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Cash Flow Glossary Term

Differential

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.

Related Terms

Emergency Relief Funding

Cash Flow

Short-term financial assistance available to subcontractors facing sudden revenue loss due to site shutdowns, disasters, or contract cancellations. Funding may come from government programmes, industry associations, or lenders. Eligibility often requires proof of active contracts and demonstrated financial hardship.

Price and Proceed

Cash Flow

A directive where a contractor is authorised to begin work before a formal purchase order is issued. The subcontractor agrees on a price verbally or in writing, then mobilises immediately. Common in urgent field situations, but carries payment risk if terms aren't confirmed in writing.

Basis Risk

Cash Flow

The gap between a benchmark price (like WTI crude) and the actual local price your client pays. When that gap widens unexpectedly, clients may cut field budgets mid-contract. This can delay your invoices or reduce your awarded scope.

Mechanic's Lien

Cash Flow

A legal claim registered against a property or project when a subcontractor hasn't been paid for labour or materials. It prevents the owner from selling or refinancing until the debt is resolved. Filing deadlines are strict, so act quickly if payment is overdue.

Construction Inflation

Cash Flow

The rate at which labour, materials, and equipment costs rise over time on construction projects. For subcontractors, it can erode fixed-price contract margins if bids don't account for escalating costs. Escalation clauses in contracts help protect against unexpected cost increases during long-duration scopes.

Cost-Plus

Cash Flow

A contract where the client reimburses your actual costs and pays an additional agreed percentage or fee on top. Common in complex field projects where scope is hard to define upfront. Subcontractors must track and document all expenses carefully to get paid accurately.

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