Contractors can consider supplier terms or business financing to bridge the gap between buying materials and collecting customer payments. The appropriate structure depends on the contract, collection timing, business qualifications and existing obligations. Funding the contractor’s operations is different from a property owner’s construction loan, even when both relate to the same job.
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How Do I Calculate the Job’s Cash Gap?
Lay out the dates for material deposits, delivery, labor payments, progress invoices and expected collection. Include retainage and any customer approval required before billing. A signed contract does not necessarily produce immediate cash.
Then compare the gap with cash available across the business. Do not allocate the same bank balance to several jobs at once. A busy pipeline can increase the cash needed before it increases the cash received.
What Happens if the Customer Pays Late?
Stress-Test the Collection Date
Materials cost $22,000 today and a $30,000 customer payment is expected in 45 days. If labor and operating expenses use another $6,000 before collection, the $8,000 spread is not all available for financing costs. Move the customer payment to day 75 and check which bills still need to be paid.
Ask whether the funding schedule begins immediately and whether it remains affordable while waiting for a disputed or delayed invoice. Do not assume the provider waits until your customer pays.
Which Records Help the Review?
- Signed contract or purchase order.
- Supplier quote and deposit requirements.
- Job budget and progress-payment schedule.
- Recent business revenue and bank activity.
- Other projects, existing financing and outstanding receivables.
Propello reviews business funding requests and also has a separate real-estate funding path. Tell us whether you are the contractor funding operations or the investor financing the property so the inquiry starts in the right place.
Educational information, not a loan offer. Availability and terms depend on the program, property or business, and borrower qualifications. Legal and tax questions should be reviewed with your advisers.