FLOORING JOBS LOOK PROFITABLE. THE CASH IS STILL IN TRANSIT.
Flooring 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 flooring 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 flooring 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.
Custom and specialty flooring is ordered against deposits and ships on the mill's schedule. Then it has to acclimate on site before installation. You carry a five-figure material position through freight, storage and acclimation, unless deposits and stored-materials billing are in the contract.
Flooring installs at the end, when every schedule delay has piled up. It can't start until the moisture readings pass. So you're stuck between a GC yelling about the schedule and a slab that's not ready. Installing early to keep the GC happy is exactly the Moorefield trap.
WHAT MOVES MARGIN IN THIS TRADE.
The Moisture Gate
The slab decides the install date. The GC's schedule doesn't. A floor laid on a wet slab is a six-figure failure with the installer's name on it. Your protection is ASTM-documented testing, a written sign-off protocol, and testing billed as a line item. One Best Buy floor ended in a $1.3 million settlement.
The Overhead Engine
Flooring earns a 19 percent gross margin and keeps 5 percent. The 14 percent overhead (showroom, warehouse, fleet, estimating) takes the difference. It's the clearest overhead-recovery problem in the 48-trade dataset. The loss comes from the building, and the field is fine.
The Material Float
Deposits go out at order. Freight and acclimation come in the middle. Billing comes at install. So you carry a five-figure material position on every specialty job, unless you negotiate stored-materials and deposit terms up front.
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.
FLOORING BENCHMARKS.
Flooring subcontractors at $1M to $5M net 5 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.
