How a $2.3M Electrical Subcontractor Paid Off All His Debt in 120 Days

The owner of a $2.3M electrical subcontracting company had been in business for eleven years. She was good at her trade. Her crews showed up. Her GCs liked working with her. By every field measure, the business was working.

Financially, it felt like running on a treadmill. Every month she was managing which vendor to pay and which one to push off. She had debt she’d been carrying for years — not catastrophic, but enough that it had become background noise. Something she’d stopped thinking she could actually eliminate.

She had $365,000 sitting in overdue accounts receivable.

That’s not a cash flow problem. That’s a collections problem. And it’s one of the most common things we find in electrical subcontracting companies doing $1M to $5M in revenue.

Why Electrical Subs Let AR Age Out

Electrical subcontractors are in a tough spot in the payment chain. You’re often the last trade called in and one of the first ones expected to be done. Your GC relationships matter more than almost anything else in the business — you need them to keep calling you back.

That dynamic creates a specific kind of collections paralysis. You don’t want to be aggressive about chasing payment because you’re worried about straining the relationship. So you send the invoice, you wait, you send a reminder, and eventually you just assume the GC is slow and move on. Six months later the invoice is 180 days old and you’ve essentially written it off without ever making a decision to do so.

The $365,000 this electrical sub had in AR wasn’t from deadbeat GCs. It was from GCs she was still actively working with — people who would have paid the moment someone called and asked. Nobody had called.

$365,000 Recovered. Every Dollar of Debt Gone.

Within the first phase of engagement we built a collections process and worked through the AR aging systematically. We contacted every GC with an invoice over 30 days. We corrected pay apps that had errors holding up approval. We tracked down lien waiver requirements that had been submitted wrong and resubmitted them correctly.

The collections process took about 90 days to work through the backlog. When it was done, $365,000 had moved from accounts receivable into her bank account.

That money paid off every dollar of debt she’d been carrying. Not a payment plan. Not a restructuring. All of it, gone, in 120 days — from money she had already earned and already been owed.

She had spent years believing the debt was just part of running a small electrical subcontracting business. It wasn’t. It was the direct result of not having a collections system, and it dissolved the moment one was put in place.

What Most Electrical Subs Miss: Overhead Allocation on Small Crews

Beyond collections, we found the same overhead miscalculation we see in most electrical subs at this revenue level. She had no real visibility into which jobs were producing margin and which ones weren’t.

Her three best GC relationships were each producing a different gross margin — and she had no idea. One was consistently at 28%. One was at 19%. One was at 9%. She was treating all three the same.

When you know which jobs make money, you bid them differently. You protect the relationships that produce real margin. You either price up or walk away from the ones that don’t.

The First Christmas Bonuses She’d Ever Paid

At the end of the year, the electrical sub paid out $23,000 in Christmas bonuses. First time in eleven years of business.

Her crew had been with her for most of that. They were good electricians who showed up every day and did solid work. She had always wanted to do something for them at year end but could never justify it financially.

The business had been generating enough profit to support it for years. She just couldn’t see it — because it was trapped in aging AR and obscured by overhead that wasn’t being tracked correctly.

Same business. Same crews. Same GCs. Better system.

If you’re an electrical subcontractor with invoices sitting out there that nobody’s actively chasing, there’s money in your business right now that you’ve already earned. Schedule a free call at constructioncfo.net to look at your AR aging together.