The Short Answer

What Is the Cash Gap?

Textbook Definition

The cash gap is the time between paying for a job’s labor, materials, and subcontractors and receiving the customer’s payment for that work.

In Plain English

You pay your crew every week. Your customer pays you in 30, 60, or 90 days. Until the check lands, you are funding the job with your own money.

Why It Matters

Why Does a Profitable Contractor Still Run Short?

Profit and cash are not the same thing. Profit shows up on paper once a job is done. Cash is what you can spend today. A contractor can show a good profit on every job and still not make payroll. The gap between the two is where good companies get hurt. It is Failure #2 in the book.

A 2026 survey of nearly 500 construction finance professionals found that 92% of subcontractors paid their workers from their own funds while waiting on customers in the past year, and 28% did it most months. About 43% of subs waited more than 90 days for final payment and retainage, compared with 15% of general contractors. Siteline, a billing software company, ran the survey, so read it as a strong signal, not a census. Source: Siteline, August 2026.

Growth makes the gap worse, not better. More jobs mean more payroll before the first payment arrives. Retainage holds back part of each payment. And bigger jobs, like those in the job-size guide, stretch the wait even longer.

Signs you have a timing problem:

  • You move money from the line of credit to cover payroll, and it is not the first time this month.
  • You pay suppliers late so you can pay the crew on time.
  • You use the deposit from a new job to finish an old job.
  • The profit and loss statement looks fine, but the bank balance keeps falling.
  • You cannot say which day the next big payment will land.
  • Pay applications go out late because the month got away from you.
Three or more? You do not have a profit problem. You have a timing problem, and timing can be planned.

What It Looks Like

What It Looks Like: Profitable and Broke

From the book · Failure #2 · A fictional example

Maria Delgado runs Square-Up Contractors. Her corrected bid held up on a medical office build-out. Her crew finished on time. The customer was so happy that it sent three more jobs that spring: a dental office, a retail space, and an office floor. Maria said yes to all three.

By early summer, Janelle, who runs payroll on Thursdays, turned her screen around. Payroll for the week was more than the checking account held. She had already moved money over from the line of credit. It was the third time that month.

The jobs were priced right. The customer always paid. The money just arrived later than the payroll did. Maria and Janelle are fictional characters in the book.

The Fix

How to Close the Cash Gap in 7 Steps

Start with a calendar, not a theory. The goal is to see the gap before it arrives, while you still have choices.

  1. Build a 90-day cash calendar.

    List every payment going out each week: payroll, subs, suppliers, insurance, truck and equipment payments. Then list every payment coming in. Look at the total, week by week.

  2. Use real payment dates, not due dates.

    Check what your customers did on your last five jobs. If “net 30” has meant 52 days, plan for 52. Plan for the date the money lands, not the date it should.

  3. Bill earlier and more often.

    Send the pay application the day it is due, not the end of the month. Ask for a deposit where you can. Use progress billing so you are paid as the work is done.

  4. Put payment terms in the contract.

    Write down when you bill, when payment is due, and what happens when it is late. In Florida, private-work payment rules are in Fla. Stat. 715.12. See the section below.

  5. Track retainage as money you are owed.

    Keep a list by job: amount held, what releases it, and the date you can bill it. Put the expected date on the calendar.

  6. Set up a credit line before you need it.

    Banks lend to companies that look healthy. Ask when your numbers look good, not the week payroll is short. A lender’s checklist helps you prepare.

  7. Check cash before you say yes to growth.

    Before you take the next big job, put it on the calendar. If the gap gets bigger than you can fund, change the deal: bigger deposit, phased billing, or a smaller scope.

Worked Example: A Gap of $88,071Say weekly job costs run $10,000. You bill $45,000 on day 30, on net-45 terms with 10% retainage.Payment arrives on day 75: $45,000 × 0.90 = $40,500. The $4,500 of retainage stays held.Costs paid out by day 90: 90 ÷ 7 × $10,000 = about $128,571. Cash received by day 90: $40,500. Your second bill, sent on day 60, is not due yet.The gap: $128,571 minus $40,500 = $88,071 you must fund from savings, a credit line, or late bills.An illustration to show the method, not a projection for your business.

Dr. Paul’s Insight

Cash problems do not announce themselves. They show up on a Thursday. The owners who stay open look at cash on the same day every week, for 20 minutes, with the calendar in front of them. It is the cheapest insurance a contractor can buy. If your bids are part of the problem, start with how to bid a construction job.

Know Your Rights

What Florida Law Says About Late Payment

These Florida rules show the kind of protection that exists. Other states have their own rules. Check yours.

