The project is profitable. The company is out of cash.
A contractor's money sits in places banks don't lend against: work done but not measured, bills measured but not certified, certified bills waiting for payment, and retention held for years. Each project looks profitable on its own budget, but together they can consume every rupee of working capital and every rupee of guarantee limit.
The fix is to manage each bill like stock: know where it is, who is holding it and when it will move.
Follow ₹30 crore of contract revenue through a typical electrical contractor
Here is the cash cycle of an illustrative contractor working on government and private projects:
At ₹30 crore of sales a year, 90 days means about ₹7.4 crore is permanently tied up in the cycle. That is what your bank limit and your own capital are really funding. Get bills certified 25 days faster and about ₹2.1 crore comes back, with no new loan and no new customer.
Illustrative composite figures, not a client's. Your own cycle comes straight from your balance sheet: stock, receivables and payables, each divided by a day's sales or purchases.
Six money problems specific to contracting
Bills stuck in certification
Most delay in government and large private work is in measurement and approval, not payment. We track each bill by stage and push the slowest step.
Retention money
Retention held for defect periods can add up to a year's profit. We keep a retention register and claim releases on the day they're due.
Bank guarantees and margin money
Performance and advance guarantees tie up margin. We plan guarantee limits and replace cash retention with guarantees where contracts allow.
Mobilisation
Starting a project needs cash before the first bill. We negotiate mobilisation advances against guarantees.
Variations without paperwork
Work done on verbal instructions often never gets billed. We make sure every variation is approved in writing and claimed.
Tenders priced without finance cost
If a client takes 120 days to pay, that cost belongs in the bid. We build it in.
Want a CFO to look at your numbers?
A senior CFO reviews your figures with you and shows you where to improve. No cost, no obligation.
How we keep contractors' cash moving
Project budgets and monthly cost-to-complete
Every project, every month.
A bill tracker
Every RA bill by stage: raised, measured, certified, paid.
A retention and guarantee register
Amounts, expiry and release dates, diarised.
A 13-week cash forecast by project
So you know which project is funding which.
Tender pricing support
Working capital and guarantee cost built into every bid.
Check your own numbers
See how retention and old bills affect your bank limit:
Ask CFOAvatar about your projects
What clients say
Some of the businesses we work with.
Before CFOSurge came into the picture, our business lacked financial discipline. Once their team started overseeing our finances, everything fell into place. There was accountability and when you know someone is keeping track, you ensure things get done properly. It’s been three years and the systems they put in place are still working well. Our business is in a much better position today.
They have facilitated us in putting both process and financial systems in place as well as take some very difficult but required decisions. We are indeed pleased to record our appreciation of their individualized, friendly and timely support in our activities during the course of their association.
Soatech’s thorough Business Assessment opened our eyes showing us several areas to improve resource utilization, follow statutory compliance, optimize cash flow. Soatech asked us several tough questions that every business owner should ask themseves. I believe implementation of just a few suggestions given by Soatech team could save us multiple times of fees we would pay them.
Quoted word for word from our clients. Some quotes use our former name, Soatech.
Questions owners ask us
How can a contractor improve cash flow?
Bill on a fixed day each month with complete measurements, track every bill through certification, claim retention on the due date, replace cash retention with bank guarantees where possible, and negotiate mobilisation advances on new work.
Do banks lend against retention money?
Usually not. Retention and uncertified work are generally excluded from drawing power, which is why contractors' limits feel small. Track them separately and release them quickly.
Can you help with government contract payments?
Yes. We track bills through each approval stage, prepare the documents departments ask for, and keep the cash forecast realistic.
