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TL;DR: GC prequalification requires financial statements (2-3 years), current WIP schedule, AR and AP aging, equipment list, and bank reference. The financial ratios GCs evaluate: current ratio above 1.2, debt-to-equity below 3.0, positive net profit margin trend. WIP reporting accuracy separates financially sophisticated subcontractors from those who just meet the ratio minimums. SPM produces all prequalification documentation as standard monthly deliverables.
Prequalification
GC Prequalification
Financial Requirements.
GCs evaluate subcontractor financial health before awarding work on larger projects. Here is exactly what they look at, what the ratios mean, and how having a financial system in place changes the conversation.
Published: May 2026 · Updated: May 2026
What GCs Look At
The Prequalification Checklist
Prequalification is a financial fitness check. GCs are asking one question: can this subcontractor complete the project without running out of money? The financial statements, ratios, and WIP schedule answer that question. Subcontractors who have a financial system in place answer it confidently. Those who do not scramble to produce documents the week before the deadline.
Financial Statements
2-3 years of P&L and balance sheet. Compiled statements for projects under $500K. Reviewed statements for $500K-$2M projects. Audited statements for larger projects. SPM works with MC4 CPA for reviewed financials when project size requires them.
WIP Schedule
Current WIP showing all active jobs, percentage complete, contract value, amount billed to date, and projected final margin. GCs who receive a WIP calculated from actual job costing data with historical accuracy documented take notice. Most subcontractors provide a hand-typed estimate.
AR and AP Aging
Current AR aging showing invoices by age bracket. Current AP aging showing what is owed to suppliers and subs. GCs use these to assess working capital quality - AR over 90 days and AP over 60 days both signal financial stress.
Bank Reference and LOC Availability
Letter from the bank confirming the line of credit limit and available balance. This tells the GC that working capital is available to fund the project during the pay app gap. SPM helps clients maintain the financial ratios that support LOC renewal and increases.
FAQ
Frequently Asked Questions
What financial documents do GCs require for prequalification?
Most GC prequalification packages require: 2-3 years of financial statements (compiled, reviewed, or audited depending on project size), current WIP schedule, current AR and AP aging, equipment list with fair market values, bank reference letter confirming LOC availability, key personnel resumes, and OSHA incident rate history. The financial statements and WIP schedule are the two documents that most smaller subcontractors cannot produce in the format GCs require.
What financial ratios do GCs look at in prequalification?
Current ratio (current assets divided by current liabilities - GCs typically want above 1.2), debt-to-equity ratio (total liabilities divided by net worth - typically want below 3.0), working capital (current assets minus current liabilities - sized relative to project bid), and net profit margin trend over 3 years. WIP accuracy (projections vs actual closeouts) is also evaluated by sophisticated GCs and owners.
How does WIP reporting affect prequalification?
GCs use the WIP schedule to assess whether the financial statements are reliable. A subcontractor who can produce a current WIP schedule calculated from actual job costing data with historical accuracy of projections vs closeouts demonstrates financial sophistication that most small subcontractors cannot match. This differentiates the subcontractor on prequalification beyond just the financial ratios.
How can SPM help with GC prequalification?
SPM produces all of the financial documentation required for prequalification as standard monthly deliverables: WIP schedule from actual ControlQore data, AR and AP aging, and financial reporting in formats that GCs recognize. Clients who use SPM go into prequalification discussions with current accurate data and a WIP history that demonstrates financial sophistication. SPM works with MC4 CPA for reviewed financial statements when the project size requires them.
