CFO Services for Electrical Contractors
A fractional CFO for an electrical contracting business separates service work from project work, then turns the estimate into a financial control instead of a habit.
Built for electrical contractors between $3M and $15M running service calls, project work, or both, who suspect the project side is where the losses are hiding.
Service pays weekly. Projects pay on retainage. One P&L cannot tell you both.
Service versus project mix, and why it changes the whole P&L.
Service work bills the day it is done and collects in a week. Project work bills on a schedule, holds retainage, and collects when the general contractor collects.
Run together, the service book’s cash pays for the project book’s timing, and a project that lost money looks like a slow month instead of a bad bid.
What the split makes visible.
- Gross profit per department, so a bad bid shows up as a bad bid and not as a cash dip.
- Which technicians and which foremen are on which side of the line.
- The real cost of pulling a service tech onto a project to hit a deadline.
- Whether growth in project revenue is growing profit or growing receivables.
Every section below assumes you know which side of that line a dollar came from.
THE ESTIMATE
Estimating and bidding accuracy as a financial control.
In an electrical contracting business the estimate is not a sales document. It is the single largest financial decision the company makes, and it is usually made without finance in the room.
Estimated versus actual, by job.
Every closed job compared to its bid, on labour hours and on material. Not to assign blame, but because the pattern in the variance is where the money is.
The hours are the risk.
Material is quotable. Hours are estimated. A bid 15% light on hours at a 12% margin is a loss, and the invoice will still look professional.
Bid discipline has a number.
Win rate against margin. Winning more than half your bids usually means the price is low, and that is a finding, not an opinion.
An estimate that is never compared to the actual is a guess with a spreadsheet around it.
RETAINAGE AND BILLING
Retainage and progress billing.
Retainage is your profit, held by someone else, for months after the work is finished. On a book of project work it is routinely the largest single receivable in the company and the one least often chased.
Progress billing is the other half. Bill late and you have financed the job. Bill on the schedule and the job finances itself.
How retainage gets managed
Tracked as its own receivable, by job and by contract, never mixed into ageing.
Released on a date you have written down, with somebody responsible for asking.
Forecast separately, because it is cash that arrives long after the job closed.
Priced in, because holding 10% for six months has a cost and the bid should carry it.
MATERIAL
Material escalation clauses.
Copper, gear and switchgear move, and lead times move with them. On a project bid six months ahead, the material price you used is a forecast, not a fact.
- An escalation clause in the contract, so a price move is a conversation and not a loss
- Quotes locked with the supplier where the contract allows it, and the lock date tracked
- Long-lead gear ordered against the schedule, not against the invoice
- Material variance reported by job, so the pattern is visible before the next bid
The bid carries the risk you did not write a clause for.
THE FIRST 90 DAYS
What we change in the first 90 days with an electrical contractor.
Boring but effective. Split the departments, get estimate-to-actual on the page, then put retainage and burden where they can be seen.
Days 1 to 30: separate the departments.
Month-end close by the 10th. Service and project as separate departments in the chart of accounts, with labour and material mapped to jobs on both sides.
Days 31 to 60: estimate against actual.
Every closed job compared to its bid on hours and material. The variance pattern named, and bid discipline reported as win rate against margin.
Days 61 to 90: retainage and burden.
Retainage tracked as its own receivable and forecast separately. Loaded cost per billable hour by licence tier, and the rate rebuilt on it.
Method first. The results come after it, on purpose.
PROOF
What changed when one client rebuilt a billable rate untouched for years.
The result below is a client of the practice, from the same rate work this page describes under labor burden. The three operators after it run electrical departments inside multi-trade companies and spoke about them on Profit and Grit.
CLIENT RESULT
A billable rate rebuilt on real overhead, profit and debt service.
One client hadn’t touched their billable rate in years. We calculated what the rate should actually be, accounting for the things most owners miss. Real overhead. Real profit target. And debt service, which almost nobody factors in.
New rate, new conversation about what each job is actually worth.
Reported by Tyler Martin, California-licensed CPA.
FROM THE PODCAST
What multi-trade operators on Profit and Grit say about the electrical department.
Mark Paup built Golden Rule in Des Moines into a $30 million plumbing, HVAC and electrical company from a shop he bought at 24 out of a newspaper ad. He did not start electrical until 2018 or 2019, and he tracks that department’s margin separately from the others, because it behaves differently.
