The business account doesn't have enough to make payroll. You're pulling from a personal credit card, a personal LOC, or personal savings. This is not a cash flow timing issue — it's a structural insolvency signal.
A major supplier has put your account on hold or required prepayment. Ready-mix, lumber, electrical supply — when they stop extending credit, the jobs stop moving. This is a public financial signal that other vendors will notice.
You've stopped paying yourself to keep the business liquid. This feels like sacrifice — it's actually a diagnostic signal. The business can't support its cost structure including owner compensation. That's the definition of insolvency.
The line of credit is at its limit and renewal is within 90 days. Banks review financials at renewal. If the financials are weak, the line doesn't renew — or it renews at a lower limit right when you need it most.
Jobs are closing with losses and nobody can explain specifically where the budget was lost. This means job costing doesn't exist or isn't working. Without job costing, the same losses repeat on every subsequent job because nobody knows what caused them.
Multiple invoices are sitting 75+ days old with no formal collections action. That's not pay-when-paid timing — that's money earned and not collected because there's no process to move it. At $3M revenue, every 10 days of AR lag is $80–100K of cash sitting in the pipeline.
You can't tell someone within $20,000 what your total accounts payable is, what's past due, and what's current. When the owner loses track of what the business owes, the books have broken down. AP surprises compound cash problems in ways that are hard to recover from.
Before anything else. Pull every active and recently closed job. Identify every invoice that's outstanding, every T&M or change order that's been completed but not formally submitted, and every retainage that's eligible for release. Most contractors in crisis have $50,000–$200,000 of cash sitting in uncollected or underbilled AR. That's the fastest money in the business — and it doesn't require winning a new job.
Sort every outstanding payable into three buckets: must pay now (payroll taxes, anyone who can shut down a job, anyone with a lien already filed), can extend 30–45 days with a proactive call (most material suppliers), defer 60+ days without significant damage (admin, minor vendors). Call every supplier in bucket two before the invoice is due with a partial payment and a specific timeline for the balance.
If the LOC is not at its limit and renewal is more than 90 days away, draw what you need now while the access is available. Banks don't close lines mid-term on current accounts — but they do scrutinize financials at renewal. Use the LOC to stabilize while the AR collection is in progress, not as a last resort after the crisis has deepened.
Once cash is stabilized, address the root causes: job costing that doesn't produce variance data, overhead rate that hasn't been recalculated, AR collection process that lets invoices age past 60 days, and bid pricing that doesn't recover actual overhead. Fixing the crisis without fixing the cause means doing this again in 90 days.
When to call for help: If you have three or more of the seven warning signs, call SPM before calling the bank. The first thing we do is find the cash that's already there — and most contractors in crisis have more collectable AR than they realize. Schedule a free call →
Seven signs: payroll covered by personal credit, supplier accounts on hold, owner stopped taking draws, LOC maxed with renewal coming, jobs finishing over budget with no explanation, AR aging past 75 days on multiple accounts, and owner doesn't know what the business owes. Any two together is a serious signal. Three or more is a crisis in progress.
Yes — if action is taken before the situation becomes irreversible. The first move is an AR audit: find every dollar earned and not yet collected. Most contractors in crisis have $50,000–$200,000 sitting in underbilled or uncollected AR. Collecting it doesn't require new revenue — it requires organizing and submitting what's already been earned.
Audit AR immediately. Before calling the bank, before renegotiating with suppliers, before drawing on credit — find out what's already owed to you and collectable in the next 14 days. Most construction owners in a cash crisis are sitting on significant uncollected or underbilled revenue they haven't formally asked for. That's the fastest cash in the business. Schedule a call — this is where SPM starts.
Call before the situation becomes irreversible. The first thing SPM does is find the cash that's already there.
Schedule a Free Call →