ELECTRICAL JOBS LOOK PROFITABLE. THE ACCOUNT IS STILL EMPTY.
Electrical 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 electrical 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 electrical 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.
IN THEIR OWN WORDS.
You don't get paid if he doesn't get paid. You just know he's going to tell you he didn't get paid.
Mike Holt forums
These GC's are trying to hire you but want you to chase the money.
Mike Holt forums
No change order, not paying.
Mike Holt forums, GC after directed extra work; the poster settled for half and concluded: always get it in writing
WHERE IT LEAKS OUT.
Same clause economics as every sub, but the verbatim voice here is native: these quotes come from an electricians' forum.
WHAT MOVES MARGIN IN THIS TRADE.
The Copper Clock
Material risk now has two hands: price (copper up 24.75 percent year over year with a 50 percent tariff) and time (panels at 16+ weeks, medium-voltage gear sold out through 2028). Fixed-price bids without escalation clauses and early buyout are unhedged positions.
The Rough-In Desert
Labor and wire go in the wall early; trim-out billing lands months later. The middle of every job is financed by the contractor unless stored-materials billing and front-loaded schedules of values close the gap.
The 120-Day Receivable
A $2.3M electrical contractor carried $365K at 120 days. AR discipline (lien deadlines calendared, retainage tracked as its own class, collections on a cadence) is the difference between a profitable book and a payday-loan lifestyle. (cfos-cash-control-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.
ELECTRICAL BENCHMARKS.
Electrical subcontractors at $1M to $5M net 9 percent, against a CFOS target of 11 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.
