OVERHEAD RECOVERYCIVIL CONTRACTORAR COLLECTIONSLINE OF CREDITFRACTIONAL CFOOVERHEAD RATECONTROLQOREOVERHEAD RECOVERYCIVIL CONTRACTORAR COLLECTIONSLINE OF CREDITFRACTIONAL CFOOVERHEAD RATECONTROLQORE
Case Study · Civil & Grading
OVERHEAD AT 30%. LOC PAID OFF IN 60 DAYS.
WHAT HAPPENED
A $6.7M civil subcontractor had a $348K line of credit maxed out and overhead running at 30%. He knew something was off but couldn't see where it was going. CFOS cut overhead from 30% to 17%, put a systematic collections process in place, and went after uncollected AR. Within 30 days there was $309K sitting in the bank. The LOC — $348K — was fully paid off in 60 days. The owner paid out $65K in bonuses.
A 30% overhead rate on civil work means you're paying 30 cents of overhead for every dollar of revenue before a single dollar reaches the bottom line. That's roughly double what a healthy civil subcontractor runs. The margin is there on the jobs — the overhead is eating it before the owner ever sees it. And when the overhead problem combines with uncollected AR, the cash position tells you there's a crisis when the actual problem is a process problem. Fix the overhead rate, collect what's owed, and the business looks completely different within 30 days.
BY JOSH LUEBKERPublished: May 2025Updated: May 2026
$348K→$0
Line of credit fully paid off in 60 days
$309K
In the bank at day 30
30%→17%
Overhead rate after restructuring
$65K
Owner-paid bonuses after LOC was cleared
The Problem
THE LINE OF CREDIT WAS MAXED. HE DIDN'T KNOW WHY.
IN THE OWNER'S WORDS
"I knew something was wrong. The work was there. The jobs were getting done. But the line of credit was always maxed and I couldn't figure out where the money was going. I just kept assuming the next big payment would fix it."
The contractor ran a solid civil operation — grading, earthwork, site preparation. $6.7M in revenue. Real backlog. GC relationships that kept the work coming. The problem wasn't the jobs. The problem was what happened to the margin after the jobs were done.
Overhead was running at 30% of revenue. On a $6.7M civil operation, that's over $2M a year in overhead — almost double what a well-run civil sub of that size should be carrying. The overhead hadn't been reviewed or restructured in years. It had just accumulated — vehicles, insurance, office costs, subscriptions, administrative headcount — without anyone asking whether each line item was necessary at the current scale of the business.
On top of the overhead problem, there was uncollected AR sitting with GC relationships that simply hadn't been followed up on. Not disputed. Not in collections. Just not chased. The combination of high overhead and slow collections meant the LOC was permanently maxed — and the owner had no visibility into which problem was doing more damage.
The Diagnosis
TWO PROBLEMS. ONE CASH CRISIS.
PROBLEM 1 — OVERHEAD AT 30%
Costs Had Never Been Scrutinized Against Revenue Scale
Civil subcontracting overhead typically runs 12%–18% at this revenue level. At 30%, this contractor was carrying $800K–$1.1M in excess overhead annually — costs that had accumulated over years of growth without a CFO asking whether each expense was justified at the current scale. The audit wasn't about cutting what was necessary. It was about identifying what had accumulated without review: redundant insurance policies, underused equipment, administrative costs that hadn't scaled down when headcount did, subscriptions that nobody remembered signing up for. Once catalogued and reviewed, overhead dropped from 30% to 17%.
PROBLEM 2 — UNCOLLECTED AR
Invoices Sent. Nobody Followed Up.
Civil subcontractors typically operate on 30–45 day GC payment terms. When those terms slip to 60, 75, or 90 days without a follow-up process, the cash that should be in the bank is sitting in someone else's AP queue. This contractor had meaningful outstanding AR across multiple GC relationships — not disputed, just not collected. GC accounting departments pay who asks. CFOS built a collections cadence: weekly aging review, tiered follow-up by days outstanding, and escalation protocol for invoices over 45 days. The first round of collections brought $309K into the bank within 30 days.
The Intervention
WHAT CFOS ACTUALLY DID.
WEEK 1
Pulled full AR aging report. Identified all outstanding invoices by GC, amount, and days outstanding. Built a contact list and immediate follow-up cadence. Made first-round collections calls in the first week. Simultaneously pulled a full overhead audit — every recurring cost line item catalogued against current business need.
WEEKS 2–3
First collections wave complete — $309K in outstanding AR collected within 30 days. Overhead audit delivered: identified which costs were necessary at current scale, which were redundant, which had never been reviewed. Presented the owner with a specific list of cuts — no generalities, specific line items with dollar amounts and rationale.
