THE CASH GAP BETWEEN BILLING AND PAYROLL.
Payroll runs every week and pay apps collect every 45 days. That structural difference between when labor costs leave your account and when billing revenue reaches the bank is the most common reason a profitable subcontractor can't make payroll. On a $5M company billing $400K a month with $100K weekly payroll, there are 4 to 6 weeks of payroll already paid with no matching cash collected, which is $400K to $600K of unfunded labor at any given moment.
This isn't a slow GC problem. Even when every general contractor on your books pays on schedule, the float exists, because the two clocks were never running at the same speed. Add materials, equipment, and insurance to the labor already spent and the float on that same $5M company often reaches $700K to $1M. The typical line of credit at that revenue is $200K, which is the whole explanation for why the line stays maxed out. It was sized against a number nobody had calculated.
WHAT IT MEANS.
Structural float is the money you've already spent on labor and overhead that hasn't been collected yet, because payroll runs every week while pay apps collect every 45 days.
Two clocks run at different speeds inside the same company. One is payroll, which cycles every 7 days and doesn't negotiate. The other is collection, which averages 45 days from pay app submission and belongs to somebody else's accounting department. The distance between the two is 38 days, and every dollar of labor you put in the field has to be carried across it out of your own pocket or your own credit.
WHY PAYROLL GETS TIGHT.
Two clocks running at different speeds
Payroll cycles every 7 days and collection averages 45 days from pay app submission. That's a 38 day distance between when the labor cost hits your account and when the billing revenue reaches it. On a $5M company running $100K weekly payroll, you're carrying 4 to 6 weeks of paid labor with no matching cash collected against it, which is $400K to $600K sitting unfunded.
The float is bigger than the payroll number
Labor is only the piece you feel every Friday. Once you add materials bought ahead of installation, equipment payments, and insurance premiums to the labor already spent, the float on a $5M company often reaches $700K to $1M. Owners size their thinking around the payroll figure and then get surprised by a number that's twice as large.
The line of credit was sized against the wrong number
Most subcontractors at $5M carry a $150K to $250K line of credit. Run the arithmetic and the minimum need on that same company is $600K or more. A line that's less than half the structural float will be maxed out permanently, and that is a sizing problem, locked in years ago and never revisited.
It isn't a slow pay problem, so slow pay fixes won't close it
Owners assume the problem is a GC who drags. Even when every GC pays right on the contract schedule, the float is still there, because it comes from the timing structure and not from anybody's behavior. Chasing a slow payer helps at the edges. It doesn't change the 38 days built into the cycle.
WHAT IT LOOKS LIKE IN DOLLARS.
Monthly billing of $417K, average collection time of 45 days, and labor and overhead of $350K a month produce $525K of unfunded float at any given time. The minimum line of credit that covers it's $600K or more. Most subcontractors at $5M have a $150K to $250K line, and the arithmetic above is the entire reason it's always maxed.
Moving from a 45 day collection cycle to a 35 day cycle on a company billing $400K a month puts $130K of additional cash in the business at any given time. That's the cheapest money available to a subcontractor, because it doesn't require a bank, a rate, or a personal guarantee.
He was waking up at 3am worried about losing his house, with both lines of credit maxed and an SBA loan drawn. In the first 30 days of the engagement, $310K in overdue receivables hit the bank. Both lines of credit and the SBA loan were cleared within 90 days, and none of it came from winning new work.
THREE LEVERS THAT CLOSE IT.
Bill earlier inside the pay app window rather than at the deadline. Use stored materials billing to capture cost before installation. Structure T and M invoices weekly instead of monthly. On a company billing $400K a month, moving collection from 45 days to 35 days is worth $130K in additional cash at any given time.
Collections run on a schedule instead of running when cash gets thin. Follow up starts at day 21, escalates at day 30, and becomes a formal demand at day 45. You learn which GC contacts move checks and which ones only file paperwork, and you track which projects have lien rights expiring so you can use them before they're gone.
Calculate the real number instead of accepting the one the bank offered. Take your monthly cost base and multiply it by average collection days divided by 30. That's your minimum line of credit. Walking into the bank with that arithmetic written down is a different conversation than asking for an increase because things are tight.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
FREQUENTLY ASKED.
