WORKING CAPITAL RATIO FOR SUBCONTRACTORS.
Working capital is current assets minus current liabilities. The current ratio, current assets divided by current liabilities, is the number bonding agents and banks read first. CFMA's 2023 surety prequalification guidance sets the minimum standard at 1.15 to 1.20, reports a construction industry mean of 1.7, and puts a ratio closer to 1.50 in the range that suggests strong trade partner relationships. SPM's own standard is separate and tighter, a band of 1.3 to 2.0 from the CONTROL Book: below 1.3 you're thin and a review becomes a conversation about cleanup rather than about more capacity, and above 2.0 is conservative, which is safe and means money is sitting idle that could be funding growth. A subcontractor can be profitable on the P&L and still fail a bonding review if working capital is thin, because retainage held across several jobs, a line of credit classified wrong, and unbilled change orders all distort the ratio in ways that make a healthy business look fragile.
Bonding capacity isn't granted on profit. A surety underwrites the balance sheet, because the question they're answering is whether you could finish a job that went sideways, not whether last year was good. That's why a sub with a strong P&L and a thin current ratio gets told no, and why the owner walks out of the meeting confused. The fix is rarely earning more. It's classifying retainage correctly, restructuring the line of credit so the whole balance isn't sitting in current liabilities, and billing the change orders you already performed.
WHAT IT MEANS.
The current ratio is current assets divided by current liabilities, the one working capital figure bonding agents and banks compare against a threshold.
The range is worth knowing before the review rather than after it. CFMA's 2023 surety prequalification guidance publishes the outside figures, a minimum standard of 1.15 to 1.20 and a construction industry mean of 1.7, and states plainly that no perfect formula exists because every underwriter measures risk differently. SPM's own standard is a current ratio between 1.3 and 2.0, with working capital itself at 10 to 15 percent of annual revenue and 13 percent the number to aim at. Knowing both tells you whether the conversation you're walking into is about more capacity or about cleanup.
WHERE THE RATIO GETS MISREAD.
Retainage classified as current when it's not
Retainage receivable is a current asset only if you expect to collect it inside twelve months. Long dated retainage on a slow closing job overstates working capital when it sits in the current column anyway. The ratio looks fine right up until a surety asks when that money is coming, and then the whole figure gets rebuilt in front of you.
A maxed line of credit dragging the ratio down
A line of credit drawn to cover payroll is a current liability, and it pulls the ratio down fast even when the underlying business is healthy. The debt is covering a timing problem rather than a profitability problem, but the balance sheet doesn't draw that distinction. A bonding review reads it as fragility either way.
Change orders performed and never billed
Work completed but not yet invoiced doesn't count as a current asset until it's billed. On a job with slow change order turnaround, that understates working capital by the full value of the unbilled scope. You did the work and you spent the money, and the balance sheet gives you no credit for either one.
WHAT IT LOOKS LIKE IN DOLLARS.
Current assets minus current liabilities equals working capital, stated in dollars. Current assets divided by current liabilities equals the current ratio, which turns the same position into a figure a bonding agent can measure against a threshold.
Two standards, kept apart on purpose. The outside one is CFMA's 2023 surety prequalification guidance: a minimum current ratio of 1.15 to 1.20, a construction industry mean of 1.7, anything above 1.20 reading as active debt management, and closer to 1.50 suggesting strong trade partner relationships. SPM's own standard, from the CONTROL Book, is a band of 1.3 to 2.0, which clears the published floor deliberately. Below 1.3 reads as thin working capital even when the P&L shows a profitable year, and above 2.0 is conservative, which is safe but leaves money idle that could be funding growth. Debt to equity is a separate ratio and it runs the other way: above 1.0 is overleveraged, and closer to zero is stronger. Working capital itself should sit at 10 to 15 percent of annual revenue, with 13 percent the number to aim at.
A ratio on its own doesn't tell an underwriter whether you can finish the work you already signed. Surety1's 2025 performance bond underwriting requirements, at https://surety1.com/performance-bond-underwriting-requirments/, put adjusted working capital at 5 to 10 percent of the current cost to complete across all open jobs, and net worth at 10 to 20 percent of that same cost to complete. The denominator is the spend still ahead of you rather than annual revenue, so a sub with $5M of cost left across an open book needs $250K to $500K of working capital and $500K to $1M of net worth standing behind it. Run that beside SPM's 10 to 15 percent of revenue and carry the larger of the two, because the surety is asking a question about backlog and the CONTROL standard is asking one about the size of the business.
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.
| 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.
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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.
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Every job shows its margin while it's still running.
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