The landfill gets paid in 15 days, you get paid in 90
You wrote checks to the landfill, the hauler, and the lab inside three weeks, and the pay app covering all of it is still with the consultant.
A trade that bills labor across months also spends across those same months, so the money going out and the money coming in stay close together. Remediation spends its whole material budget in one dig window and then waits on a technical reviewer before the invoice even becomes an invoice. That distance between the spend and the deposit is what puts a job with good margin on the line of credit.
The size of it
On a 3,000 ton job at $75 a ton plus haul, well over $300,000 leaves the account inside a month against a receivable that pays 60 to 90 days after the last truck.
The entire disposal spend on a removal action falls inside a two to four week window, because that's how long the dig lasts. Disposal facilities want payment at the gate or on short terms for a new account, haulers invoice per load as the loads are hauled, and the lab bills per sample per round. Then the pay app goes to the owner's consultant for technical review, gets certified, and gets paid on the owner's terms or on the GC's pay when paid terms. Your largest outflow is compressed and front loaded, and the inflow is neither.
Three moves, in order
Step 07: Monthly cadence
Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month.
What else costs environmental remediation contractors money
The same mechanism in other trades
What environmental remediation owners ask
Paying tipping fees months before the pay application funds?
You wrote checks to the landfill, the hauler, and the lab inside three weeks, and the pay app covering all of it is still with the consultant.
What does it cost?
On a 3,000 ton job at $75 a ton plus haul, well over $300,000 leaves the account inside a month against a receivable that pays 60 to 90 days after the last truck.
What do I do first?
Build a weekly cash calendar for the dig window with tipping, hauler, and lab invoices on the outflow side and the pay app on the inflow side, so you see the low point before you reach it.
What are environmental remediation contractors supposed to be making?
Environmental remediation has 23% gross margin, 16% overhead and 7% net profit after taxes at $1M to $5M. The all-trade average is 7%, so this trade is right on it. The CFOS target is 10.5%.
Which part of the system fixes it?
The step is number 07, monthly cadence. Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month. It comes from chapter 7 of CONTROL: C.F.O.S. Construction Financial Operating System.
Everything on this page is something you can install yourself, and CONTROL is the order to do it in. If you would rather buy the finished result, SPM The Construction CFO does this work for environmental remediation contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, led by the same author.
What a fractional CFO does for environmental remediation contractors
Wrote CONTROL, the 8 step system behind these figures. More about the author.