GRADING JOBS LOOK PROFITABLE. THE CASH IS STILL IN TRANSIT.
Grading 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 grading 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 grading 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.
DOT work pays on measured quantities, agency estimates, and public-agency cycles; retainage and final acceptance stretch past private norms.
WHAT MOVES MARGIN IN THIS TRADE.
The Two Economies
Mass grading sells yards; fine grading sells tolerance. One blended cost history misprices both, and the trade's 18 percent gross margin has no room for systematically wrong bids in either direction.
The Acceptance Gate
Density tests and subgrade acceptance are payment gates: a failed proctor is unpaid production plus retest fees plus schedule burn. Moisture and soils documentation is what separates a claim from a donation.
The Idle Spread
Sixteen percent overhead at the small end, heaviest in the dirt family, running twelve months against seasonal production. Winter reserves and utilization tracking are the difference between a spring restart and a spring refinance. (cfos-working-capital-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.
GRADING BENCHMARKS.
Grading subcontractors at $1M to $5M net 2 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.
