HOW MUCH CASH CAN YOU TAKE OUT OF THE COMPANY?
A bank balance includes money that belongs to payroll, vendors and tax payments, so it is not the amount available to draw. Build the 13 week forecast, find the lowest ending balance, and subtract a floor of two payroll cycles. On a $4M company with $380,000 in the bank, the forecast low is $155,000, the floor is $125,000, and the safe draw is $30,000. Then check the draw against net profit to date, because a draw larger than profit is paid from working capital.
Owners set draws from the account balance because it is the number in front of them, and it is the wrong number for two reasons. It includes cash that is already spoken for, and it shows today, while the risk is the lowest week in the next quarter. The 13 week forecast answers both, which is why the draw is set from the forecast and reviewed every month.
WHAT IT MEANS.
A safe owner draw is the most an owner can take out of the company while payroll, vendors, taxes and the lowest week of the forecast are still covered, which is usually far less than the bank balance.
Working capital is the long term test, and it counts receivables and payables, not only the bank balance. The CONTROL standard puts it at 10 to 15 percent of annual revenue, with 13 percent as the working target, which is $520,000 on $4M. A draw that takes working capital below that target is borrowed from the next job.
WHY THE BALANCE MISLEADS.
The balance includes money that belongs to someone else
Payroll and payroll taxes, vendor and subcontractor payables, and tax payments all come out of the same account the owner is looking at. Until they are paid, that cash is committed, and a draw taken from it is a loan from the next payroll.
Today is not the risk, the lowest week is
A 13 week forecast shows the lowest point cash reaches before collections catch up. In the example the balance is $380,000 today and falls to $155,000 in week 7. The $225,000 difference goes to payroll, payables, taxes and loan payments before the next pay apps are collected.
Draws above profit come out of working capital
Only salary belongs in overhead, and draws are distributions of net profit. An owner who books $70,000 of salary and takes $180,000 in total draws leaves $110,000 coming out of net income that should have stayed in the company as cash.
WHAT IT LOOKS LIKE IN DOLLARS.
1. Build the 13 week forecast from real pay app dates, not averages. 2. Put every tax payment and loan payment in it. 3. Find the lowest ending balance, $155,000 in week 7. 4. Subtract the floor, two payroll cycles including payroll taxes, $125,000. 5. What is left, $30,000, is the most that can be drawn, and only if net profit to date is at least that much.
13 percent of $4M is $520,000. The draw is checked against that target every quarter, because a company can pass the forecast check in one month and still be drawing down the working capital the next job needs.
WHAT WE CHANGE.
The draw comes from the forecast low point, set once a month and paid on the same day. A fixed draw ends the habit of taking whatever the balance shows on Friday.
Operating, payroll, tax reserve and retainage each get their own account, so the balance in operating is the number that can be spent. Estimated tax payments come from the reserve, not from the draw.
A draw larger than net profit to date is paid from working capital. The quarterly review compares the two and resets the monthly draw before the shortfall becomes a payroll problem.
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 |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $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.
You stop touching the books.
Everything in Core, and we do the bookkeeping and the controllership as well. Your office stops answering coding questions and stops fixing a reconciliation that will not balance on the last day of the month.
We do the books. No payroll.
Every job shows its margin while it is still open.
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 books, the job costing, and the software. No payroll.
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