GRADING CONTRACTOR CASH FLOW PROBLEMS: THREE STRUCTURAL CAUSES.
Grading cash flow isn't tight because grading work is unprofitable. It's tight because of three structural features of grading operations: large equipment costs that mobilize before billing starts, seasonal winter shutdown that stops revenue while overhead continues, and import fill and export haul cost spikes that require significant temporary working capital. Working out which of the three is driving the current cash problem is what determines the fix.
The grading contractors who manage cash well aren't the ones with better luck or better GC relationships. They're the ones who modeled the cash requirement before mobilizing, built the winter reserve in August, and structured the SOV so mobilization costs come back in the first billing cycle. Everybody else finds the same three problems at the point where nothing can be done about them. None of this is hard math. It's a question of whether anybody ran the numbers before the equipment left the yard.
WHAT IT MEANS.
Grading cash flow strain is a timing problem created by equipment costs that hit before billing starts, a winter shutdown that stops revenue while overhead continues, and import fill and export haul costs that spike between billing cut-offs.
WHERE GRADING CASH GOES TIGHT.
Large equipment costs hit before billing starts
Grading work begins with equipment mobilization, site setup, and initial earthwork, and all of it generates significant cost before the first billing cut-off. Mobilizing a dozer, scraper, grader, and compactor to a site costs $6,000 to $14,000 in trucking alone. Operating those machines for the first two weeks before the first pay app generates $40,000 to $80,000 in equipment operating cost and labor, and the first check doesn't come in until 30 to 60 days after the first pay app is submitted. On a $600K grading contract, the hole before the first payment requires $80,000 to $140,000 in working capital before any revenue comes back.
Winter shutdown stops revenue but not overhead
Grading work in most U.S. markets slows hard or stops entirely for 8 to 16 weeks in winter, because frozen soil, snow cover, and wet conditions make production grading impossible. Revenue drops toward zero and overhead doesn't. A grading contractor doing $4M annually with 14% overhead carries $46,666 per month in fixed overhead through winter while billing $50,000 to $100,000, which is a shortfall of $20,000 to $40,000 per month coming out of the cash reserve or the LOC. Over a 12 week winter that's $60,000 to $120,000 in cash consumed by overhead against reduced revenue.
Import fill and export haul create concentrated cash outflows
Grading projects with significant earthwork create large, concentrated trucking and material costs during the earthwork phase. A week of heavy haul trucking can run $30,000 to $50,000 in trucking cost alone. If the haul phase falls between billing cut-offs, those costs get funded for 30 to 60 days before the billing event covers them. On large import fill projects the earthwork phase may require $80,000 to $150,000 in temporary cash, all of which needs to be in the working capital model before the project mobilizes.
WHAT IT LOOKS LIKE IN DOLLARS.
On a $600K grading contract, a mobilization SOV line at 9 percent is $54,000, billed when the equipment is on site and before production begins. That covers the mobilization trucking and the first two weeks of equipment operating cost. Without that line, the same money comes out of working capital and waits 30 to 60 days for the first check to come in.
WHAT CHANGES THE CASH POSITION.
The mobilization line gets billed when the equipment is on site and before production begins, which is the point where the cost has already been incurred. On a $600K contract, 9 percent is $54,000 recovered in the first billing cycle. That covers mobilization trucking and the first two weeks of equipment operating cost instead of financing both out of working capital.
Before the equipment leaves the yard, the forecast maps the expected payment date, the peak cash requirement of the earthwork phase, and the working capital shortfall between them. If LOC availability doesn't cover the peak, that gets resolved before mobilization rather than at week six. This is the single cheapest step on the list and the one most often skipped.
The winter shutdown is predictable, so the overhead requirement through winter gets modeled in August, the reserve gets built out of fall collections, and the business enters winter with the LOC undrawn. The contractors who do this aren't surprised in February. The ones who don't are borrowing at the worst possible time of year.
The CFOS 24 month cash flow forecast for grading contractors overlays projected project revenue by month against overhead by month. That makes the winter revenue shortfall visible year round instead of only when winter is already here. Seeing it in July is what allows the corrective action to happen in August.
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.
Pricing
| 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.
