Contractor financials, measured the way lenders and buyers need them
Construction earnings depend on how jobs are recognized. Cash-basis books, missing WIP schedules, and aging equipment are the three things that most often move a contractor's adjusted earnings.
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What we test in a contractor QoE
- Work-in-progress schedule and percentage-of-completion review
- Over/under billings and their effect on earnings and working capital
- Backlog quality, margins, and fade on completed jobs
- Retainage receivable and payable
- Customer and general-contractor concentration
- Owner-operator compensation and field roles
- Equipment condition, deferred maintenance, and replacement capex
- Cash-basis to accrual conversion
Finance leadership for trades & construction
- Job costing and WIP reporting set up in your accounting system
- Monthly close with over/under billing adjustments
- Bonding and surety financial packages
- Cash forecasting around draws and retainage
- Bid margin and estimating feedback loops
Questions buyers and lenders ask
Why does WIP matter in a contractor QoE?
Contractors earn profit as jobs progress, not when cash arrives. Over- and under-billings can move a year's profit between periods, so cash-basis or year-end-only books can overstate or understate earnings. The work-in-progress schedule is where we test that.
Is deferred maintenance an adjustment?
Yes. SOP 50 10 8.1 names deferred maintenance among the adjustments a QoE must document. For equipment-heavy contractors, normalizing capex can change how much debt the earnings support.
Do backlog and customer concentration affect the loan?
They do. The SOP requires the QoE to assess revenue quality, including customer concentration and contract continuity. A contractor dependent on two general contractors, or with thin signed backlog, gets a more cautious earnings view.
Two ways to start
Buying or financing a deal? Start with a QoE conversation. Running the business? Start with a CFO conversation.