PROCESS PIPING JOBS LOOK PROFITABLE. THE CASH IS STILL IN TRANSIT.
Process Piping 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 process piping 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 process piping 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.
Under ASME B31.3, every weld carries a unique number traceable to the welder, the welding procedure, heat treatment, and examination results, and for high-pressure and hazardous (Category M) service "the documentation package becomes legally binding, inadequate weld maps can delay hydrotest sign-off or final acceptance." The pipe is half the product; the traceability dossier is the other half, and a contractor whose paperwork trails its production has built unbillable inventory in stainless steel.
WHAT MOVES MARGIN IN THIS TRADE.
The Dossier Half
The pipe is half the product; the legally binding traceability package is the other half, and hydrotest sign-off waits on it. Documentation labor billed and built weld-by-weld is the trade's collection strategy.
The Lapsed Ticket
Six months without a qualified process and the welder's qualification dies quietly, surfacing at audit as rework on finished welds. The qualification matrix is a financial control; run it weekly.
The Five Percent Trigger
Sampled examination means one failed weld expands into a welder's whole lot. Repair rates tracked by welder and process are the early-warning system, and reject economics belong in every alloy bid. (cfos-job-profitability-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.
PROCESS PIPING BENCHMARKS.
Process Piping subcontractors at $1M to $5M net 8 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.
