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Construction glossary
Construction Glossary •
Cash Flow
What is Cash Flow?
Cash flow, as applied to the construction industry, refers to the net amount of money moving in and out of a construction business within a defined period of time. This includes income from clients, loan repayments, supplier payments, salaries, and overhead costs. Crucially, understanding cash flow is vital for a construction firm as it helps in making strategic decisions for sustainable growth. It can be used to assess the liquidity and overall financial health of a business. With an active construction project, cash flow can be unpredictable due to unexpected expenses, delayed payments, or cost overruns, requiring diligent cash flow management.
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Other construction terms
Applied Overhead
What is Applied Overhead?
Applied overhead, in the context of the construction industry, refers to the allocation of indirect costs incurred during the construction project. These costs can include utilities, rent, salaries of...
Cost of Goods Sold (COGS)
What is Cost of Goods Sold (COGS)?
Cost of Goods Sold (COGS) in the construction industry represents the direct costs associated with the production of goods or services that a company sells. These costs may comprise the cost of raw ma...
Lender
What is a Lender?
A lender, in the context of the construction industry, is a bank, financial institution, or a private individual that provides funds for construction projects. They lend money with the understanding t...
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