TANK AND VESSEL JOBS LOOK PROFITABLE. THE COST CODES SAY OTHERWISE.
Tank and Vessel 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 tank and vessel 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 tank and 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 happens inside owner shutdowns and turnarounds. These are fixed outage windows. Every trade gets packed in, premium-shift labor is the norm, and an overrun costs the owner enough that liquidated exposure and acceleration are both in the contract. Pricing a turnaround means pricing the window: overtime structures, standby when the unit isn't released on time, and peak-window planning inside an industrial plant.
WHAT MOVES MARGIN IN THIS TRADE.
The Two-Code Book
API 650 new-build has project economics. API 653 inspection-repair has recurring demand, triggered by tank condition. One blended P&L misprices both, and the project side borrows its stability from the recurring side.
The Hydro Gate
Qualifications, weld maps, NDE and a structure full of test water come between substantial completion and the check. Bill when the documentation is complete, and plan the hydro as a logistics event. That's how this trade collects.
The Window Premium
Turnaround work gets packed into owner outages. Premium shifts are the plan, and a late unit release costs you. Price the window in the bid and document the standby. Somebody pays for the outage clock.
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.
TANK AND VESSEL BENCHMARKS.
Tank and Vessel subcontractors at $1M to $5M net 8 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.
