Field notes
Cash Flow Management for Electrical Contractors: The 30-60-90 Trap
Profitable electrical contractors go out of business every week. Not from lack of work. From lack of cash. The job was profitable on paper. The shop just ran out of money waiting to get paid.
Here is the 30-60-90 trap that kills small electrical shops and the discipline that keeps cash in the bank.
What the 30-60-90 trap looks like
A 5-truck electrical shop runs $80,000 of materials and labor through the field every month. The shop sends invoices on Net 30 terms. On paper that means money comes back 30 days later. In practice, residential customers pay on average at 14 days and commercial GCs pay on average at 52 days, with 15 to 25 percent going past 60 days.
Net 30 quoted means 45 days actual on average. For a commercial-heavy shop, that becomes 60 to 90 days actual. The owner is now floating two to three months of payroll, materials, and overhead before the first dollar comes back.
A shop with $30,000 of monthly profit but $200,000 of receivables outstanding is dying in slow motion. The bank account is empty. Payroll Friday is becoming a problem. The owner takes a personal loan to cover materials. Six months later the shop closes.
The five-discipline cash flow recovery system
Discipline 1: Residential is cash on completion, not Net 30
Residential service work does not get Net 30 terms. The invoice fires the moment the foreman marks the job complete. The customer pays before the foreman leaves the driveway via the Stripe link in the invoice. If the customer cannot pay, the shop offers a 3-month financing option through a partner — but the shop gets paid immediately.
Residential is 80 percent of the volume in most shops and should be 95 percent cash-on-completion within 60 days of implementing this discipline.
Discipline 2: Light commercial is milestone billing, not lump-sum billing
Light commercial jobs (6 to 14 weeks) bill in phases — contract signing, rough-in complete, trim complete, final. Each milestone is a payable event. The shop is paid as it works, not at the end.
Discipline 3: Net 15, not Net 30, on commercial contracts
Negotiate Net 15 on commercial contracts. Some GCs will push back. Hold firm. The price reflects the terms. A GC who insists on Net 30 is asking for a discount they have not earned. Charge them for it.
Discipline 4: Aging report every Monday at 8am
The owner reads the aging report every Monday. Anything over 30 days gets a phone call from the office that day. Anything over 60 days gets a phone call from the owner that day. Customers who consistently pay at 70 days are not customers — they are creditors using your money.
Discipline 5: A working capital line of credit, not a personal loan
Every electrical shop needs a working capital line of credit equal to 30 to 60 days of expenses. This is what handles the gap between "we finished the work" and "they paid us." Personal loans, credit cards, and "I will skip my paycheck this month" are not substitutes.
The DSO target every electrical shop should track
DSO is Days Sales Outstanding — the average number of days between invoicing and getting paid. The healthy DSO for a residential-heavy electrical shop is under 14 days. For a commercial-heavy shop it is under 35 days. Track it monthly. If it is climbing, something is broken.
How FieldCommand handles cash flow discipline
FieldCommand fires invoices automatically at job completion with the Stripe payment link embedded. Milestone billing for commercial projects triggers on inspection passes. The aging report runs on the owner dashboard with one-click follow-up sequences for past-due invoices. DSO is calculated automatically and trends over time. The owner sees cash flow without doing the bookkeeping.