CONSTRUCTION SEASONAL CASH FLOW.
Seasonal cash flow is a defining financial challenge for construction subcontractors in most of the US. Winter slows the work down and spring ramps it up fast. The distance between summer peak cash and winter trough can be $200K to $500K for a $5M contractor, and most contractors experience it as a crisis rather than as a planned event. Here is how to manage it deliberately.
Nothing about a slow season is a surprise. You know roughly when the work stops and roughly when it starts again, which makes the winter trough the most predictable cash event in the business. What's missing is the number. Without a forecast that runs past twelve months you know the trough will be lower than summer and you can't say by how much, so you can't decide in July what to hold back. The difference between a $150K trough and a $50K trough changes every distribution, every equipment purchase, and every hire between July and December.
WHAT IT MEANS.
Seasonal cash flow is the predictable swing between a construction subcontractor's summer cash peak and winter cash trough, driven by when the work can be built rather than by whether the work was profitable.
The slow season and the spring ramp up are two different cash problems that happen four months apart. The slow season drains the reserve because revenue drops while overhead doesn't. The ramp up drains it again because mobilizations go out before the first pay apps come in, so a contractor who spent the winter getting thin hits April needing more cash than any month of the year.
WHY WINTER KEEPS FEELING LIKE A SURPRISE.
Every winter is a financial emergency
A slow season that's predictable every year isn't a surprise. It's a planning failure. If you know work slows from November through February, the cash to cover that period should be built during the busy season, and most contractors build cash in the summer and spend it through the year without deliberately preserving what the slow months will need.
You don't know what your true seasonal low is
Without a 24 month cash flow forecast you don't know what your cash position will be at the bottom of the seasonal trough, only that it will be lower than summer. Not knowing the specific number means you can't plan specifically. The difference between a $150K seasonal trough and a $50K trough changes every financial decision between July and December.
Spring ramp up strains cash too
The beginning of the busy season creates its own cash problem, because new project mobilizations hit before the first pay apps get collected. A contractor who depleted cash over winter and then mobilizes three new jobs in April is facing strain from both directions at once. The trough doesn't end when the work starts. It ends when the money for that work reaches the bank.
WHAT IT LOOKS LIKE IN DOLLARS.
The distance between summer peak cash and winter trough can be $200K to $500K for a $5M contractor. That's not a profit problem and cutting bids won't close it. It's the same money moving through the year on a schedule the weather sets.
A common benchmark is 8 to 12 weeks of overhead and fixed costs held as a minimum cash reserve entering the slow season. For a contractor with $80K a month in fixed overhead, that's $160K to $240K in reserve. The right figure inside that range depends on how long your slow season runs, whether backlog carries into winter, and how your GCs pay during the winter months.
PLAN THE TROUGH IN JULY.
The 24 month cash flow forecast shows your projected seasonal trough. The distance between your minimum operating cash requirement and that trough number is your seasonal reserve target. During the summer months when cash is accumulating, we set the reserve target and measure distributions against it so the reserve is funded before the slow season starts.
Excess cash above the operating floor during the busy season belongs in a business sweep account or high yield savings, earning yield while it waits for the slow season. The 24 month forecast tells you when you'll need it back. Money sitting idle in checking earns nothing and is far more likely to go out as a distribution that should have been held.
A working capital line is the right tool to bridge a seasonal cash shortfall when the draw event is the slow season and the payback event is the spring ramp up. It's the wrong tool for covering a slow season shortfall that exists because summer cash was fully distributed. The forecast tells you which of those two you're in before you call 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.
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