GROWTH IS EATING YOUR WORKING CAPITAL.
The faster a subcontractor grows, the more working capital gets consumed before revenue catches up. A $4M sub growing to $6M needs 40–50% more cash in the system before the new revenue arrives. CFOS Working Capital sizes the LOC correctly, builds a cash reserve protocol, and makes sure growth doesn't outrun the bank.
The Working Capital System is Module 4 in CFOS, the Construction Financial Operating System. Working capital problems look like cash problems, but they're really structure problems. The LOC isn't sized for actual mobilization cycles. Retained earnings aren't being managed as a strategic reserve. The bank relationship hasn't been optimized for the sub's growth stage. CFOS Working Capital addresses all three, building the capital structure that lets a subcontractor take on bigger jobs without hitting a wall at every next threshold.
WHAT ACTUALLY BREAKS WITHOUT THIS.
LOC Too Small for the Actual Job Size
Most subcontractors get a line of credit when they first need one, based on the revenue they had at the time. Two years later, revenue is up 60% and the LOC hasn't changed. A $3M LOC on a $6M sub that takes on a $2.4M mobilization job is exhausted before the first pay app. The bank didn't grow with the business because nobody asked them to, presented the financials to justify it, or knew what to ask for.
No Cash Reserve Strategy
Profitable subcontractors often have no operating cash reserve because every dollar of retained earnings gets deployed into the next job or distribution. When a GC goes bankrupt, a dispute holds $300K, or a major job gets pushed 6 weeks, there's nothing to absorb the shock. CFOS builds a cash reserve protocol: a target reserve level based on the sub's mobilization exposure, and a rule for when distributions are allowed without eroding the reserve.
Bank Relationship That Hasn't Been Managed
The banker knows your balance. They don't know your backlog, your WIP, or your mobilization schedule. A subcontractor presenting clean financial statements, a funded backlog report, and a 13-week forecast to a banker gets a different conversation than one who calls on a Friday afternoon asking for more credit. CFOS prepares the bank package and manages the lender relationship so your credit capacity reflects your actual business strength.
WHAT OWNERS THINK IS WRONG VS WHAT IS.
"We just need to close that big job."
A new job means more cash out before cash in. If working capital is already strained, a larger job makes it worse, at least initially. CFOS has seen $5M contractors hit a crisis on the job that was supposed to save them because nobody built the capital structure to support mobilization before the contract was signed.
"The bank should be able to see we're profitable."
Banks don't lend based on profitability. They lend based on cash flow coverage, collateral, and their confidence in the business's financial management. A sub with a 12% net margin and no WIP schedule, no forecast, and a year-end P&L as the only financial package is not a compelling borrower. CFOS builds the package that makes you one.
"We'll build reserves when things slow down."
Things don't slow down in a deliberate way that gives you time to build reserves. The shock event (GC insolvency, disputed job, 3 slow-payers at once) happens while you're busy. The reserve needs to be built systematically during the profitable periods. CFOS installs a distribution rule that protects the reserve while still paying the owner appropriately.
SPECIFIC OUTPUTS. NOT ADVICE.
WORKING CAPITAL STRAIN IS TRADE-SPECIFIC.
Civil & Sitework
Civil jobs have the highest mobilization costs in construction. Equipment, bond requirements, and sub pre-payments hit before a single pay app is submitted. A $1.8M civil mobilization on a growing $5M sub can consume 60–70% of available working capital on day one.
Underground Utility
Underground utility contractors face bonding and insurance requirements that tie up cash equivalents. Working capital that looks available on paper is encumbered by performance bond collateral, making the effective working capital significantly lower than the balance sheet shows.
Electrical (Commercial)
Material procurement for commercial electrical jobs runs 30–60 days before installation. A $600K electrical job has $200K–$300K in material out the door before any billing. Working capital strain on electrical contractors in growth phases is acute and consistent across the trade.
Concrete & Structural Steel
Concrete and steel subcontractors often need to pre-purchase material to lock pricing, especially in volatile commodity markets. A $400K rebar pre-purchase that sits on the balance sheet as inventory consumes working capital for 60–90 days before it's billed.
BEFORE AND AFTER.
FREQUENTLY ASKED.
