In construction, profitable companies fail. The cause is almost always cash, not margin.

Construction is the sector where the gap between the profit and loss account and the bank account is widest, and where a finance seat with no sector experience is most likely to give confident advice that turns out to be wrong. The mechanics are specific, they are not intuitive, and they are where the money is made or lost.

What is different here

You get paid on applications and certificates, not on invoicesWork is valued, applied for, and then certified by somebody who is not you, on a timetable set by the contract. The amount applied for and the amount certified are routinely different. A finance seat used to raising an invoice and chasing it will misread both the revenue and the timing, and the first they know about it is a payment that arrives light.

Retention is your money, held by somebody else, for a year or moreA percentage of each payment is held back, usually released in two stages, with the second often a year after practical completion. It is real money, it is frequently forgotten, and recovering aged retentions is one of the fastest pieces of cash a new finance seat can find. It is worth asking any candidate how they would build a retention register, because the ones who have done it will answer immediately.

The Construction Industry Scheme changes how subcontractors are paidContractors deduct tax from subcontractor payments and pay it to HMRC, at different rates depending on the subcontractor's registration status. Getting verification and deduction wrong creates a liability that surfaces months later. This is process, not judgement, and a fractional seat's first job is usually checking that the process is actually being followed rather than assumed.

Work in progress is a judgement, and it is where the surprises liveValuing work done but not yet certified is an estimate made by people with an interest in the answer. Most large losses in construction appear when that estimate is revisited honestly. A fractional CFO who asks to walk the jobs with the quantity surveyor in week one is doing the right thing, and one who only reads the ledger is not.

What to ask, that you would not ask elsewhere

Walk me through how you would build a cash flow forecast from applications, certificates and retentions rather than from invoices.
How would you set up a retention register, and what would you expect to find in the first month?
What is your experience of the Construction Industry Scheme, and where have you seen it go wrong?
How do you get comfortable with a work in progress valuation you did not prepare?
Which contract forms have you worked under, and what did that change about the reporting?

Where it goes wrong

Hiring a finance seat with no construction experience because the accounts look straightforward. The accounts are the last place the problem appears.
Forecasting cash from the profit and loss account. In this sector those two numbers can point in opposite directions for a year.
Leaving retentions to the project team. They are cash, and cash is the finance seat's job.
Treating the quantity surveyor and the finance function as separate. Where they do not talk weekly, the numbers drift.

Which seat you are actually hiring

The sector changes the conditions, not the job. What each seat covers, what it costs and when it is the wrong hire is set out across the eleven seat pages, and the cost calculator will tell you whether the work you have described is really a fractional one. If the job turns out to be five days a week and permanent, we find full-time executives too.

Common questions

You get paid on applications and certificates, not on invoices?

Work is valued, applied for, and then certified by somebody who is not you, on a timetable set by the contract. The amount applied for and the amount certified are routinely different. A finance seat used to raising an invoice and chasing it will misread both the revenue and the timing, and the first they know about it is a payment that arrives light.

What should I ask when hiring for construction and property?

Walk me through how you would build a cash flow forecast from applications, certificates and retentions rather than from invoices. How would you set up a retention register, and what would you expect to find in the first month? What is your experience of the Construction Industry Scheme, and where have you seen it go wrong?

What goes wrong when hiring into construction and property?

Hiring a finance seat with no construction experience because the accounts look straightforward. The accounts are the last place the problem appears. Forecasting cash from the profit and loss account. In this sector those two numbers can point in opposite directions for a year.

Check it yourself

General information about hiring, not tax, legal or contractual advice. Payment terms, retention and notice requirements depend on your contracts. Take advice on your own position.

The bench

Operators who have worked in construction and property

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