Construction CFO Services for General Contractors

The schedule of values is the billing map for the whole contract, and it starts decaying the day the notice to proceed arrives. Every approved change order that is not pushed into the SOV creates a line item that can no longer be billed cleanly. We rebuild the SOV with each project manager after every approved change so line items match the current contract sum and percent complete can be measured rather than argued. Each owner then gets a billing calendar: cost cutoff date, PM review date, and submission date, with a name next to each.

Timing moves cash more than margin does. A pay app that reaches an owner on the 28th instead of the 25th can miss a fixed draw meeting and slide a receipt by a full month. We track two numbers on every job: billing lag, the days from cutoff to submission, and collection lag, the days from submission to deposit. Both appear on the monthly report by job and by project manager. Every GC has one PM who bills beautifully and one who bills when reminded. The calendar treats them the same.

• Billing calendar by owner with cutoff, review, and submission dates
• SOV control log reconciled to approved change orders
• Pay app checklist: waivers, certified payroll, stored materials backup, updated schedule
• Billing lag and collection lag reported monthly by job and by PM

Retainage receivable is often the largest single asset on a GC balance sheet and the least managed one. It sits in accounts receivable, ages quietly, and gets released months after substantial completion if someone remembers to ask. We keep a retainage ledger by job: amount held by the owner, amount you hold from each subcontractor, the release conditions in each contract, and the expected release date. The net retainage position appears on the weekly cash report so you know what is earned, what is collectible, and when.

The payable side carries its own risk. Most subcontracts include pay-when-paid language, and the discipline is to match sub retainage release to owner release, job by job, and never release a sub before the owner pays without a decision from you. Lien waiver control is the other half: conditional waivers with each progress payment, unconditional waivers on receipt of funds, and final waivers from every sub and supplier before a job closes in the books. Retainage is the money you have earned, cannot spend, and will later be asked to prove you are owed.

A job is not closed until the final waiver file is complete, the retainage is released, and the final WIP entry has been booked. Closeout is a finance event, not just a punch list.

The monthly WIP schedule is the only financial statement a general contractor cannot outsource to the year-end CPA. It lists every open job with contract sum, approved changes, estimated cost, cost to date, percent complete, earned revenue, billings to date, and the resulting over or under billing. We build it, reconcile it to the general ledger each month, and post the over and under billing entries so the balance sheet and the WIP agree to the dollar. When the surety or the bank asks for it, it already exists.

Estimate-to-complete is where fade hides. Each PM updates cost to complete monthly with buyout status in hand. Committed cost from executed subcontracts and purchase orders is known; uncommitted cost is where the estimate meets reality. We report margin movement by job, by PM, and by cause: buyout misses, self-performed labor overruns, unpriced change orders, and general conditions that ran past the schedule. An underbilling on the WIP is either a billing miss or a loss no one has admitted yet. We make the team decide which.

The WIP also feeds the backlog gross profit schedule, which tells you how much margin is already sold and how many months of overhead it covers. That number, not the sales pipeline, is what a surety underwriter uses to decide whether your next bond gets written. We report it monthly beside the WIP, split between bonded and unbonded work, so the bonding conversation starts from a schedule you already have rather than one built for the meeting.

Committed cost only works if every subcontract and purchase order is in the accounting system before the work starts. We set that rule and enforce it through a buyout report that compares commitments to the estimate by cost code, so a buyout miss shows up in week two rather than at closeout. Cost codes are standardized across jobs so self-performed labor, subcontracts, materials, equipment, and general conditions roll up the same way on every project.

Change orders are tracked on two logs that never merge. Owner change orders carry a status (pending, approved, disputed), days outstanding, and dollars at risk. Subcontractor change orders carry the same fields plus the owner change order they map to. Work performed under a construction change directive without a price is flagged as a receivable at risk until the price is agreed. A sub change order cannot exceed its owner change order without your sign-off, which sounds obvious until you see how often it happens.

For self-performed scopes, we compute a fully loaded labor burden rate (payroll taxes, workers' compensation, benefits, small tools, and paid time off) and post labor to cost codes weekly, so labor to estimate is a Friday number rather than a month-end surprise. Superintendents see hours by cost code against the estimate for their job each week, and the burden rate accounting uses is reconciled to the one estimating uses at least once a year, which is once more than most GCs manage.

A surety underwriter reads a GC's financial statements in a particular order: working capital, the WIP schedule, underbillings, and how the WIP ties to the balance sheet. We prepare interim financials in that order. Over and under billings post to the balance sheet, retainage is separated from trade receivables, and the backlog gross profit schedule accompanies every package. The bonding agent receives a quarterly update before requesting one, which changes the conversation about program limits.

The bank reads for covenants and borrowing base. We run the covenant calculation monthly, forecast it 13 weeks forward, and prepare the borrowing base certificate from the same aged receivable that feeds the cash forecast. If a covenant will be tight in week nine, you and the lender hear it in week two. Underwriters are patient people who have read many WIP schedules rewritten the night before the meeting. Ours are the same schedule they saw last quarter, moved forward a quarter.

• Interim financial statements with WIP tied to the general ledger
• Backlog gross profit schedule and months of overhead coverage
• Quarterly surety package and annual renewal support
• Monthly covenant calculation and borrowing base certificate

A GC cash forecast that starts from last month's bank balance and a growth assumption is a wish. Ours starts from the jobs. Each open project contributes expected pay app receipts by date, subcontractor payments tied to those receipts under pay-when-paid terms, self-performed payroll, retainage releases, and any owner-funded stored materials. Overhead, debt service, and line of credit draws and paydowns sit below the job lines. The forecast is updated every Monday, and each week's variance from the prior forecast is explained in one line per job.

The forecast is also where growth decisions get tested. Backlog by month of expected billing shows when cash conversion will lag a large project start, which is the moment most GCs draw on the line for the first time and the moment most sureties get nervous. Hiring a superintendent, taking a job with heavy front-end mobilization cost, or offering an owner extended retainage terms all run through the model before they are approved.

Ninety days is enough to change what you know about your own company. By then you should expect a WIP schedule you trust because it ties to the ledger, a cash forecast you use because it has been close for eight straight Mondays, a bonding package that is current before the agent calls, and a Friday report that tells you which jobs made money this week and which project manager needs a conversation on Monday.