INTERIOR JOBS LOOK PROFITABLE. THE CASH IS STILL IN TRANSIT.
Interior 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 interior 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 interior 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.
Tenant-improvement work runs on allowances ($15 to $80 per square foot by market and asset class) that reimburse AFTER the work: the contractor gets paid by a tenant who gets paid by a landlord only on a clean draw package (paid invoices, lien waivers, proof of completion), typically 30 to 60 days after submission, and some deals hold the entire allowance until certificate of occupancy. The published tenant-side advice says it plainly: "you need working capital to float construction, which catches a lot of first-time tenants by surprise." It catches their contractors harder.
The tenant's rent commencement and move-in date are contractual; the fit-out schedule inherits them backward. Retail TI runs 8 to 16 weeks permit-to-CO and restaurant 12 to 22, with permitting adding 4 to 12 weeks by jurisdiction, and long-lead equipment (switchgear at 18 to 30 weeks) can exceed the entire construction window. Hidden conditions in existing buildings justify the published 10-to-15 percent contingency norm.
WHAT MOVES MARGIN IN THIS TRADE.
The Reimbursement Float
TI money flows landlord-to-tenant-to-contractor, released 30 to 60 days after a clean draw package, sometimes only at certificate of occupancy. The contractor who builds lien waivers and invoice packages as the work happens gets the draw; the one who assembles them at month end finances the landlord's building.
The Work-Letter Seam
Base-building versus tenant scope lives in the work letter, not the drawings, and every unread seam (demising walls, panel upgrades, code-triggered base work) surfaces as unpaid scope. Price the letter, then the plans.
The Lease-Date Vise
Rent commencement is contractual, permits take 4 to 12 weeks, switchgear takes 18 to 30, and the schedule runs backward from a date the contractor never chose. Long-lead procurement and contingency discipline are the only slack in the system. (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.
INTERIOR BENCHMARKS.
Interior 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.
