Cory Salisbury
Founder & Fractional CFO • Salisbury Bookkeeping
How Rising Interest Rates Impact Your Construction Jobs
Interest rate increases ripple through multiple areas: homeowners qualify for smaller projects, your equipment financing costs more, and carrying costs intensify.
Quantifying the Impact
A $75,000 commercial installation with 75-day cash conversion cycle at 9% borrowing costs $923 in interest. At 11%, that climbs to $1,130. Across twenty annual jobs, rising rates eliminate $4,140 in profit.
Immediate Strategic Adjustments
- Add Financing Costs to Estimates
- Restructure Payment Terms (25-30% upfront, Net 15)
- Evaluate Project Selection for cash conversion efficiency
Debt Management Strategy
Prioritize high-interest debt paydown when rates exceed 10%. Build emergency reserves equal to one month of operating expenses.
Monthly Monitoring
- Average days to collect
- Total outstanding receivables
- Interest expenses year-over-year
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