TANK / VESSEL JOBS LOOK PROFITABLE. THE COST CODES SAY OTHERWISE.
Tank / Vessel 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 tank / vessel 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 tank / vessel 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.
Repair and alteration work often runs inside owner shutdowns and turnarounds: fixed outage windows where every trade compresses, premium-shift labor is the norm, and schedule overrun costs the owner enough that liquidated exposure and acceleration both live in the contract. Pricing a turnaround means pricing the window: overtime structures, standby exposure when the unit isn't released on time, and the marine file's peak-window discipline in an industrial plant.
WHAT MOVES MARGIN IN THIS TRADE.
The Two-Code Book
API 650 new-build runs project economics; API 653 inspection-repair runs condition-triggered recurring demand. One blended P&L misprices both, and the recurring side is the stability the project side borrows against.
The Hydro Gate
Qualifications, weld maps, NDE, and a structure full of test water stand between substantial completion and the check. Documentation-complete billing, with the hydro planned as a logistics event, is the trade's collection discipline.
The Window Premium
Turnaround work compresses into owner outages where premium shifts are the plan and late unit release is the trap. Price the window explicitly and document the standby; the outage clock bills somebody. (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.
TANK / VESSEL BENCHMARKS.
Tank / Vessel subcontractors at $1M to $5M net 8 percent, against a CFOS target of 10.5 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.