WEEKS 3–4
Overhead restructuring implemented. Redundant insurance consolidated. Underused equipment costs addressed. Administrative headcount reviewed against current workload. Overhead rate target set at 17% — achievable immediately based on the cuts identified. New overhead structure locked in for the forward budget.
DAY 60
LOC balance: $0. The combination of collected AR and reduced overhead eliminated the cash gap that had kept the line maxed. The owner used the cleared cash position to pay $65K in team bonuses — the first discretionary payout the business had made in a significant period. Weekly collections review and overhead monitoring locked in as ongoing process.
The Outcome
60 DAYS. LOC AT ZERO. OWNER PAYING BONUSES.
$348K line of credit paid off in full within 60 days of engagement start — from maxed to zero without new revenue or new financing.
$309K in the bank at day 30 — from collections on outstanding AR that had simply never been followed up on.
Overhead rate cut from 30% to 17% — eliminating roughly $870K in annual overhead drag at the $6.7M revenue level.
$65K in team bonuses paid after the LOC was cleared — the first discretionary payout the owner had made in a significant period.
Weekly AR aging review and collections cadence established — going forward, outstanding invoices get followed up on a schedule, not when the bank account is low.
Overhead monitoring process locked in — every recurring cost reviewed quarterly against current business necessity.
Time to Outcome
30 DAYS TO CASH. 60 DAYS TO DEBT-FREE.
$309K in the bank at day 30. LOC at zero by day 60. The speed came from two things working simultaneously: collections brought cash in fast, and overhead cuts stopped cash going out. Neither required new revenue. Neither required financing. The money was already there — it just wasn't being collected or retained.
WHY OVERHEAD MATTERS THIS MUCH
The difference between 17% overhead and 30% overhead on $6.7M in revenue is $872K per year. That's the number that shows up as a permanently maxed line of credit, a stressed bank account on payroll weeks, and an owner who knows the work is there but can't figure out where the money goes. Overhead doesn't announce itself. It accumulates in the background — a vehicle lease here, an insurance renewal there, a headcount that made sense two years ago but doesn't now. The fix requires someone with a mandate to look at every line item and ask if it's still justified. That's what CFOS did in the first three weeks of this engagement.
What This Means
IS YOUR OVERHEAD RATE EATING YOUR MARGIN?
Civil and grading contractors doing $4M–$10M should be running 12%–18% overhead. If you're above that, the margin is there on the jobs — it's just not reaching the bottom line. These are the signs.
Your line of credit is permanently at high utilization even when the backlog is full and the jobs are getting done.
Your overhead rate has never been formally audited against current revenue scale — it's just what it's always been.
You have AR sitting 45, 60, or 90 days outstanding with no systematic follow-up process — just personal calls when you remember to make them.
The bank account is stressed on payroll weeks even though the monthly revenue number looks fine.
You've never paid a discretionary bonus because there's never been enough cash in the bank at the right time to justify it.
Common Questions
FREQUENTLY ASKED.
A $6.7M civil subcontractor had a $348K line of credit maxed out and overhead running at 30% of revenue — roughly double the healthy benchmark for civil work at that scale. The work was real, the backlog was full, and the jobs were getting done. But the overhead had accumulated over years without review, and outstanding AR wasn't being collected systematically. The owner knew something was wrong but couldn't identify where the money was going.
Two problems producing one cash crisis. First: overhead at 30% — costs that had accumulated over years without anyone asking whether each line item was justified at the current revenue scale. The audit identified roughly $870K in annual overhead drag that could be reduced without operational impact. Second: uncollected AR across multiple GC relationships — invoices that had been sent but never followed up on. Not disputed, just sitting. The first collections wave brought $309K into the bank in 30 days.
$309K in the bank at day 30. $348K line of credit paid off in full by day 60. Overhead rate cut from 30% to 17%. $65K in team bonuses paid after the LOC was cleared — the first discretionary payout the business had made in a significant period. No new revenue. No new financing. The money was already there — it just wasn't being collected or retained.
Yes — overhead accumulation without review is one of the most common patterns in civil and grading subcontracting at the $3M–$10M revenue range. Any contractor running overhead above 20% who hasn't done a formal audit in the past 12 months is likely carrying meaningful drag. The Cash Control System and Job Profitability System are the CFOS modules that address overhead rate and collections process for this profile.
Former commercial construction project manager and master electrician. Managed 150+ projects totaling $300M+ including Google data centers, military bases, hospitals, and high-rises. Now fractional CFO for commercial subcontractors doing $1M–$12M through Sulphur Prairie Management.
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WHAT'S YOUR OVERHEAD RATE RIGHT NOW?
If you don't know — or it's above 20% — the margin is there on the jobs. It's just not reaching the bottom line. Find out in 30 minutes.
