By industry · 5 min read · Published
What we usually see when a contractor goes from $10M to $30M
By Chris Greco, Founder and President.
When a contractor grows from $10M to $30M, the backlog is the best it has ever been and the bank account is the worst. The company is financing its customers through retainage and slow draws while paying labor every Friday. Nobody has calculated over- and under-billings, so the P&L swings with whoever posted invoices that month.
The surety asks for a work-in-progress schedule the books cannot produce. Margin fade appears at job close, months after the point where it could have been fixed. The bank's line was sized for a $10M company.
A monthly WIP schedule with over/under billings, job-cost review at 40% complete, a 13-week forecast on draw timing, and a bonding package the surety accepts. Then the backlog can be turned into cash instead of a working-capital problem.
Where this applies
Chris Greco
Founder and President, CFO Anywhere. CFO for owner-led companies since 2002. Executive MBA, Gies College of Business, University of Illinois.
About ChrisMore from Chris
Running the business · 2 min read
What we usually see when the bookkeeper quits in October
When the bookkeeper quits in October, the company faces a Q4 close, year-end, 1099s and W-2s with nobody in the seat. The first week matters more than the hiring decision.
Running the business · 3 min read
What we usually see when a company opens its second location
When a company opens its second location, overhead doubles before revenue does, and the P&L cannot say which location is carrying the other. The company is profitable in total and losing money in one place.
Running the business · 2 min read
Can we afford another hire? A five-minute way to answer
Take the loaded cost of the hire, salary plus about 25% for taxes, benefits and equipment, and put it on the 13-week forecast as a weekly line. If ending cash stays above your floor in every week, you can afford it now. If it dips, the forecast tells you which month you can.