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“The data is clear—there’s a fundamental flaw in how money moves through construction.
A proactive, diversified capital strategy is the only way for subcontractors to free up profits and invest in growth. Subs who lead with this strategy will lead the industry.”
Chris Doyle | Founder and CEO of Billd
As a subcontracting business owner or CEO, you’re not alone in facing an uphill battle against the unpredictable payment cycle that is the standard in the construction industry. Every subcontractor—whether they make $25M, $50M, or $100M in annual revenue—faces slow pay cycles, with 64% reporting being paid late by general contractors, according to the 2025 National Subcontractor Market Report.
Your greatest challenge is stabilizing your cash flow so that you can keep existing projects running smoothly and take on more work.
By understanding your working capital options, building a robust working capital stack, and deploying it effectively, you can defend your business against cash flow inconsistencies and the challenges that come with them.
Lukas Montgomery
Management and Accounting /
Miller Paneling Specialties
Even if you have a safety net of cash in the bank, it’s best practice to have multiple forms of working capital available. This prevents you from relying too heavily on any single form of capital, leaves room available in your bank line of credit, and protects your cash.
Additionally, the size of construction expenses can make it difficult or impossible to use cash as the only form of capital. Here’s a few reasons why diversity is important:
On average, subcontractors wait 56 days for payment after submitting their pay application. This compounds with every project you take on, and the sum of all project debts contributes to your maximum cash deficit.
The most important factor to consider as you deploy your working capital is flexibility. Your “cheapest” options like cash and your bank LOC are also your most flexible options—the options that can quickly relieve the strain of sudden project setbacks or allow you to take advantage of unexpected opportunities.
Even subcontractors with large cash reserves and lines of credit can face financial trouble because they’ve maxed out the most flexible options that could have saved them when they ran into unforeseen cash flow challenges.
Using working capital in order of least to most expensive.
The strategy we recommend: Deploy working capital in order of least to most flexible, safeguarding your cash and bank line of credit and relying more heavily on the less flexible options first.
For more information on how to deploy your working capital, see these principles.
Here’s what a capital stack that is optimized from least to most flexible might look like:
Supplier terms
Should be used first because they are an inflexible form of financing that can only be applied to material purchases and are paid back on fixed terms.
Credit cards
Can cover daily business expenses but should not be used to cover project expenses due to the sheer size of expenses.
Billd
Considered medium to low flexibility because it is tied to a specific project, but has more flexible terms that align to construction timelines. Billd offers Material financing, providing up to 120-terms on material purchases, and Pay App Advance, which covers up to 100% of an approved invoice (minus a purchase fee) with up to 60-day terms.
Bank line of credit
A line of credit can offer a flexible capital solution with the added benefit of bonding capacity.
By having multiple capital options available and creating a strategy for when and how to use them, you can improve efficiency, mitigate risk, improve relationships with suppliers and GCs, and create healthy, long-term growth.
It takes time for businesses to be able to secure these capital options, which is why it’s important to be proactive instead of reactive when seeking additional capital sources.
Flexible working capital options take time and effort to acquire. However, cash flow problems can arise quickly so we highly recommend you secure options well before you need them.
We recommend taking the following actions to get more credit before you need it:
Apply for new credit
While you shouldn’t apply for new credit aimlessly, having multiple options available can lower your risk of hitting your limit.
Seek higher limits
Negotiate higher limits before you need them. If you wait until your finances are strained to negotiate a higher limit, it will make it more difficult to get approved. Plus, the stakes are higher if your limit increase gets denied.
Even the most financially strong subcontractors can find themselves in trouble for one of two reasons: They are too ambitious for what their capital can support or they have limited their capacity by relying only on cash or bank lines of credit. A cash-only strategy can often serve as your limit to growth—you never know what opportunities lie ahead and how much liquidity you may need to accept them.
Get more tips on how to scale sustainably here.
Scaling sustainably requires you to think about how you’ll support the work before you bid. This means prioritizing working capital. Now that you have tips on how to scale sustainably, it’s time to take action.
If you take away anything from this whitepaper, it should be the following:
Deploy your capital based on flexibility, not price.
Proactively plan to grow your available credit using this guidance.
Create and deploy an action plan for how you’ll respond to high DSO/strained cash flow.
