Short answer: Negotiate a deposit or progress payments where you can, line up supplier terms, and use a line of credit to cover the rest of the start-up costs. Pay it down as the job pays you.
Add up what the job costs before the first payment
List materials, labor, equipment, permits and any subcontractors you’ll pay before the first draw or invoice. That’s the amount you need to float.
Ways to reduce the gap
- Ask for a deposit. Even 10 to 30 percent up front helps.
- Bill in stages. Progress billing shortens the wait.
- Get supplier terms. Net-30 from your supplier can line up with your customer’s payment.
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Cover the rest with a line of credit
A line of credit lets you draw what the job needs as you need it, then pay it back as payments come in. When the next job comes along, the line is there again.
Watch out for
- Taking on so much at once that one late payment sinks everything
- Not accounting for retainage, which can hold back part of your payment for months
- Change orders that add cost before they’re approved
Don’t pass on work you can do
If the only thing standing between you and a profitable job is the start-up cost, that’s exactly the problem working capital solves.
