What aspect of project management can significantly impact cash flow for contractors?

Delays in client payments can significantly impact cash flow for contractors because cash flow is fundamentally about the timing of expenses and income. When a contractor completes work on a project but does not receive payment promptly from the client, it creates a gap in cash flow that can hinder the contractor's ability to meet financial obligations. This delay can result in difficulties covering ongoing expenses such as payroll, material purchases, and overhead costs.

Maintaining healthy cash flow is critical for contractors as it allows them to operate smoothly, invest in new projects, and sustain their business during periods when they may not have immediate income. Understanding the importance of timely payments and incorporating effective systems to manage and expedite client invoicing and collections can help mitigate this risk, ensuring that the contractor has the funds needed to support ongoing operations and financial commitments.