DEMOLITION JOBS LOOK PROFITABLE. THE CASH IS STILL IN TRANSIT.
Demolition subcontractors have no cash left 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 are 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 you bill dollar one. Shoring or stabilizing adjacent structures adds engineered cost up front. Demolition spends more up front than any other dirt trade.
WHAT MOVES MARGIN IN THIS TRADE.
The Survey Skipped
Hazmat found mid-swing stops the machine and adds $2 to $7 per square foot under abatement protocol. Bill the pre-demolition survey as its own line and use it to trigger change orders. If you don't, it's the most expensive thing you never charged for.
The Gate Rate
Disposal is 20 to 30 percent of project cost. Tipping fees went up about 10 percent in a year, to roughly $62 per ton. Track per-ton actuals against the bid rate. It's the simplest variance report in the trade, and the most useful.
The Untracked Paycheck in the Pile
Salvage is part of the contract consideration. Ferrous sets the tonnage, non-ferrous sets the margin, and disputes go to court. A scrap ledger on every job with grades, weights and settlements turns a guess into revenue.
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 | You can get here on the days you control. Bill on time, send complete paperwork, and follow up in week two. |
| Strong | 30 days | Takes work every month. It's the cheapest money you can get. |
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 costs no interest and needs no bank. So we fix billing and collections before we talk about financing.
DEMOLITION BENCHMARKS.
Demolition subcontractors at $1M to $5M net 4 percent, against the CFOS net profit target, set at your trade's net profit average at your revenue plus 3.5 points, never below 10 percent, before taxes. The working capital target is 13 percent of annual revenue, and the monthly close should finish by day 10 so the numbers can still change a decision.
FREQUENTLY ASKED.
