How Commitments/Liabilities Affect Financial Health
Commitments and liabilities represent the financial obligations of a project that must be paid off over time. These include long-term liabilities like subcontractor contracts and short-term commitments such as Supplier payments. Properly tracking these liabilities ensures contractors can manage cash flow, avoid overspending, and meet all financial obligations on time.Best Practices for Managing Commitments and Liabilities
Contractors should use financial management software to track all project-related liabilities. Keeping an up-to-date record of commitments allows for better cash flow management and ensures the business remains solvent throughout the project’s lifecycle.Related Terms: Purchase Order (PO) (PO), Subcontract