Funding for electrical contractors

How the money moves in this trade

On a commercial subcontract you submit a schedule of values, bill monthly against completed work, and get paid when the GC is paid by the owner, minus retainage (commonly held until substantial completion). Material costs are front-loaded: switchgear may need a deposit months ahead. Service and residential work is faster and smaller. Bonding capacity, which limits the size of projects you can bid, depends on working capital and a clean balance sheet, which is why stacking advances quietly shrinks your future bids.

Two worked scenarios

Scenario A: switchgear deposit on a 9-month job

A hypothetical $180,000 subcontract needs a $27,000 gear deposit in month one; the first pay application is approved in month two and paid in month three. A line of credit draw for about 60 days (hypothetical 13% APR, 1% draw fee) costs roughly $847. An advance for the same amount (hypothetical 1.24 factor, 2% fee, 20 weeks) costs $7,020 and debits $1,674 a week regardless of pay-app timing.

Scenario B: retainage stuck at year end

Retainage of 10% across four jobs is $41,000 receivable in principle but not for months. Factors generally exclude retainage; the realistic tools are a line sized to it and negotiating retainage reduction after 50% completion where the contract allows.

Hypothetical numbers, labeled as illustrations; not quotes.

What fits what

Questions specific to this trade

• Will my bonding company object to a UCC lien or an advance on my books?
• Does the subcontract permit assignment of receivables?
• Can I negotiate retainage reduction at 50% completion?
• Does the supplier offer job-account terms for a specific project?

Common questions