CCIFP Certified Construction Industry Financial Professional Exam

How does retainage most directly affect a construction contractor's cash flow?

It accelerates early cash receipts by rewarding timely billing It reduces cash inflows by withholding a percentage of each payment until project completion It increases the contractor's bonding capacity proportionally It eliminates the need for a mobilization advance

Correct Answer:

It reduces cash inflows by withholding a percentage of each payment until project completion

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