PLUMBING JOBS LOOK PROFITABLE. THE CASH IS STILL IN TRANSIT.
Plumbing 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 plumbing 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 plumbing 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.
Plumbing spends in two humps with a canyon between. Underground and rough-in take the labor and pipe early. You demobilize while walls close and finishes go in. Trim-out comes back months later for fixtures and final. That's the trade's cash story, told in two pages that should link as one.
WHAT MOVES MARGIN IN THIS TRADE.
The Two-Hump Canyon
Underground and rough-in spend the money. Trim-out collects it months later, behind punch and retainage. A flat percent-complete SOV underbills the front and leaves the back stuck. You need phase-weighted billing.
The Allowance Ambush
Fixture allowances reconcile at the end unless you reconcile them in writing as selections come in. Late selections, unannounced substitutions and unpriced deltas turn into back-charges at the finish.
The Unseen Evidence
Document under-slab surprises before backfill, or they never happened. A photo taken before the concrete truck gets there is worth more than a claim filed after it leaves.
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.
PLUMBING BENCHMARKS.
Plumbing 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.
