Concrete subcontractors fund the most expensive work first and bill the least for it. Formwork, rebar, pump setup — all cash out before the first pay app. Here is how to fix the timing.
Concrete subcontractors accepting GC-drafted SOVs are accepting billing structures that underbill the first 30–40% of project work. Formwork, rebar, pump mobilization — all cash-intensive — carry less SOV value than they represent as a percentage of actual cost. The cash hole is funded from operating cash or the line of credit for the first half of every project.
Most concrete subs set an overhead rate from the estimating software default or from a calculation done years ago. Since then: a PM was hired, equipment was purchased, insurance went up. The overhead rate in bids did not update. Every job won since the last hire is underpriced by the difference between the old rate and the current one.
At $4M in annual billings, a concrete sub generates $330,000+ per month in invoices. A 10% collection lag is $33,000 per month sitting at 45+ days with no follow-up. Over a year, that lag accumulates into $100,000–$200,000 in an AR backlog that feels like a receivable but functions as an interest-free loan to every GC who is slow-paying.
SPM reviews every new concrete subcontract SOV before signing and recommends front-loading adjustments: mobilization line at 5–8% of contract value, formwork and rebar billable at installation, pump mobilization as a separate line, and concrete placement priced by pour phase rather than as a single lump milestone.
Pull SG&A from the last 12 months of P&L. Divide by revenue. That is the real overhead rate. Compare to what is in bids. The gap — almost always 4–8 points — goes into the bid model immediately and applies to every future job. On $4M in annual billings, a 6-point correction is $240,000 per year in recovered margin.
Every invoice over 30 days, every uncollected balance — pulled and called on in the first week. Most concrete contractors collect $80,000–$200,000 in the first 30 days of active collections. That cash funds operating needs while the structural fixes are being implemented.
After the audit, weekly collections calls on every invoice over 30 days every Monday. On $4M in billings this takes 2–3 hours per week. It prevents the backlog from ever rebuilding to crisis level again.
This contractor had all three problems simultaneously: GC-drafted SOVs on every active job, overhead rate at 5% (actual was 12%), and $203,000 in AR sitting uncollected.
Collected in the first 7 days of engagement.
Corrected in the first 60 days. $130,000 in profit sharing paid within 12 months.
A free call with Josh takes 30 minutes. Bring your last P&L and current bank balance.
Schedule a Free Call →