Case Study — SMB Tier
How a $500K painting contractor survived their first $1.9M commercial job
A 19-year-old owner with a successful residential painting business just won their biggest contract: a $1.9M apartment-complex paint job. Between weekly Davis Bacon prevailing-wage payroll and 60-day AR cycle on commercial work, he was about to float roughly $300K of cash before the first GC payment landed. He thought he needed a $500K line of credit. He needed something different.
~$300K
Peak cash gap modeled before draw #1
$180K
Right-sized LoC (vs. $500K he was going to take)
$2.4K/mo
Interest saved by not over-borrowing
12 wk
Cash forecast updated weekly through completion
The Challenge
From $7K residential paint jobs to a $1.9M commercial contract
Davis Bacon prevailing wages
Federally funded apartment complex, so painters had to be paid the prevailing wage scale for the county. Weekly payroll, often 30-50% above his standard residential rates. He underpriced the labor in the bid because he didn't know.
60-day AR on commercial work
Residential customers pay on the spot or within 30 days. Commercial GCs pay 30 days after the monthly draw is approved, which is 30 days after billing. Effective AR cycle: 50-60 days from labor outlay to cash arriving.
5% retainage withheld
GC contract held back 5% of every payment as retainage, released at substantial completion. On a $1.9M project, that's $95K sitting at the GC for 6+ months after the job is done — invisible to most subs until it bites.
Bookkeeper said 'ask your accountant'
Standard pattern. The bookkeeper records the past. The accountant files taxes. Neither one builds a forward cash forecast. Owner asked his bookkeeper 'what can we afford next month?' and got a shrug.
What We Did
Modeled the cash gap. Right-sized the LoC. Built the weekly forecast.
Four steps over the first 10 days of the engagement. The owner never saw a cash crunch on the project — because we saw it before he started.
Mapped the Davis Bacon payroll cycle against the GC draw schedule
Painters get paid weekly. The GC pays approved draws on a 30-day-after-billing cycle. Subcontractor billing has its own 5-7 day cycle. We mapped every dollar of labor and materials against expected cash inflow week by week.
Modeled the peak cash gap
Week 1: payroll out, no money in. Week 4: first invoice goes to GC, still no money in. Week 8: first GC payment lands. Modeled peak working-capital float at roughly $300K — including 5% retainage withheld until substantial completion.
Sized the line of credit to the actual gap
Owner was going to ask for $500K because 'bigger is safer.' We showed him the math: a $180K LoC fully covered the modeled gap with a 30-day buffer, at half the interest cost. Banks also approve smaller LoCs faster.
Set up a weekly cash forecast through job completion
13-week rolling forecast updated every Friday. Tracks actual labor cost vs. budget, material spend vs. budget, GC payment timing, retainage release projection. When the forecast drifts, the owner sees it the same week — not at year-end.
Results
What he actually got
~$300K
peak cash gap, modeled before any payroll went out
Without the model, he was guessing. With the model, he could see week-by-week exactly when cash got tight, when it recovered, and what each scenario looked like if labor or materials ran over.
$180K LoC
right-sized vs. the $500K he was about to ask for
The bigger LoC felt safer but cost more. Smaller LoC fully covered the modeled gap with a 30-day buffer. Faster bank approval, half the standby fees, half the interest if drawn.
$2.4K/mo
interest saved by not over-borrowing
On 8% LoC interest, $320K of unused capacity would have cost roughly $2,100/month in interest if drawn — plus standby fees on the unused portion. We sized it to actual need, not paranoia.
Weekly forecast
13-week rolling cash view, updated every Friday
Tracks labor cost vs. budget, materials, GC payment timing, retainage release. The single change that flips an owner from 'flying blind' to 'I know what's coming.' That's the whole product.
I thought I needed a $500K line of credit. Sam showed me I needed a $180K LoC and a weekly cash plan. The plan is the part that actually saved me — the LoC just kept me from missing payroll on week six.
Owner
$500K Painting Contractor — first $1.9M commercial project
What the Data Showed
The pattern behind the cash gap
Weekly payroll vs. 60-day AR is structurally cash-negative
This isn't a sign of a poorly run job. Every commercial subcontractor on prevailing-wage work has the same gap. The question isn't whether you'll need to float cash — it's how much, for how long, and whether you've planned for it. The model surfaces the answer before the bid goes out, not after the first payroll bounces.
The default LoC ask is almost always too big
Owners ask for "as much as I can get" because nobody has modeled the actual gap. Bigger LoCs cost more in standby fees, take longer to approve, and hide the cash discipline that should be baked into the project plan. A right-sized LoC is the second-best forcing function for cash discipline. The first is a real forecast.
Davis Bacon needs to be priced into the bid, not absorbed after
First-time commercial subs frequently underbid on labor because they don't model the prevailing wage scale plus weekly payroll cycle. The labor uplift is often 30-50% above residential rates for the same work. The next bid carried that math correctly, and the owner is no longer leaving margin on the table.
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