PAVING JOBS LOOK PROFITABLE. THE CASH IS STILL IN TRANSIT.
Paving 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 paving 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 paving 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.
Hot mix comes from someone else's plant on someone else's schedule, seasonal plant shutdowns compress the calendar, and haul-time physics (mix arriving too cold to lay) put a radius around every job.
WHAT MOVES MARGIN IN THIS TRADE.
The Unhedged Tuesday
DOT work adjusts pay to the liquid asphalt index automatically; private work leaves the same contractor fully exposed on the same commodity. Carrying index-tied escalation language into private bids is the trade's single highest-value contract habit.
The Ticket-to-Yield Gap
Bought by the ton, sold by the square yard: waste, over-depth, and handwork live in the spread between plant tickets and placed quantity, and nobody sees the donation until the reconciliation runs per job.
The Ninety-Day Season
Plant schedules, temperature floors, and a compressed calendar concentrate the year's revenue into a window, while the fleet and the overhead run twelve months. The winter reserve isn't a luxury; it's the business model. (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.
PAVING BENCHMARKS.
Paving 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.
