Crews mobilize on day one. Payroll goes out every two weeks. The first pay app does not get paid until day 73. That gap is structural — and it has a structural fix.
On a typical commercial electrical project, your crews mobilize on day one. You start pulling material, running conduit, setting gear. Payroll goes out every two weeks. Then you wait. Pay App 1 goes out at day 30, GC approval takes 15–30 days, net 30 payment means cash at day 75–90. That gap is structural. Every electrical contractor has it. Most do not have a system built around it.
Electrical material lead times make the cash gap worse. Switchgear can take 20–52 weeks. Panels and transformers are 16–30 weeks. Wire and conduit are ordered in full quantities at job start.
You are buying $80,000 in material in month one for a job that will not generate its first payment until month three. The gap between material cash out and first billing is often larger than the entire first pay app.
If you let the GC dictate the schedule of values, your early milestones will be undervalued and your later milestones overstated. You do the most cash-intensive work first and get paid for it last. Negotiating the SOV to front-load mobilization, material procurement, and rough-in is the single most impactful thing you can do before a job starts.
Most GCs have a billing cut-off — typically the 20th to 25th of the month. Miss it by a day and you wait 30 more days. On a $300K/month billing pace, one missed cut-off is $300K pushed back 30 days. Most electrical subs miss their cut-off at least once per billing cycle on at least one job.
T&M electrical work should be billed weekly — not monthly, not at completion. Every week you wait to bill T&M work is another week of float you are funding. Crews cost money daily. The invoice for that work should follow within 5 business days.
The GC said they would handle the change order paperwork. You kept working. Now the job is 80% complete and you have $40,000 in verbal approvals that have never been formalized, billed, or approved in writing. Change orders should go on the next pay app — not at closeout.
Retainage at 10% on a $1.5M electrical job is $150,000. It is on your balance sheet as a receivable — but it is not collectible for 12–18 months. If you are counting retainage in your cash position, you are overstating available cash by a significant margin.
Before the subcontract is signed, negotiate the schedule of values to front-load mobilization, material procurement, and rough-in. Ask for a mobilization line item of 5–10% of the contract value. Ask for material procurement to be a separate line item billable at delivery. These are legitimate costs — the SOV should reflect that.
Map each GC's pay app cut-off date, review period, and payment terms. Submit every pay app on the first eligible day of the billing period. Never miss a cut-off. This single change can move $300,000+ in annual payment timing forward by 30 days on a $3M revenue business.
Any T&M work performed this week gets invoiced by Friday. No exceptions. The paper trail starts now. The payment starts now.
When verbal approval happens on a change, put it on the next pay app as pending. Force the formal approval process. Do not accumulate verbal approvals that turn into disputes at closeout.
Map every payroll date, material payment, and equipment cost against every expected pay app receipt for 13 weeks. The cash gap becomes visible 8 weeks before it hits. That is enough time to act — collect old AR, accelerate a billing, or arrange short-term financing at normal rates instead of emergency MCA rates.
This contractor had $365,000 in overdue AR when SPM started. Three GC relationships at 28%, 19%, and 9% gross margin — the owner did not know which ones were making money. The 9% GC was the busiest relationship. The billing cycle was 45–60 days late on every job because nobody was tracking cut-off dates.
In overdue AR collected within the engagement. Debt cleared completely within 120 days.
In employee bonuses paid after the financial system was rebuilt. The money was always there — it was bleeding out through the billing structure.
A free call with Josh takes 30 minutes. Bring your last P&L and current bank balance. The gap between those two numbers is where we start.
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