PROFITABLE ON PAPER. BROKE IN THE BANK.
A profitable construction company with no cash is not a contradiction. Profit is recognized when work is billed. Cash arrives 30 to 60 days later. Growth consumes working capital before it produces cash. And AR that sits uncollected is profit that exists only on paper. These three mechanisms can run simultaneously on any job, any month. The income statement is accurate. So is the empty bank account. They tell different stories about the same business.
This is the most common financial experience in commercial subcontracting. It is also one of the most fixable. SPM has recovered over $2.1M in client AR since 2023 — not from new revenue, from money that was already earned and sitting uncollected.
THREE THINGS THAT MAKE A PROFITABLE BUSINESS FEEL BROKE.
Every contractor who calls SPM with a cash problem believes the problem is unique to their situation. A slow GC, a bad month, a big project that drained the account. Occasionally that is true. More often it is one of three structural mechanisms that every subcontracting business runs on — and none of them show up as a problem on the income statement.
WHY PROFIT AND CASH ARE TWO DIFFERENT THINGS.
On a percentage-of-completion basis, revenue is recognized as work is performed and billed. The income statement shows profit in the current period. The cash from that billing arrives 30 to 60 days later. A contractor who earns $80,000 in gross profit in October may not see that $80,000 in cash until December.
The income statement says the business made money in October. The bank account in October says otherwise. This timing gap is structural — it exists on every project, every month, for the life of the business. It is not a problem to eliminate. It is a characteristic of the business model that requires working capital management and a 13-week forecast to navigate.
Every dollar of new revenue requires working capital before it generates cash. When a profitable business grows 30% in a year it deploys 30% more crew, 30% more materials, and 30% more equipment before billing events arrive. The profit from the existing business is consumed by the working capital requirement of the new business.
The income statement shows growing profit. The bank account shows working capital being consumed. The owner is confused: the business has never been more profitable and has never had less cash. This is the growth trap. It is not a sign the business is failing. It is a sign the business outgrew its working capital structure without a plan.
A business with $400,000 in outstanding AR at 55 days average is carrying $240,000 more in receivables than the same business at 35 days. That $240,000 is earned profit sitting in a receivable instead of the bank. The income statement accurately shows the profit. The cash account does not have it.
Collections discipline — not new revenue — is what converts that earned profit to available cash. A $6.7M civil contractor had $309,000 in the bank within 30 days of SPM engagement. Not from new work. From AR that existed and had not been systematically followed up on. The money was always there. The process was not.
THREE SYSTEMS THAT CLOSE THE GAP BETWEEN PROFIT ON PAPER AND CASH IN THE BANK.
FLAT MONTHLY FEE. NO SURPRISES.
Two tiers based on trailing 12-month revenue. No hourly billing. No payroll. No add-ons.
| Revenue | Core Financial | Executive Financial |
|---|---|---|
| Under $1M | $1,900/mo | $2,900/mo |
| $1M–$3M | $2,600/mo | $3,600/mo |
| $4M–$6M | $3,800/mo | $5,500/mo |
| $7M–$9M | $5,100/mo | $6,900/mo |
| $10M–$12M | $6,100/mo | $8,500/mo |
| $13M+ | Quoted | Quoted |
FREQUENTLY ASKED.
