Contractors

General contractors, sub-contractors, specialty trades, electrical contractors, plumbing contractors, HVAC contractors, roofing companies, painting contractors, and concrete and masonry operators share a recognisable cash-flow profile and a recognisable debt profile when payment timing slips and material costs run ahead of pricing. Contractor debt relief, construction company MCA help, contractor business loan workout, and specialty trade cash flow restructure are the searches we see when an operator carrying real backlog and real expertise has nonetheless run out of cash on a Friday afternoon. This page is the long version.

The contractors we work with are almost always good at the work. The crews are solid, the relationships are real, the backlog — on examination — is genuine. The trouble lives in the gap between the contractor and his money: in retention held by general contractors and owners, in payment delays that compound across the chain from owner to GC to sub to supplier, in material cost spikes that have not been priced into existing contracts, in change-order disputes that age out, and in the bonding requirements that tie up working capital that the contractor needs in operating cash. Understanding that gap is the first step to repairing it.

The cash-flow rhythm of an independent contractor business

Contractor cash flow is structurally lumpy. Revenue arrives on a draw schedule, on completion, or on milestone-billing terms that depend on the contract type. Owner-direct work pays on contract terms, often net-30 to net-45. Subcontractor work to a general contractor pays on pay-when-paid or pay-if-paid terms (where state law permits), with retention — typically five to ten percent of contract value — held until project completion or some other defined milestone. Public-works projects carry their own statutory payment timelines and prompt-payment rules. Insurance-restoration work depends on insurance carrier reimbursement timing, often the longest collection cycle in the industry.

Against this revenue, the cost structure is largely synchronous. Direct labour runs weekly or biweekly. Material is paid on supplier terms (commonly net-30, sometimes net-15 with COD on stretched accounts). Equipment loans on trucks, trailers, and specialty equipment are monthly amortising. Insurance — general liability, commercial auto, workers’ comp, and (where required) bonded-business insurance — is monthly. Subcontractor payments downstream run on the contractor’s own AP terms.

The mismatch is structural. Material and labour are paid before the draw arrives. Retention sits on the GC’s books for months and sometimes years. Bonded jobs tie up working capital in performance and payment bonds. The contractor’s working-capital line, factoring arrangement, or (when other tools have been exhausted) MCA stack is what bridges the gap. When the bridge is healthy, the structure works. When the gap widens — a slow-paying GC, a disputed change order, a material cost spike, a project that ran longer than the schedule — the bridge accumulates faster than draws collect, and the contractor ends up in our office.

Common debt patterns we see in contractors and specialty trades

Retention build-up and the receivables that age forever

The single most consistent pattern. Retention held by GCs and owners on completed work, sometimes properly aged at sixty or ninety days, sometimes contractually held until project completion that has now been pushed out twice, sits on the contractor’s books as a receivable but is, in cash terms, simply unavailable. A contractor with five hundred thousand dollars of retention spread across six projects is, in cash-flow terms, half a million dollars short of where his P&L suggests he is. We coordinate retention recovery as part of every contractor engagement, including the prompt-payment-act enforcement work that is sometimes available.

Stacked merchant cash advances

Construction is one of the higher-MCA-pitch industries, particularly for residential remodelers and small commercial subs. The first advance was usually taken to cover material on a job before the draw arrived. The second was taken to cover the gap created by the first. Stack collapse in construction is particularly damaging because the daily debits can interrupt the contractor’s ability to purchase material, which in turn delays the work that produces the draw that would resolve the cash gap.

Material-supplier balances that have aged out

Material suppliers are typically the most workable creditors a contractor has, but only if the relationship is managed honestly and the balances do not age past the point of routine negotiation. Suppliers who have been quietly carrying balances for ninety or one-twenty days without communication eventually pull credit terms or switch the contractor to COD, which compounds the working-capital problem rather than solving it. Restoring supplier relationships through structured arrears workouts is workable but slower than maintaining them.

Equipment loan distress on trucks and specialty equipment

Work trucks, trailers, lifts, scissor lifts, mini-excavators, skid-steers, scaffolding, and specialty trade equipment carry monthly payments that do not flex with the work schedule. When work softens, the equipment payments — structured for the prior assumption — become uncomfortable. Restructures, deficiency negotiations, and (where it fits) voluntary returns are workable when run by an advisor who knows the lender posture in this segment.

