YOUR VENDOR INVOICES
ARE STACKING UP.
HERE'S WHAT THAT SIGNALS.
AP piling up means cash is coming in slower than obligations are going out. It's almost always a billing and collections problem — not a revenue problem. The work is done. The GC owes you. But the cash hasn't arrived yet, and your material vendors and equipment companies aren't waiting. Piling AP is a leading indicator of a cash crisis, not a lagging one.
Every vendor invoice you push past terms is a relationship you're degrading. Material vendors who get paid late charge more on the next order, tighten credit limits, or move you to COD. Equipment companies put holds on accounts. The compounding effect of late AP — higher material costs, reduced credit, COD requirements — can raise your project costs by 3–5% permanently. That margin hits every bid going forward.
THREE REASONS AP
PILES UP IN CONSTRUCTION.
AR Collected Slower Than AP Is Due
GC pays at net 60. Material vendor is net 30. The 30-day gap means you're paying vendors before you're collecting from GCs — every month. This gap is manageable with a cash buffer and a forecast. Without both, AP stacks.
Billing Lag Compresses the Cycle
If pay applications go out on the 20th instead of the 1st, every payment is 30 days later than it should be. Meanwhile AP due dates don't move. The mismatch pushes AP past terms every time.
No Cash Reserve for the Gap
The $650K cash floor in the CFOS model exists precisely for this — to bridge the gap between spending on a project and collecting from the GC. Without a cash reserve, every project start stresses AP.
THE REAL PRICE OF
LATE AP IN CONSTRUCTION.
Lost Early Pay Discounts
Most material vendors offer 2/10 Net 30 — 2% discount for payment within 10 days. On a $400K material package, that's $8K available. When you're paying at 45–60 days instead, you lose the discount and pay late fees. That's 3–4% of material cost given away.
Tightened Credit Terms
A vendor who gets paid consistently late will reduce your credit limit, require COD on new orders, or require a deposit before releasing materials. COD on a large material package requires cash before the project has billed — creating the exact problem you were trying to avoid.
Vendor Relationship Damage
The best pricing, the best allocation of scarce materials, and the best service go to customers who pay on time. A subcontractor with a reputation for slow pay gets the second-best price, the second priority on delivery, and less flexibility on returns and credits.
HOW TO CLEAR AP
AND KEEP IT CURRENT.
A $3.4M civil contractor with $245K in uncollected AR and AP stacking used SPM's collections process to recover the AR, clear the AP, and eliminate four MCA loans in one engagement. See the case study →
