Contractor Case Study: Accounts Payable Financing for Construction Cash Flow

The Scenario

A commercial general contractor secured three concurrent mid-sized projects totaling $22 million in contract value.

While revenue visibility was strong, the contractor faced working capital strain due to construction billing cycles:

Subcontractors and material suppliers required payment within 30–45 days
Project owners paid on 60–90 day progress billing cycles
Retainage withheld 10% until project milestones were completed
$3,500,000 in upfront material and labor costs required financing

The contractor was profitable — but cash flow timing created operational pressure.

The Solution: $3.5M Accounts Payable Financing Facility

The contractor implemented a $3,500,000 revolving accounts payable financing structure.

Facility design:

Direct payment to approved subcontractors and suppliers
90–120 day repayment window
Flexible usage tied to project draw schedules
Integrated with progress billing receivable timing

The structure effectively bridged the gap between payables and receivables during peak construction activity.

Results

$3.5M in Liquidity Preserved
Stabilized subcontractor relationships
Improved payment predictability
Maintained bonding capacity
Supported simultaneous project execution
Avoided equity dilution or ownership restructuring

Strategic Impact

With stabilized working capital, the contractor:

Maintained project momentum
Protected supplier trust
Preserved debt-to-equity ratios
Avoided overextension of traditional bank credit
Strengthened financial positioning for future bids

Accounts payable financing provided structured liquidity aligned with real construction billing cycles..

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