Hey guys. I’m a demolition contractor that specializes in hazmat (asbestos and lead) on the central coast of California. During summer time, we do a significant amount of state work. It’s all prevailing wage, we’re required to do certified payroll and it’s a huge draw on me. My weekly payroll can go from 17k to 32k and I don’t get paid for 90 days, on top of the GC holding 5% retention for two years.
I’m the first guy in and the last to get paid it seems. I make a bunch of money on these projects, but because they all come in one clump, I occasionally have to take bridge loans to keep going and it eats up a significant amount of my profit.
My contracts all state that payment is due to me net 15, but the state pays so slowly that I really can’t enforce that without pissing off my clients and risking not getting hired again.
I know the simple answer is keep a good cushion in the bank. I used to be able to carry 200k at all times to get me through these times but the more state work I do, the more it eats away at my reserves. My receivables are all very high, but it’s getting increasingly harder to cover the overhead while waiting for money to come in.
Has anyone else in a similar situation found a way to, in a nice way even, pressure clients to actually pay on time?
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