WHY PROFITABLE CONTRACTORS FAIL.
Profitable contractors fail because P&L profit and cash flow aren't the same thing, and most owners never internalize the difference until the cash runs out. The disconnects are structural. Pay app cycles delay revenue 30 to 90 days behind the work performed, retention locks 5 to 10% of every dollar for 6 to 14 months past completion, mobilization costs hit AP weeks before any pay app produces cash, and growth itself compounds working capital requirements faster than the resulting profit adds operating cash.
Profit pays the IRS. Cash pays the crew. Walk into a subcontracting business that's about to fail and you'll find a P&L that looks healthy: revenue up, gross margin holding, net profit positive. The accountant says everything is fine, the bank still extends credit, and the surety writes the next bond. Then the payroll cycle hits and the money isn't there. None of that's bad luck or an anomaly. Construction finance is built to separate the day you earn a dollar from the day you can spend it.
WHAT IT MEANS.
The distance between profit and cash is the time between the day a subcontractor earns a dollar on the P&L and the day that dollar is available to spend in the bank.
The disconnect is structural, not unusual. Four features of construction finance pull profit recognition away from cash receipt, and every one of them scales with revenue. That last part is what makes growth the most dangerous thing a profitable contractor can do without a plan.
Most CPAs and bookkeepers report on the P&L. They watch revenue trends, gross margin, and net profit, and none of those three surface the distance between profit and cash. The 13-week cash flow forecast is the missing piece, because it's the only report that shows the problem before the problem closes the business.
WHERE THE PROFIT GOES WITHOUT YOU.
Pay app cycle timing
Work performed in March bills on a pay app submitted April 5th. The GC reviews it, approves it, and processes it through their AP, so payment hits the bank in late May or early June, 60 to 90 days after the work was performed. Meanwhile the labor, material, and equipment costs for that same work hit AP and the bank on weekly cycles. A $400K month of revenue takes 60 to 75 days to become cash on average while a $400K month of costs becomes cash outflow in 5 to 30 days, and that structural 45 to 65 day distance is the largest single source of working capital tied up in any healthy growing subcontractor.
Retention held past completion
Standard retention is 5 to 10% of every pay app, held until substantial completion of the entire project, which is often the building rather than your scope. For a sub whose work completes in month 8 of a 14-month project, retention sits another 6 to 8 months past your last billable activity, and on a $2M scope that's $100K to $200K of capital locked for 6 or more months past completion of the work. Across 4 to 6 active projects in various stages, retention typically holds 6 to 10% of trailing 12-month revenue indefinitely, so for a $5M sub that's $300K to $500K sitting in retention receivables. The balance sheet counts it as healthy current assets and the bank account doesn't.
Mobilization cash holes
Every new project starts with costs that hit AP before any revenue: mobilization, shop drawings, submittals, material deposits, gear lead-time financing, bonding, and insurance. On a $1.5M electrical project those costs run $80K to $200K, on a $2M concrete project they run $150K to $400K, and on a $4M marine project they run $400K to $800K, while the SOV mobilization line typically caps at 3 to 5% of contract value. A growing sub adding 3 to 4 new projects per quarter is adding $300K to $1.2M of cash hole every quarter, financed entirely out of working capital before any of that new revenue becomes cash. Growth in backlog without financial structure changes is what triggers the cash crisis.
Growth compounds the working capital demand
The first three disconnects each scale with revenue, so double the revenue and the receivables, retention, and mobilization holes all roughly double. Profit doesn't double the available operating cash, it adds slowly to retained earnings while the working capital requirement scales proportionally. A $3M sub running 8% net profit, which is $240K, trying to grow to $5M needs $400K or more in additional working capital just to bridge the structural distance, and that growth from $3M to $5M might add $160K in annual profit against a $400K plus requirement. Subs financing growth out of profit alone hit the working capital wall and fail at the moment of fastest growth, which is the moment everyone thinks the business is succeeding most.
WHAT IT LOOKS LIKE IN DOLLARS.
A growing sub can show $500K of net profit on the P&L while operating cash falls from $400K to $100K over the same period, because growth-related working capital absorption exceeded profit generation. Accrual accounting recognizes revenue when the work is performed or when the invoice is submitted, depending on the method, and cash receipt happens later. The P&L describes the economic activity correctly and tells you nothing at all about the cash position.
WHAT WE PUT IN PLACE.
The forecast is built around your actual project cycle, pay app timing, retention release schedule, and mobilization cost behavior. The distance between profit and cash becomes visible and managed instead of compounding silently. It gets updated weekly, which is the only thing that makes it useful.
Every new project gets an SOV built to recover real mobilization costs in the first 30 days through proper line items. The alternative is absorbing those costs into working capital and calling it normal. Defensible front-loading is a negotiation at contract signing, while you still have leverage.
Retention release dates get built into the operating cash plan, project by project. Retention holds become a known scheduled event instead of a surprise constraint on growth. You stop discovering in July that a release you were counting on is nine months out.
Bid decisions and capacity additions get made against the cash needed to fund them, not just the margin they would produce. A job you can't fund isn't an opportunity. This is the hardest habit on the list to build and the one that keeps the doors open.
Cash trends get their own agenda item rather than a footnote at the end of the profit discussion. Cash gets attention equal to profit instead of being treated as secondary. The business doesn't fail because the work was bad, it fails because the cash timing was bigger than the working capital available to bridge it.
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.