Bond-related issues

Bonded contractors face a particular constraint: a deteriorating bonded line of credit can shut a contractor out of public-works and certain commercial markets entirely. Surety relationships are usually the last to break and the most consequential when they do. We coordinate carefully with surety partners when the situation has reached that level.

Federal payroll tax (Form 941)

Construction is over-represented in the Trust Fund Recovery Penalty population. Weekly payroll, lumpy revenue, and the temptation to defer payroll-tax deposits when a draw is delayed combine to produce 941 arrears that, once accumulated, are personally liable to responsible persons. Behind on 941 is the most dangerous category of contractor debt and the one that gets prioritised first.

Independent contractor versus W-2 misclassification

Construction is one of the most-litigated areas of worker-classification compliance. Crews of "independent contractors" who in fact work full-time for one contractor, on the contractor’s schedule, with the contractor’s tools, are routinely reclassified by federal and state authorities, with substantial back-payroll-tax, unemployment-insurance, and workers’-comp liabilities attached. We coordinate the response when this issue lands on a contractor’s desk.

Operating challenges underneath the contractor debt

Job-cost discipline and the change-order problem

The most consistent operating finding. Job-cost tracking that does not capture actual versus estimated cost in real time, change orders that are performed verbally and never written, and crew-time that is not allocated cleanly to specific jobs all combine to produce P&Ls that are vaguely right and individually wrong. Contractors who run job-cost discipline cleanly — daily time allocation, written change-order practice, weekly job-cost review — recover meaningful margin without changing a single price.

Pricing on material and labour

Most contractors we sit with have not adjusted their hourly labour rate or their material-mark-up structure in two to three years, while material costs have climbed meaningfully and labour costs have moved in step. Annual or biennial pricing reviews recover the compression cleanly when run with customer-relationship discipline.

Backlog quality versus quantity

Contractor backlog is often measured in dollars of contracted work without sufficient attention to the profitability mix and the payment-timing mix of the backlog. A backlog dominated by slow-paying GCs at thin margins is structurally different from a backlog dominated by direct-pay owner work at good margins, even at the same dollar level. The backlog-quality conversation is one of the operating-side conversations we have early.

Crew utilisation and the labour-cost ratio

Crew utilisation — productive hours billed against payroll hours — is the operating math underneath profitability for any labour-intensive contractor. Operations that measure utilisation weekly recover meaningful margin without changing a price.

Florida-specific considerations

Florida licenses contractors through the Department of Business and Professional Regulation under Florida Statutes Chapter 489. License classifications matter; unlicensed contracting carries severe consequences. Florida prompt-payment rules under §§ 218 (public works) and 715.12 (private construction) Florida Statutes give contractors statutory tools for collection on public projects and certain private projects. Florida lien rights under Chapter 713 are some of the more contractor-friendly in the country, and the Notice to Owner and lien-enforcement timelines are mechanical and worth knowing precisely. Sales tax on construction services in Florida is largely exempt for residential work but applies to certain specialty and commercial services, with rules that catch operators who have not run the analysis. Workers’ comp in construction classifications is rated higher than most other industries; experience-mod audits regularly recover material premium.

What we do for contractors and specialty trades, specifically

• Retention recovery and prompt-payment-act enforcement. Direct work on the receivables that have aged out of the routine collection cycle.
• MCA stack unwind. Time-sensitive negotiation with funders.
• Material-supplier renegotiation. Restoring credit lines and payment terms with suppliers through structured arrears workouts.
• Equipment loan workouts. Direct negotiation with equipment lenders on trucks, trailers, and specialty equipment.
• Bonding-line coordination. Where surety relationships are at risk.
• Federal payroll tax workout. Coordinated with our tax-defense partners.
• Worker-classification review. Coordinated with our employment-law partners where reclassification issues have surfaced.
• Lien rights and Florida prompt-payment coordination. Where contractual remedies are available and being underused.
• Job-cost, pricing, and backlog-quality review. The operating-side work that prevents the next round of debt.

The contractor we will not take

Operations whose license has been suspended, whose bonding has been terminated, and whose backlog has collapsed are usually past the point of debt restructure. We refer to counsel for wind-down where that is the right path. For everyone else, the situation is workable, and the patterns are familiar.

