You have four debts and no order to pay them in
Paying the wrong one first can put you back where you started, with less cash and the same problem.
Construction debt arrives in layers: an advance taken to make a payroll, a line drawn to cover a slow collection, equipment notes, a card. They carry wildly different real costs, and the most expensive one is rarely the one with the scariest balance. A daily-remit advance can cost several times what the note costs and it takes the money out before you see it, which is what makes the next payroll tight.
Three moves, in order
Step 07: Monthly cadence
Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month.
Other problems step 07 solves
Other things that go wrong
What owners ask
What order should a contractor pay off business debt?
Paying the wrong one first can put you back where you started, with less cash and the same problem. Construction debt arrives in layers: an advance taken to make a payroll, a line drawn to cover a slow collection, equipment notes, a card. They carry wildly different real costs, and the most expensive one is rarely the one with the scariest balance. A daily-remit advance can cost several times what the note costs and it takes the money out before you see it, which is what makes the next payroll tight.
Which part of the system fixes this?
The step is number 07, monthly cadence. Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month. It's drawn from chapter 7 of CONTROL: The Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades that publish a figure, net profit at $1M–$5M averages 7% before taxes. If you're well under that and this page describes your month, the two are usually the same story. The published average tells you where the pack sits, and your own job costing tells you where you sit, which is the number that pays payroll.
Where do I start?
Convert every debt to a true annual cost, including fees and the effect of daily or weekly remittance on your cash cycle.
Can I fix this without touching anything else?
You can try, and it doesn't hold. Step 07 depends on step 03, overhead calculation and step 04, estimating system and step 05, software and bookkeeping alignment and step 06, project management. Install it ahead of those and it produces numbers nobody trusts, which is worse than the problem you started with.
Wrote CONTROL, the 8 step system these figures sit inside. More about the author.