DEMOLITION JOBS LOOK PROFITABLE. THE CASH IS STILL IN TRANSIT.
Demolition subcontractors run out of cash for reasons specific to how the work is built and billed, on jobs that are making money. The three that cost the most in this trade are below, taken from demolition contractor research. Most sit at 75 to 90 days from finishing work to holding the money, and 45 days is achievable.
Cash and profit are measured on different clocks. Your profit and loss records revenue when you invoice and costs when you incur them, while the bank account only knows what cleared. Labour goes out weekly and collects 45 to 90 days later, minus retention. That distance is what a growing, profitable demolition company funds out of pocket, and it widens as you grow. The specific things that widen it in this trade are what the rest of this page is about.
WHERE IT LEAKS OUT.
Big iron moves in before dollar one bills, and shoring or stabilization of adjacent structures adds engineered cost at the front. Demolition's spend curve is the steepest front-load in the dirt trades.
WHAT MOVES MARGIN IN THIS TRADE.
The Survey Skipped
Hazmat discovered mid-swing stops the machine and adds $2 to $7 per square foot under abatement protocol. The pre-demolition survey is a billed line and a change-order trigger, or it's the most expensive thing the contractor never charged for.
The Gate Rate
Disposal runs 20 to 30 percent of project cost, and tipping fees moved about 10 percent in a year to roughly $62 per ton. Per-ton actuals tracked against the bid rate is the trade's simplest, highest-value variance report.
The Untracked Paycheck in the Pile
Salvage is contract consideration: ferrous drives the tonnage, non-ferrous drives the margin, and disputes go to court. A per-job scrap ledger with grading, weights, and settlement documentation turns a guess into revenue. (cfos-job-profitability-system) ---
DAYS SALES OUTSTANDING.
Ninety days is weak, 45 is the target, 30 is strong. Nothing else moves cash faster.
| Position | Days | What it means |
|---|---|---|
| Weak | 90 days | Roughly three months of work funded out of your own pocket. |
| Target | 45 days | Achievable on the days you control: submission timing, complete documentation, follow up in week two. |
| Strong | 30 days | Requires discipline every month, and it's the cheapest capital available to you. |
Moving from 90 days to 45 frees roughly annual revenue divided by 365, times 45 days. At $4M that's about $493,000. At $8M it's about $986,000. That money doesn't come from a bank and it costs no interest, which is why we work the cycle before discussing financing anything.
DEMOLITION BENCHMARKS.
Demolition subcontractors at $1M to $5M net 4 percent, against a CFOS target of 10 percent, set at 10 percent before taxes or 3.5 points better than your trade's average at your revenue, whichever is higher. Working capital should sit at 13 percent of annual revenue, and the monthly close should finish by day 10 so the numbers can still change a decision.
FREQUENTLY ASKED.
