MECHANICAL JOBS LOOK PROFITABLE. THE BALANCE SHEET IS STILL THIN.
Mechanical 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 mechanical 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 mechanical 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.
Mechanical scope is mostly equipment, and 2026 lead times are historic. Chillers quote 20 to 85 weeks depending on configuration, and commercial chilled-water systems are benchmarked at 48 to 60 weeks because of customization and material bottlenecks. Deposits go out at release. Storage and insurance cost you in the middle. The pay application catches up at delivery, if the SOV allows it. In 2026 the stakes are higher.
WHAT MOVES MARGIN IN THIS TRADE.
The Equipment Float
Chillers take 20 to 85 weeks. You pay deposits at release and get paid at delivery. Unless the SOV bills deposits and stored equipment, you're the project's bank. In 2026's lead-time market, the float is the job.
The Three-Shop Contract
Sheet metal, piping and controls are separate businesses inside one price. Cost codes by discipline are the only way to know which shop makes money and which one depends on the others.
The Subsidy Nobody Ordered
Service and construction have opposite cash and margin profiles. In blended books, one pays for the other for years and nobody notices. The best net results go to owners who split the books and manage both on purpose.
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.
MECHANICAL BENCHMARKS.
Mechanical subcontractors at $1M to $5M net 9 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.
