Josh Luebker
Fractional CFO · The Construction CFO
Former commercial construction PM and master electrician. 150+ projects, $300M+ total value. Fractional CFO for commercial subcontractors $1M–$12M. About Josh | LinkedIn
If payroll is due and the cash isn't there, you're in one of the most stressful moments you'll face as a construction company owner. Here's exactly what to do — in the next 24 hours, and over the next 60 days so it doesn't happen again.
Missing payroll is the most stressful moment in any contractor's career. It's also not necessarily fatal. In SPM's experience, contractors who near-miss or miss payroll almost always have collectible AR that hasn't been pursued, retainage that can be requested early, or a LOC they haven't fully drawn. The solution is usually a cash source you already have but haven't activated — not a new loan.
If payroll is due in less than 72 hours: Call your GC on your largest active job and request expedited processing on your most recent pay app. Many GCs will accelerate payment with a direct call — especially if you have a good relationship and frame it as a cash timing issue rather than a financial crisis. This works more often than most contractors think.
A payroll near-miss is the end of a chain. Something in your financial system — billing, overhead, job cost — broke down weeks before you saw the problem. These are the most common root causes in the order SPM encounters them.
No 13-week forecast means payroll crises arrive as surprises. The cash gap was visible 3–4 weeks earlier if anyone had looked. A real forecast built around your billing cycles shows you every payroll obligation and every expected receipt 90 days out. You manage the gap before it's a crisis.
Outstanding invoices that haven't been called on. GCs who are slow unless pushed. Retainage sitting at completion that hasn't been formally requested. Most contractors in a payroll crisis have $100K+ in receivables they could collect within 7 days with focused effort.
Payroll is overhead. If your overhead rate doesn't cover your actual payroll burden — wages, payroll taxes, benefits, workers comp — every job you complete slowly drains your cash. The payroll crisis is the visible result of a math problem that's been running for months.
One or more active jobs is significantly over-budget. The cash is being consumed by field costs that exceed billing. No job cost review means no early warning. By the time payroll is at risk, the job loss is already baked in.
You added 8 people last month. The payroll obligation increased immediately. The billing for the work they're doing arrives in 45–60 days. The timing gap between payroll and billing is the cash hole — and it's larger with more people.
Work slowed in January. Overhead didn't. If you don't have 60–90 days of operating reserves built for the slow season, payroll pressure in Q1 is structural — not a one-time problem.
Getting through today's payroll is step one. Step two is building the system that makes this the last time. SPM builds the forecast, the AR process, and the job costing system that shows the gap 90 days before it becomes a Friday afternoon call.
Legally, missing payroll triggers state wage payment laws — most states require payment within a specific timeframe after wages are due. Practically, your best employees leave first. The ones who stay are the ones who can't find another job quickly. The damage to morale and crew stability is often worse than the financial problem itself. The goal is to make payroll no matter what — owner draw, personal funds if necessary, LOC draw — and fix the underlying cause in the following 30 days.
Your LOC is designed for exactly this — draw it. An MCA is not — avoid it. The difference is cost of capital and repayment structure. An LOC at prime + 2% that you repay when AR comes in costs you a few hundred dollars in interest. An MCA at 1.35 factor rate with daily repayment costs you 35% of the advance immediately and draws down your bank account every business day regardless of whether new AR arrived. Solve payroll with the cheapest capital available, not the fastest.
Directly and early. Do not let them find out by checking their bank account. A direct conversation — "we have a cash timing issue, payroll will be 2 days late, here is the specific date you'll be paid" — preserves far more trust than silence followed by a surprise. Most employees who've been with you longer than 6 months will give you 48 hours. None will give you the benefit of the doubt if they feel misled.
Schedule a free 30-minute call. We'll tell you straight what's broken and whether SPM can help you get out of it.
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