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.
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