PROFITABLE BUT NO CASH.
The income statement reports profit and the bank account tells a different story, which is common in commercial subcontracting. Profit and cash are two different things in construction. Profit gets recognized when you bill, and the money comes in weeks later. Growth eats working capital faster than profit builds it, and uncollected AR is earned profit sitting in a receivable instead of your bank.
We work this problem on every engagement, and the first 30 days is usually a collections event. We chase the earned but unfollowed AR, correct billing cycles that run late, and build a 13 week forecast off expected collection dates rather than income statement dates. That forecast tells you what the bank will hold in eight weeks, which is a different question from whether the jobs made money. Both answers can be good news and bad news at the same time, and the one that decides whether payroll clears on Friday is the cash answer.
WHAT IT MEANS.
Profitable but no cash is the normal condition of a growing subcontractor, because profit gets recognized when the work is billed while the money for it comes in 30 to 60 days later.
This timing distance is structural. It exists on every project, every month, for the whole life of the business. It's not a problem to be solved so much as a feature of the business model that has to be funded and managed on purpose.
WHY THE BANK DISAGREES.
Profit is recognized when billed, the cash comes later
On a percentage of completion basis, revenue gets recognized as work is performed and billed, so the income statement reports profit in the current period. The cash from that billing reaches you 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, and the bank account in October says otherwise.
Growth eats the profit before it turns into cash
Every dollar of revenue growth needs working capital before it produces cash. A profitable business that grows 30 percent in a year deploys 30 percent more crew, 30 percent more material, and 30 percent more equipment before the billing events come in. The profit from the existing work gets consumed by the working capital requirement of the new work. The income statement reports growing profit while the bank account reports the working capital going out, which is how a business has never been more profitable and never had less cash.
Profit locked in AR nobody is collecting
A business with $400,000 in outstanding AR at 55 days average days outstanding is carrying $240,000 more in AR than the same business at 35 days DSO. That $240,000 is earned profit sitting in a receivable instead of the bank. The income statement is right about the profit and the cash account simply doesn't have it yet. Collections discipline, not new revenue, is what turns that earned profit into money you can spend.
WHAT IT LOOKS LIKE IN DOLLARS.
A business with $400,000 in outstanding AR at 55 days DSO is carrying $240,000 more in receivables than the same business at 35 days DSO. That $240,000 is spendable inside two to four weeks of systematic follow up. It's the cheapest money in the business, because it's already earned and already billed.
A $6.7M civil contractor had $309K in the bank within 30 days of starting with us, from AR collections alone. No new work was sold and no bids were changed. Every client who comes to us profitable and broke has AR that nobody has been chasing, which means the profit was always there and the process wasn't.
WHAT WE CHANGE.
We model when the cash comes in, not when the profit gets recognized. The 13 week forecast gets built from expected collection dates, so it reports the cash position instead of the income statement position. That's the report you make a payroll decision off of.
The working capital needed to fund each new revenue dollar has to be available before the commitment gets made. We calculate that number against your current cash and your line of credit, and then you grow at the rate the structure supports. Signing first and funding later is how a good year turns into a payroll scare.
Every invoice past 45 days on the AR aging gets a collections call every Monday. The $240,000 that's earned but uncollected is available within two to four weeks of systematic follow up. Nobody has to sell anything new for that money to reach the bank.
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.
