the work) to be profitable, particularly in...

Financial Planning and Management Practices of Electrical Contractors

Article Category: Research Article

Data publikacji: 14 mar 2017

Zakres stron: 1482 - 1498

Otrzymano: 05 paź 2016

Przyjęty: 08 lis 2016

DOI: https://doi.org/10.1515/otmcj-2016-0011

Słowa kluczowe
financial planning, financial management, survey questionnaire, best practices, cash flow

© 2016 Gunnar Lucko, published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Financial Planning and Management Practices of Electrical Contractors

Article Category: Research Article

Data publikacji: 14 mar 2017

Zakres stron: 1482 - 1498

Otrzymano: 05 paź 2016

Przyjęty: 08 lis 2016

DOI: https://doi.org/10.1515/otmcj-2016-0011

Słowa kluczowefinancial planning, financial management, survey questionnaire, best practices, cash flow

© 2016 Gunnar Lucko, published by De Gruyter Open

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Słowa kluczowe
financial planning, financial management, survey questionnaire, best practices, cash flow