Your biggest PO gets paid months before it can be billed
You wired the deposit in April, paid the balance in July, and in September the unit is still in a leased warehouse with nothing on the pay app to show for it.
Most trades buy material on a schedule that roughly tracks the billing, since pipe, wire, and board get delivered as the work goes in. Mechanical buys the single most expensive object on the job once, up front, from a factory whose ship date nobody on site controls. That turns one PO into a cash event larger than any month of labor you'll ever run on that job, and it hits before a single dollar of it is billable.
The size of it
A $150K to $400K equipment package gets funded out of working capital for 60 to 120 days, on a job whose total gross profit might be $180K. One equipment buy can tie up more cash than the job will ever earn.
Made-to-order rooftops, air handlers, and chillers run 40 to 60 percent of the material cost on a mechanical job, and they sit in one or two purchase orders. The manufacturer takes a deposit at release and wants the balance at or near shipment, and the unit ships on the factory's calendar, not the jobsite's. That puts it in a yard or a rented warehouse weeks or months before there's a curb to set it on. Billing it as stored material means the GC has to accept off-site storage, which means a bill of sale, transfer of title, a certificate of insurance listing the owner, and often a bond. Plenty of GCs refuse off-site stored material outright, so the largest single cash outflow on the job gets no line on the G702 until the unit is physically set.
Three moves, in order
Step 01: Job cost structure
Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words.
What else costs hvac contractors money
The same mechanism in other trades
What hvac owners ask
How to bill for hvac equipment sitting in storage?
You wired the deposit in April, paid the balance in July, and in September the unit is still in a leased warehouse with nothing on the pay app to show for it.
What does it cost?
A $150K to $400K equipment package gets funded out of working capital for 60 to 120 days, on a job whose total gross profit might be $180K. One equipment buy can tie up more cash than the job will ever earn.
What do I do first?
Pull every open equipment PO onto one sheet with three dates on it: deposit paid, balance due, and factory ship. Then write next to each one the month it can first appear on a pay application.
What are hvac contractors supposed to be making?
HVAC runs 24% gross margin, 16% overhead and 8% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade sits 1 points above it. The CFOS target is 11%.
Which part of the system fixes it?
The step is number 01, job cost structure. Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words. It comes from chapter 1 of CONTROL: The Construction Financial Operating System.
Josh Luebker ran commercial construction projects before he ran the numbers behind them, on data centres, military bases, hospitals, and high-rises. He wrote CONTROL: The Construction Financial Operating System, which is an eight-step framework for commercial subcontractors, and it publishes on October 1, 2026. He is a master electrician who moved into the office and kept the field vocabulary.
Sulphur Prairie Operations LLC maintains the benchmark reference behind these figures. Every edition is reconciled against the newest CFMA survey release before it publishes here. Where a figure changes between editions, the older edition keeps its year in the title so a citation to it stays correct.