LOW VOLTAGE AND AV · ELECTRICAL AND TECHNOLOGY · FIXED BY STEP 07

Your Own Closeout Releases Your Month-Three Retention

Retention comes off the rough-in cable bill in month three and releases at final acceptance in month twenty-four. Your own training session is the event that releases it.

WHY IT'S A LOW VOLTAGE AND AV PROBLEM

Trades that finish mid-job hold retention for a few months and move on. You hold it for the full build duration, because your earliest dollar and your last deliverable fall at opposite ends of the same schedule. It's also money you already borrowed against a distributor line to fund in the first place, so you're paying for it twice.

WHAT IT COSTS

The size of it

5 to 10% of the earliest and largest cash outlay on the job stays held for the whole build, financed by you the entire time.

OVERHEAD AT $1M to $5M

16%

CFOS target 15% for low voltage and AV.

GROSS MARGIN AT $1M to $5M

24%

CFOS target 26.5% for low voltage and AV.

NET PROFIT AT $1M to $5M

CFOS target 11.5% for low voltage and AV.

First billing on most of these jobs is the rough-in pull, and 5 to 10% comes off it immediately. Release happens at final acceptance and closeout, and for AV and low voltage, closeout is the last thing that happens on the entire job: commissioning, as-builts, certification reports, and owner training are the final punch items. So your own sign-off gates your own release. Any unrelated delay by any other trade pushes your acceptance date and delays that month-three money along with it.

WHAT TO DO

Three moves, in order

STEP 01

Age retention receivable as its own line by job, separate from AR, with the release event spelled out. Most owners in this trade can't say what their total retention balance is.

STEP 02

Negotiate partial release at substantial completion of the rough-in scope, or tie release to your milestone rather than to whole-project acceptance.

STEP 03

Build the closeout package as you go, redlining as-builts weekly, filing test reports the day of the test, and dating owner training in the contract, so acceptance never waits on you.

THE FIX

Step 07: Monthly cadence

Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month.

CFOS-07 · CHAPTER 7

The monthly close that takes a contractor 5 hours

What this step changes, what it depends on, and how to tell it's installed.

BENCHMARKS

Low voltage and AV by revenue band

All 7 bands are published. The CFOS target is beside the figure up to $10M to $25M, and the 4 bands above that are labelled modeled.

ACROSS EVERY TRADE

Profitable on the P&L, out of cash

Your P&L says you made money and your bank account says you didn't. Neither is wrong.

SAME TRADE

What else costs low voltage and AV contractors money

LOW VOLTAGE AND AV · CFOS-01

Your Distributor Credit Line Sets Your Revenue Ceiling

The hardware is half the contract and it buys on a net-30 line from ADI or Almo, while the GC pays 90 days later. A credit manager who never saw your backlog sets your ceiling.

LOW VOLTAGE AND AV · CFOS-06

Shop-Built Racks Stall as WIP With No Billing Against Them

You loaded, terminated, burned in, and tested the rack in your shop because that's the cheapest place to do it. That's also the one place it can't be billed.

LOW VOLTAGE AND AV · CFOS-04

You Bid a Model Number, Then It Goes End-of-Life

Copper moves and comes back. A model number that gets discontinued never comes back, and the spec still calls for it.

LOW VOLTAGE AND AV · CFOS-06

Commissioning Waits on the Owner's IT Department

Your commissioning crew is mobilized, on site, and idle, waiting on a help desk ticket. No one on the GC's schedule owns that date.

LOW VOLTAGE AND AV · CFOS-03

Parts Are Covered. The Truck Roll Is on You.

The manufacturer warrants the box. Everything it takes to get a tech up a ladder to swap that box comes out of your overhead for twelve months.

SAME MECHANISM, OTHER TRADES

The same mechanism in other trades

CIVIL

Your retainage is waiting on 70 percent grass

You finished grading in month three and utilities in month six, and the last 5 to 10 percent of your contract is held behind a seed bed that has to reach 70 percent cover.

CONCRETE

Done in June, Retention Releases When the Building Opens

Footings, foundations, and slab-on-grade are the first real dollar volume on the site, so you bill most of your contract early and then wait on a building you left a year and a half ago.

DEMOLITION

Demo Goes First And Gets Its Retention Back Last

You work five weeks and wait twenty months for the money. Your retention depends on the prime's substantial completion on a building you left before the foundation went in.

QUESTIONS

What low voltage and AV owners ask

Why low voltage retention takes two years to get released?

Retention comes off the rough-in cable bill in month three and releases at final acceptance in month twenty-four. Your own training session is the event that releases it.

What does it cost?

5 to 10% of the earliest and largest cash outlay on the job stays held for the whole build, financed by you the entire time.

What do I do first?

Age retention receivable as its own line by job, separate from AR, with the release event spelled out. Most owners in this trade can't say what their total retention balance is.

What are low voltage and AV contractors supposed to be making?

Low voltage and AV has 24% gross margin, 16% overhead and 8% net profit after taxes at $1M to $5M. The all-trade average is 7%, so this trade is 1 point above it. The CFOS target is 11.5%.

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.

OR HAVE IT HANDLED

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 low voltage and AV contractors as a service. It is a separate firm, Sulphur Prairie Management, LLC, led by the same author.

What a fractional CFO does for low voltage and AV contractors

AUTHOR

JOSH LUEBKER

MASTER ELECTRICIAN · 150+ PROJECTS · $2.1B+ MANAGED

Wrote CONTROL, the 8 step system behind these figures. More about the author.