Type of workWhat the law saysLaw
Private projectsPayment is owed once it is due under the contract, a written request was made, and any required waivers or affidavits are delivered. Late amounts earn interest at the statutory rate plus 12% a year, starting on the 14th day after payment is due. The paying party has 14 days to return an incomplete or wrong request with written reasons.Fla. Stat. 715.12
Local government workPayment is due 20 business days after a stamped invoice (25 if an agent must approve). Late payment earns 2% a month or the contract rate, whichever is greater. Prime contractors pay subs within 10 days of getting paid, and subs pay their own subs within 7 days.Fla. Stat. 218.735 (2022 text)

Based on the 2026 text of section 715.12 and the 2022 text of section 218.735. A construction attorney can tell you how these rules apply to your contract.

Check Your State

Prompt-payment and retainage rules differ in every state. Some states have caps and deadlines that Florida does not, and the rules keep changing. Ask a construction attorney in your state before you rely on a deadline or demand interest.

Work With Dr. Paul

Three Ways Dr. Paul Helps Construction Owners

Read the page and fix it yourself, or get help. Here is where each option fits.

Business Consulting

For owners stuck in the cash gap, bidding blind, or running every job themselves. Dr. Paul works with you on bids, cash flow, job costing, and getting you off the jobsite.

See consulting and prices →

Business Plan Writing

For contractors applying for a loan, a line of credit, a bigger bond, or an expansion. Dr. Paul writes the plan and the financial projections for you.

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Business Plan Template

For owners who want to build it themselves. A construction-specific Word plan plus an Excel model with editable bids, job costing, labor, and equipment.

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FAQ

Cash Flow Questions

Why do profitable contractors run out of cash?
Because the money goes out before it comes in. Contractors pay crews weekly and suppliers in about 30 days, while customers often pay in 60 to 90 days and hold back retainage until the end. The busier the company gets, the bigger the gap grows. A 90-day cash calendar and clear payment terms are the first fix.
What is a cash flow forecast for a contractor?
It is a list, week by week, of the money you expect to pay out and the money you expect to receive, using real payment dates. A 90-day forecast is a good place to start. It shows the weeks when you will be short while you still have time to act.
How many days does it take contractors to get paid?
Surveys show wide ranges, and subcontractors often wait the longest. No single number fits every company. The reliable number is your own: look at your last five jobs and count the days from billing to payment.
What is retainage and how does it hurt cash flow?
Retainage is the part of each payment a customer holds back until the job is finished, often 5 to 10 percent. It is earned money you do not have yet, so it belongs on your cash calendar as a future payment, not in your bank balance.
What is the first thing to do when cash is tight?
Build the 90-day calendar, bill anything not yet billed, and call the customers who owe you. Then talk to your banker or advisor early. Waiting until payroll is short leaves you with fewer choices.

Start with the calendar. Call when you want help building it.

See Consulting and Prices → Call or text (321) 948-9588

Keep Going

Related Construction Guides

Cash connects to bids, retainage, job size, and lenders. Start with the one that fits your week.

What Is Retainage in Construction?

How the holdback works, who can hold how much, and how to collect it faster.

How Big a Job to Take

A five-part size test and a written limit before the next big call.

How to Write a Change Order

Six steps, a one-page sample, a script, and the Florida lien clock.

What Lenders Want

The reports to bring, the SBA loan fit, and a plan that proves it.

Customer Concentration

Measure your exposure, set a cap, and widen your base in 90 days.

How to Do a Bank Reconciliation

Know your real bank balance before you plan around it.
← PreviousHow to Bid a Construction Job

Sources

Where These Numbers and Rules Come From

Every figure on this page comes from a source below. Dollar examples labeled as examples are illustrations, not projections for your business.

Dr. Paul Borosky, DBA, MBA

Business Consultant, Author & Educator | 14+ Years | 1,000+ Clients Served

Dr. Paul Borosky, DBA, MBA is a business consultant, author, and educator, and the founder of Quality Business Plan. He helps small business owners across the United States and Canada, including contractors and specialty trades, with business planning, financial modeling, fractional CFO services, and the everyday problems of businesses that depend too much on their owners. He is the creator of Dr. Paul’s Organize-Plan-Grow™ Strategy, author of numerous published books on Amazon including Top 5 Reasons Construction Companies Fail, and publisher of over 1,000 business-focused videos on YouTube.

About Dr. Paul The Construction Book YouTube Channel

This page is for general educational purposes only. It is not legal, financial, tax, accounting, insurance, or other professional advice. Construction laws, licensing rules, and tax rules vary by state and change over time. Dollar examples are illustrations, not projections for your business. Shiny Nail Remodeling, Square-Up Contractors, and the people in them are fictional. For decisions about your own business, consult a qualified professional.