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Cash FlowGlossary Term

Change Order

A formal written amendment to an existing contract that modifies scope, cost, or schedule. Subcontractors should never perform out-of-scope work without a signed change order. Undocumented changes are a leading cause of unpaid invoices and disputes.

Related Terms

Standby (standby Time)

Cash Flow

Time when a subcontractor's crew or equipment is on-site but unable to work due to client-caused delays. Most contracts allow billing at a reduced standby rate during this period. Tracking and documenting standby time is critical to recovering these costs.

Differential

Cash Flow

A pay premium added to a base rate for working in hazardous, remote, or demanding conditions. Subcontractors should account for applicable differentials when pricing bids and setting crew rates.

Bridging Power

Cash Flow

A subcontractor's ability to fund operations while waiting on client payments. It covers payroll, fuel, and equipment costs between invoice and payment. Strong bridging power prevents work stoppages during slow pay cycles.

Input Cost Index

Cash Flow

A measure tracking changes in the costs subcontractors pay for labour, equipment, fuel, and materials over time. It is used to justify price adjustments in contracts with escalation clauses. Rising index values signal shrinking margins if rates aren't renegotiated.

Fuel Cost Escalation Clause

Cash Flow

A contract provision allowing subcontractors to adjust their billing rates when fuel prices rise beyond an agreed threshold. It protects field service companies from absorbing significant fuel cost spikes on long-term jobs. Without this clause, subcontractors carry the full financial risk of volatile diesel and equipment fuel costs.

Special Dividend

Cash Flow

A one-time payment made by a client company to shareholders, separate from regular dividends. For subcontractors, it may signal a cash-flush operator likely to fast-track project approvals or expand field budgets. Watch for these announcements when forecasting upcoming contract opportunities.

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