Material procurement deposits — especially for switchgear, structural steel, precast, and specialty mechanical equipment — create large cash outflows months before billing can offset them. Subcontractors who map deposit requirements into their 13-week cash flow forecast at job start can pre-position line of credit draws and use stored materials billing provisions to close the gap. SPM handles this as part of monthly cash flow management.

Cash Flow — Procurement

Your Material Deposits Are Draining Your Cash Before the Job Starts.

You sign the contract. You order the long-lead materials. You pay the 40% deposit on the switchgear — $180K out the door. The switchgear won't arrive for 16 weeks. You can't bill for it until it's on-site. Your first pay app is still 6 weeks away. That's a $180K cash gap and the job hasn't started yet. This is one of the most overlooked cash flow problems in commercial subcontracting, and it's entirely manageable if you plan for it before the purchase order goes out.

Schedule a Free Call →

The Deposit Problem

Why Material Deposits Kill Cash Flow.

The bigger the job, the more likely it involves long-lead materials that require large upfront deposits — often months before the materials arrive and before you can bill for them. Here's where the cash goes.

Long-Lead Materials Require Cash Early

Switchgear, transformers, custom structural steel, precast concrete, large diameter pipe, and specialty mechanical equipment often require 30–50% deposits 3–6 months before delivery. That cash is out the door with no corresponding billing until the material lands on-site.

Deposits Don't Show Up on the Pay App

Most subcontractors don't bill for materials until they're installed. That means deposits paid in Month 1 don't generate revenue until Month 4 or 5. If you're doing a $2M job with $400K in early deposits, you're carrying that cash deficit for months — funded by your operating account or line of credit.

Multiple Jobs with Overlapping Deposits

If two or three jobs have long-lead deposit requirements in the same 60-day window, the cash drain compounds fast. A $100K deposit on Job A, a $150K deposit on Job B, and a $75K deposit on Job C — all due the same month — can create a $325K cash deficit that nobody planned for.

How to Manage It

Three Ways to Close the Deposit Cash Gap.

Bill for Stored Materials

AIA contracts allow billing for materials stored on-site or in bonded storage

Submit a stored materials request with the pay app the month materials arrive

Document with lien waivers and material certifications as required

This alone can recover 30–60 days of deposit cash gap

Procurement Schedule in the Cash Forecast

Map every deposit requirement to the week it's due — at job start

Identify months where deposits overlap across jobs

Flag high-deposit months 6–8 weeks in advance

Pre-arrange line of credit draws for known deposit windows

Negotiate Deposit Terms Where Possible

Push for milestone-based deposits tied to fabrication stages

Request extended payment terms on smaller material orders

Negotiate GC advance payments or owner-furnished materials for truly large items

Know your contract terms — some allow material cost reimbursement in advance of installation

The Fix

Procurement Planning as Cash Flow Management.

The subcontractors who manage deposit cash flow well do one thing differently: they map deposits into the forecast before the job starts, not after the first invoice arrives. Once you see the gap coming 6 weeks out, you have options. Once it hits, you're scrambling.

SPM maps every deposit and long-lead material requirement into the 13-week cash flow forecast at job start. When a $200K switchgear deposit is due in Week 8, it's in the forecast in Week 1. You know it's coming, the line of credit is positioned, and the stored materials billing is already planned for when delivery arrives.

At every job start, list all materials with lead times over 6 weeks and their deposit requirements

Put every deposit date in the 13-week cash flow forecast immediately

Review your contract for stored materials billing language — use it every time

Pre-position your line of credit draw before deposit months — don't wait until you're short

Track delivery dates against deposit payments — if a delivery slips, the billing slips with it

Frequently Asked Questions

Common Questions.

How do material deposits affect construction cash flow?

Large material deposits are often required 3–6 months before delivery and installation. These deposits are paid from operating cash with no billing until the materials are on-site or installed. On a $1.5M job requiring $300K in deposits, that cash is out the door for months before you can bill for it.

Can I bill for stored materials on a pay app?

Often yes. AIA-standard contracts include a stored materials billing provision — materials stored on-site or in a bonded off-site storage facility can typically be included in your pay app. Billing for stored materials as soon as they're on-site significantly reduces the cash gap from procurement deposits.

What is a procurement schedule and why does it matter for cash flow?

A procurement schedule maps the lead times and deposit requirements for all long-lead materials on a project. When you know 6 months in advance that you'll need to place a $200K deposit in Month 3, you can plan for it in your cash flow forecast. Without one, deposit requirements arrive as surprises.

How does SPM handle material deposit cash flow planning?

We map procurement schedules into the 13-week cash flow forecast at the start of every job. Deposit timing is forecasted out to the delivery date, stored materials billing opportunities are identified, and the cash gap is quantified before it happens — with enough lead time to act.

Josh Luebker

Fractional CFO · The Construction CFO

Former commercial construction project manager and master electrician. Managed 150+ projects totaling $300M+ including Google data centers, military bases, hospitals, and high-rises. Now fractional CFO for commercial subcontractors doing $1M–$12M through Sulphur Prairie Management.

Schedule a Call LinkedIn Email Josh

Your Material Deposits Are Draining Your Cash Before the Job Starts.

Why Material Deposits Kill Cash Flow.

Three Ways to Close the Deposit Cash Gap.

Procurement Planning as Cash Flow Management.

Common Questions.

STOP BEING SURPRISED BY DEPOSIT CASH GAPS.