I was walking through a material yard over in Ashwaubenon with a contractor named Stefan. He pointed at a pallet of architectural shingles and told me, "Ethan, that's $13,420 of my own money sitting in the sun, and I won't see a cent of it back until the insurance adjuster signs off in six weeks."
Stefan's business, Fox River Roofing, looked great on a spreadsheet. He had a 22.8% net margin and a backlog that stretched into the fall. But his bank account told a different story. He was constantly shuffling funds to cover payroll for his three crews because his cash was perpetually trapped in the "gap" between buying materials and getting paid. We spent the next 8.7 months re-engineering his financial flow.
At a Glance
Reducing the 'Cash Gap' by adjusting deposit structures can unlock five figures in liquid capital.
Negotiating 45-day terms with local Green Bay suppliers provides a vital buffer during the busy summer season.
High-quality, exclusive leads reduce the sales cycle time, directly impacting how fast capital rotates through the business.
Implementing a 'Progressive Billing' model prevents contractors from acting as interest-free banks for homeowners.
The Reality of the "Cash Gap" in Brown County
Most roofing owners I talk to in Wisconsin focus entirely on top-line revenue. They think a $2M year means they've "made it." But in the roofing world, cash is oxygen. Stefan was suffering from a classic case of a bloated Cash Conversion Cycle (CCC).
In Green Bay, our season is condensed. Between the late spring thaws and the first November slush, every day counts. When Stefan took on a $28,000 roof near Lambeau Field, he'd front $9,000 for materials and another $6,000 for labor before he ever saw a progress payment. For 24 days, he was out $15,000. Multiply that by twelve concurrent jobs, and you can see why he couldn't afford to repair his aging fleet of trucks.
According to the National Roofing Contractors Association (NRCA), operational inefficiencies and poor cash management are among the leading causes of mid-sized firm failure. It isn't a lack of work; it's the inability to fund the work you already have.
Step 1: Moving from 0% to the "30-40-30" Rule
Stefan's first mistake was his "trust-based" billing. He was asking for 10% down, which barely covered the permit fees and the dumpster rental. I've seen this kill shops in Howard and De Pere alike.
We transitioned him to a 35/35/30 model:
- 35% Deposit: Collected upon contract signing to lock in the schedule and order materials.
- 35% Mid-Point: Collected the day the crew arrives and shingles are delivered.
- 30% Final: Collected upon completion and walk-through.
By shifting the material cost onto the initial deposit, Stefan stopped being a bank for his customers. In the first 90 days, this single change improved his liquid cash position by $42,700. If you find your crews sitting idle while you wait for a check to clear, you might want to get answers on how to stabilize your pipeline.
Step 2: Leveraging Supplier Terms
Next, we looked at his accounts payable. Stefan was paying his suppliers via credit card immediately to get a 1.5% cash-back reward. While that sounds smart, it was actually draining his liquidity.
We negotiated with his local supplier in Green Bay to move him to a "Net 45" arrangement. By delaying that $13,420 material payment by 45 days, and collecting his 35% customer deposit upfront, Stefan created a "positive cash float." He was essentially using the supplier's money to fund the project start.
Cash Position Comparison
| Factor | Standard Approach | Optimized Approach |
|---|---|---|
| Material Payment Timing | Pays for materials upfront with credit card (1.5% reward) | Negotiates Net 45 terms + 35% customer deposit |
| Cash Flow Impact | Negative $13,420 for 45 days | Positive float using supplier credit |
| Annual Cost | $201 cash-back reward | $0 interest, improved liquidity |
Material Payment Timing
Cash Flow Impact
Annual Cost
Step 3: The Hidden Cost of "Cheap" Leads
This is where my technical marketing hat comes on. Stefan was spending $2,400 a month on "shared" leads from a big-name aggregator. He was fighting five other contractors for every job in Allouez. This led to:
- Longer Sales Cycles: He spent 14 days chasing homeowners just to get an appointment.
- Lower Close Rates: He closed only 9% of these leads.
- Wasted Capital: The money spent on these leads sat "dead" for weeks because they didn't turn into jobs quickly.
We cut that spend and moved him toward exclusive, verified leads. I've watched contractors test the platform with a signup bonus and realize that closing 1 in 4 leads instead of 1 in 11 does more for working capital than any bank loan ever could. When your sales cycle drops from 22 days to 12 days, your capital "turns" faster.
The Velocity Metric
"Track your 'Lead-to-Cash' time. If it takes more than 35 days from the first phone call to the final check, your working capital is being strangled by your sales process."
The Result: $64,800 Unlocked
After 8.4 months of these adjustments, Stefan's "paper profit" finally started showing up in his real-world bank account.
Action Plan
The Working Capital Playbook
A systematic approach to unlocking trapped cash and improving your cash conversion cycle.
Audit your Receivables: Identify every invoice older than 15 days and assign a staff member to follow up daily.
Restructure Deposits: Move to a minimum 30% deposit to cover material overhead immediately.
Shorten the Sales Cycle: Switch to exclusive lead sources to reduce time-to-close.
Negotiate Payables: Push for Net 30 or Net 45 terms with local vendors to keep cash in your pocket longer.
Stefan didn't need more jobs to fix his stress; he needed his current jobs to pay for themselves faster. By the end of the year, he had replaced two of his older trucks and added a fourth crew without taking out a single high-interest line of credit.
If you are struggling with the "Green Bay Winter" because you didn't save enough cash during the summer surge, look at your working capital. It's usually not a revenue problem—it's a timing problem.
According to research from the Small Business Administration (SBA), small construction firms that optimize their working capital see an average 23% improvement in cash flow within the first year. The key is understanding that every day your money sits in receivables or inventory is a day it's not working for you.