THE PROBLEM · FIXED BY STEP 07

The MCA trap, and how subs fall in

It comes back as a fast yes when every other answer was slow. The daily draw starts before the job does.

DIRECT ANSWER

A merchant cash advance prices in daily remittance against future receipts. In a business where receipts are already 60 to 120 days out, that mismatch compounds. The second advance usually pays the first, and the effective cost is nothing like the number on the term sheet.

WHAT TO DO

Three moves, in order

STEP 01

Convert any offer to an annualized cost before you sign anything.

STEP 02

Fix the receivable that created the shortfall, because that's the problem underneath the offer.

STEP 03

If you're already in one, map every daily draw against the forecast before taking another job.

THE STEP

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

Read the step that fixes this, what it depends on, and what it changes downstream.

DIAGNOSTIC

Find your numbers

Pick your trade and revenue band. Get your targets, your shortfall, and the step order that closes it.

SYSTEM HUB

All 8 steps in sequence

What each step depends on, what it feeds, and why the order counts for more than the speed.

SAME STEP

Other things that go wrong

CFOS-03

You're bidding below your own overhead

If the overhead percentage in your estimating template is lower than what you actually run, every job you win loses money before a single hour is worked.

CFOS-03

Your overhead rate has not been updated in years

The rate in your bid sheet was right once. Revenue doubled, you hired two PMs and a fleet, and the rate never got revisited.

CFOS-02

Your equipment is eating the margin

The machine is paid for, so the jobs use it at no charge. Then the transmission goes and the year is gone.

PROOF

Contractors who had this

TENANT IMPROVEMENT GENERAL CONTRACTOR

6.7% to 11.2% net profit in 120 days

A tenant improvement GC was using each new job to finish the last one, and could see two weeks ahead at best.

CIVIL

Four merchant cash advances gone, gross profit 5% to 33%

A civil subcontractor did everything right to grow and nearly finished the business doing it.

MASONRY

Jobs 80% spent at 60% complete, now bidding at 10% net

A masonry contractor was making money on block and giving it back on brick, and the blended report couldn't show him which.

QUESTIONS

What owners ask

Merchant cash advance construction contractor?

It comes back as a fast yes when every other answer was slow. The daily draw starts before the job does. A merchant cash advance prices in daily remittance against future receipts. In a business where receipts are already 60 to 120 days out, that mismatch compounds. The second advance usually pays the first, and the effective cost is nothing like the number on the term sheet.

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 is, and your own job costing tells you where you are, which is the number that pays payroll.

Where do I start?

Convert any offer to an annualized cost before you sign anything.

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 the field won't trust, which is worse than the problem you started with.

AUTHOR

JOSH LUEBKER

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

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