HOW MUCH WORKING CAPITAL DO YOU NEED?
Working capital is current assets minus current liabilities. For a commercial subcontractor it decides whether you can mobilize the next job without borrowing, survive a 60 day payment delay, and cover overhead through a slow month. Most owners don't know their working capital position, and most of the ones who do know it are below where they need to be. The SPM target is $1.2M for a stabilized $5M to $8M subcontractor, with $650K as the non-negotiable cash floor.
The requirement isn't one number that fits every contractor. Three separate demands stack on top of each other. There's overhead you have to cover if the revenue stopped tomorrow, there's money you have to spend on a job before the first pay app gets funded, and there are receivables you have to float while a GC takes 45 days to pay. Add those three together and you have your requirement. Set it beside your own balance sheet and you have your answer, which is usually that you're short and by how much.
WHAT IT MEANS.
Working capital is current assets minus current liabilities, and for a subcontractor it's the figure that decides whether you can mobilize the next job without borrowing.
Working capital isn't a fixed number. It scales with revenue and with how long your cash cycle is. A $2M subcontractor and an $8M subcontractor have different requirements because the jobs are bigger, the mobilization costs are higher, and the payment cycle covers more dollars every month.
WHERE THE CAPITAL WENT.
Owner draws above net profit
This is the most common working capital drain we find. The business makes $180K in net profit and the owner draws $280K. That $100K shortfall comes straight out of working capital. Year after year the business grows in revenue while working capital doesn't build, because profit is being pulled out faster than it accumulates.
Equipment bought with operating cash
A $90K equipment purchase funded from the operating account reduces working capital by $90K the day it clears. The asset is on the balance sheet and the cash is gone. Equipment belongs on structured debt rather than on the same cash that has to cover payroll next Friday.
AP paid before AR is collected
Most subcontractors pay AP faster than they collect AR. Vendors get paid in 30 days and GCs pay in 45 to 60. That spread means the business is constantly funding its vendors out of its own working capital instead of out of collected receivables.
Reactive debt accumulation
It starts with an MCA to make payroll. Then a quick LOC draw covers a material deposit, and a vendor financing arrangement covers a piece of equipment. Every one of those reactive borrowings reduces working capital through interest and fees. Over 2 to 3 years of borrowing that way, a $3M subcontractor can end up with $150K to $300K in annual debt service draining the same pool it needs for working capital.
WHAT IT LOOKS LIKE IN DOLLARS.
The baseline working capital requirement for any commercial subcontractor is enough cash to cover 3 months of overhead if revenue stopped tomorrow. On $800K in annual overhead, that's $200K minimum. Most subcontractors are below this line. They fund overhead with the line of credit in slow months instead of holding the reserve.
Every project needs mobilization capital before the first invoice gets paid. On a $600K project, mobilization typically costs $40K to $80K covering equipment, materials, labor, and insurance, all before any cash comes in. With 3 to 5 concurrent projects in various stages, the aggregate mobilization reserve should be roughly 10% of active backlog.
If your average payment cycle is 45 days, you're holding 1.5 months of revenue in receivables at any given time. Working capital has to absorb that float without a credit draw. On $5M in annual revenue, 1.5 months is $625K in receivables that somebody has to fund, and that somebody is you.
RESEARCH FROM OTHER SOURCES.
These figures come from another company's survey, not from SPM's clients. Each one cites the report and the page.
Billd's 2026 National Subcontractor Market Report found more than half of subcontractors said their bank line of credit covers less than 10 percent of their annual revenue.
Source: Billd, 2026 National Subcontractor Market Report, page 8 (survey of 623 respondents, published May 13, 2026).
Billd's 2026 National Subcontractor Market Report found 42 percent of subcontractors secured capital before they needed to use it.
Source: Billd, 2026 National Subcontractor Market Report, page 10 (survey of 623 respondents, published May 13, 2026).
HOW THE NUMBER GETS BUILT.
The SPM target is $1.2M of working capital for a stabilized $5M to $8M subcontractor, with $650K as the non-negotiable cash floor. Those aren't aspirations posted on a wall. They're the figures distributions get measured against, so draws come out of whatever is above the floor and not out of the floor itself.
The first move is eliminating reactive debt, because interest and fees pull from the same pool the target has to be built out of. Next comes correcting billing lag, which pulls cash forward without requiring a single dollar of retained profit. Only after those two does the retained earnings work make sense. Do it out of order and the profit you keep goes right back out the door as interest.
Draws get sized to net profit instead of exceeding it, which is the one change that turns a growing revenue line into a growing balance sheet. Distributions above the floor are still available in a good year. What goes away is the habit of funding a $280K lifestyle out of a $180K business and calling the difference timing.
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. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Under $1M | $1,900 to $3,300 | $1,000 |
| $1M to $3.5M | $2,600 to $5,300 | $1,500 |
| $3.5M to $6.5M | $3,800 to $8,300 | $3,000 |
| $6.5M to $9.5M | $5,100 to $11,800 | $4,500 |
| $9.5M to $12.5M | $6,100 to $14,900 | $6,000 |
| $12.5M to $15.5M | $7,400 to $17,650 | $7,500 |
| $15.5M to $18.5M | $9,400 to $22,400 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
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. The onboarding fee is right here in the table.
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 and never in a report.
Your bookkeeper still does the books.
Every job shows its margin while it is still open.
Everything in Core, plus the bookkeeping and bank reconciliations done for you, and the job costing and WIP software set up, loaded with your cost codes, and managed every month. Use your own online software, or move to ours and we cover it.
A bookkeeper we choose does the books and reconciliations. No payroll.
You approve, and the money side gets handled.
Everything in Strategic, plus a controller we choose who handles your bills and receivables for you the way an in-house controller would. They call vendors, pay the bills and keep the accounting current. We plan the cash flow first, and you approve every payment because it is your money.
A controller we choose does the payables and receivables. No payroll, no pay applications, no collections.
FREQUENTLY ASKED.
