The outbreak of COVID-19 started in early December 2019, gradually expanding to the other countries of the world. The spread of the pandemic did not just affect the world in terms of health, but also made industries suffer across all verticals—leading to a few unique challenges for construction contractors.

From financial imbalance to trouble retaining cash flow, the circumstances have turned to be completely unfavorable for the contractors that rely on banks for essential surety credits to sustain. To prevent loss of liquidity, the contractors are leaning toward construction accounting software and other technology to keep their accounting data in place and avoid risks with project deliveries.

But still, there are many other factors that must be considered to maintain cash flow for potential credit availability such as debt agreements and lines of credit, which involve financing of equipment and vehicles.

Nevertheless, it is completely the responsibility of the contractors to stick with the guidelines related to the line of credit and debt agreements which in most cases are covenant ratios.

Reprinted courtesy of Manipal Dhariwal, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.