IRRIGATION JOBS LOOK PROFITABLE. THE BALANCE SHEET IS STILL THIN.
Irrigation 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 irrigation 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 irrigation 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.
The revenue calendar spikes twice. Spring startups get packed into a few weeks. Fall winterizations have to beat the first freeze. Compressor capacity and crew count cap how many systems fit inside each window. Miss the freeze window and a $75 service call becomes a spring repair claim. The seasonal reserve from the dirt family applies here too, on a shorter clock.
WHAT MOVES MARGIN IN THIS TRADE.
The Orphaned Install
Install a system without a service agreement and you give away 30-to-40-percent-gross-margin recurring work to whoever answers next spring's call. Get the agreement signed at install.
The Freeze Race
Startups and winterizations put the year's service revenue into two windows, capped by your crews and compressors. A missed blowout turns into a spring repair claim. Window capacity is the business plan.
The Package Seam
Install is part of landscape and sitework packages, where sleeving, routing and controller scope blur together. Put the boundaries in writing before the trencher moves. Whoever documented least ends up paying for the seam.
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.
IRRIGATION BENCHMARKS.
Irrigation subcontractors at $1M to $5M net 7 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.
