DRYWALL JOBS LOOK PROFITABLE. THE CASH IS STILL IN TRANSIT.
Drywall 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 drywall 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 drywall 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.
Drywall mobilizes after MEP rough-in and before finishes, which means it inherits every upstream delay with none of the float. Compressed hang-and-finish windows force overtime and stacked crews that the unit price never carried.
5 to 10 percent held on every draw, and drywall's completion sits close enough to project end that release waits on everyone's punch list, not just its own.
WHAT MOVES MARGIN IN THIS TRADE.
The Flashlight Tax
Finish quality judged under the wrong light becomes free rework. Without contract language fixing the inspection standard (permanent lighting, perpendicular view), every punch walk is a negotiation the sub loses.
The Damage Economy
Drywall both absorbs and causes back-charges, and most subs track neither direction. Two untracked flows of $500 and $3,000 hits, job after job, is where the margin between 5.5 percent actual and the 10 percent CFOS target quietly lives.
The Middle Squeeze
Drywall inherits upstream delay with no float and pays for it in overtime and stacked crews. At 19 percent gross margin, the thinnest in the interiors group besides framing, compression cost that's not documented and billed is margin donated to the schedule. (cfos-cash-flow-cycle-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.
DRYWALL BENCHMARKS.
Drywall subcontractors at $1M to $5M net 6 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.