Lou Hobaica holds the master licences across plumbing, electrical, HVAC and general contracting and competes with 40,000 licensed contractors in Phoenix. Austin Blanchard has electricians running calls on their own inside six months, hired with no trade experience at all.
The pattern in both is the same one this page argues for: an electrical department is its own P&L, with its own margin, its own labour cost and its own risk, and it should be read that way.
The Home Services Cash Flow Scorecard.
15 questions. 5 minutes. A real answer about where your business stands.
You answer 15 plain-English questions about how your business actually runs. You get a score, a one-page read on what's working, and the two or three places your cash is leaking that you probably already suspect.
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The Home Services Cash Flow Scorecard.
Find out in five minutes whether your numbers are helping you run the business or hiding the problems that are costing you cash
How You Close Your Books
How You Track Cash
How You Price Work
How You Read Your Numbers
Analyzing financial indicators...
Your Priority Fixes
WHO THIS IS FOR
Built for electrical contractors between $3M and $15M.
Below $3M the owner still prices most of the work personally and knows every open job. Above $15M the bid pipeline and the WIP need daily attention from someone in the building. In between is where a project book gets large enough to hide a losing bid inside a busy quarter.
Sound familiar?
- You run service and project work, and you suspect the project side is where the losses are.
- You have never compared a closed job to the bid that won it, on hours.
- Retainage is sitting somewhere in your ageing report and nobody is chasing it by name.
- You win more than half the jobs you bid and have never treated that as a warning.
WHAT IT COSTS
$2,500 to $10,000 a month.
I price off your actual numbers, not a guess on a phone call. We talk first, I spend a few days in your financials, and you get one fixed monthly fee.
→ What drives fractional CFO cost for an electrical contractor
WHAT GOOD LOOKS LIKE IN ELECTRICAL
A real gross margin target for a residential electrical department.
Mark Paup added electrical to Golden Rule in 2018, alongside plumbing and HVAC, and grew it into part of a $30 million company. On his episode he gives the number he runs the department to and, more usefully, the number he is actually running while it grows.
The gap between those two figures is the point. A department adding technicians runs below its target because new technicians are not yet productive, and that is a planned cost rather than a leak. Knowing which of the two you are looking at is the difference between hiring and panicking. The benchmark report carries the wider set.
GROSS PROFIT, RESIDENTIAL ELECTRICAL
mid-60s target, 58% while growing
“Residential electrical, that one’s like mid-60s, but you know, we’re right around 58% still, but that department’s growing. That’s our newest department. So we’re always adding new technicians and that kind of beats that up.”
Mark Paup, Golden Rule, on The Big Five Numbers Every Trades Owner Should Track. Gross profit after direct labour and material.
ELECTRICAL CFO QUESTIONS
What electrical contractors ask before the first call.
Short answers, in the terms an electrical contractor actually uses.
What does a fractional CFO do for an electrical contractor?
A fractional CFO for an electrical contracting business separates the service department from the project department in the ledger, compares every closed job to the bid that won it on hours and material, tracks retainage as its own receivable, and rebuilds the billable rate on loaded cost by licence tier. It is a part-time financial executive working alongside your existing bookkeeper and CPA.
What gross margin should an electrical contractor run at?
Mark Paup, who runs a $30M plumbing, HVAC and electrical company in Des Moines, targets the mid-60s in gross profit on residential electrical and reports running around 58 percent while the department grows, stated on the Profit and Grit podcast. A department that is adding technicians will sit below target, because new technicians are not yet productive.
Why is my electrical company profitable on service and losing on projects?
Because the two collect on completely different clocks and are usually reported as one number. Service bills the day it is done. Project work bills on a schedule, holds ten percent retainage, and collects when the general contractor collects. Reported together, a bid that lost money looks like a slow month rather than a bad estimate.
How do I know whether my bids are accurate?
Compare every closed job to its bid on labour hours, not on total dollars, and look at the pattern in the variance rather than at any single job. Material is quotable; hours are estimated, which is where the risk sits. A bid fifteen percent light on hours at a twelve percent margin is a loss with a professional-looking invoice on top of it.
Is a high win rate on bids a good thing?
Not on its own. Winning more than half the jobs you bid usually means the price is low. Win rate read next to margin is a finding; win rate on its own is a vanity number.
What is labor burden for an electrician?
The multiplier on the wage: payroll tax, workers’ compensation, benefits, paid time off, the truck and tools, and the hours that never bill. It differs by licence tier, because an apprentice, a journeyman and a master do not carry the same load, and it is the number the billable rate has to be built from.
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