What a Hamilton & Merchant engagement actually looks like for a contractor

Owners ask, on the first call, what an engagement actually looks like in practice. The answer varies by situation, but for a typical GC, sub, or specialty trades operator carrying MCA stacks, equipment lenders, material suppliers, and bonded-line surety relationships, the engagement runs in five recognisable phases over roughly five to ten months.

Week one: assessment and clock mapping. We pull the full debt picture — every creditor, every contract, every personal guarantee, every lien position. We build the thirteen-week cash forecast against current revenue. We map the legal-process clocks running on each item: cure windows on contractual defaults, response windows on any served complaints, statutory windows on any tax notices, prompt-payment windows where they apply. We deliver a one-page summary by the end of the first week so the owner knows what is actually running and what is not.

Weeks two through four: priority creditor contact and stack stabilisation. We open communication with the equipment finance company and the major material suppliers and any creditors whose clocks are short enough to require immediate response. Where MCA debits are running close to operating margin, this is the phase in which stack stabilisation begins. The goal is to halt the trajectory toward collapse and create the breathing room in which the longer negotiation work can run.

Months two and three: substantive negotiation. Direct negotiation with each major creditor on the actual terms — principal reduction where it is available, rate restructure, term extension, and modified payment schedules calibrated to the realistic cash flow of the business. We typically achieve twenty-five to fifty percent on the negotiable private positions during this phase. Tax-side work, where it applies, runs in parallel through our partner network.

Months three through six: operating-side coordination. While the debt-side negotiations close out, we run the operating-side work that prevents the next round of debt from accumulating. This is the work most other firms in our category skip. For contractors who run weekly job-cost reviews, we coordinate the corresponding discipline. The operating-side work is what makes the debt-side relief durable.

Months six and beyond: stabilisation and follow-through. The debt picture is now restructured. The operating discipline is in place. We circle back monthly through the stabilisation period, confirming the new structure is holding and that the early warning signs of recurrence are not building. Engagements close cleanly when the owner is running the business under the new structure with confidence.

Frequently asked questions about contractor debt relief

How quickly can a GC, sub, or specialty trades operator get relief from MCA daily debits?

Stack stabilisation typically begins within the first two to three weeks of engagement. Substantive principal renegotiation runs over the following sixty to ninety days. The exact timeline depends on the number of advances, the cumulative size of the daily debits, the funders involved, and how aggressively each funder responds to a structured restructure proposal. Stack collapse can be averted in most cases when the engagement begins before the cumulative daily debits exceed actual operating margin.

Will my credit be damaged by working with a debt-relief firm?

The debt itself, not the firm, is what affects credit. A debt that is being negotiated, settled, or restructured will produce reporting that reflects those events, and the credit profile may move accordingly. The alternative — letting the debt progress to default, judgment, and enforcement — almost always produces worse credit consequences than a structured restructure. We are direct about the credit implications of each option before any of it begins.

Do I need to file bankruptcy to deal with this?

In the great majority of contractor situations we work, no. Direct creditor negotiation, contract and lease renegotiation, and (in the right cases) out-of-court workout agreements resolve the situation without a filing. Bankruptcy remains an option where it fits, and we will tell you plainly when it does. We do not run bankruptcy filings ourselves; when one is the right path, we coordinate with a bankruptcy attorney we trust. See our alternatives to bankruptcy page for the full layered analysis.

What does this cost?

Our engagement fees are scaled to the work and disclosed in writing before any paid work begins. The first conversation is free and there is never an obligation. For contractor engagements, fees typically run a small percentage of the relief produced, structured so the math is plainly favourable for the client. We do not collect fees in advance of work delivered.

What is the single most dangerous mistake to avoid?

For most contractor owners, do not skip filing a Notice to Owner on a job because the relationship feels comfortable. The category we describe carries personal-liability or operational-shutdown consequences that are meaningfully larger than the immediate pressure that produced the temptation. We talk about this on every first call.

How do I know when to call?

The signal we tell contractor operators to watch for is a supplier moving you to COD or a surety asking for updated financials mid-cycle. By the time that signal is visible, the work is still entirely doable, and the engagement is faster and cheaper than it will be in another quarter or two. The owners we work with who closed cleanly are almost without exception the ones who reached out around that signal rather than waiting for it to escalate.

Are there Florida-specific considerations I should know about?

Yes. Florida lien rights under Chapter 713 are some of the more contractor-friendly in the country, and Notice to Owner timing is mechanical. Where the situation involves a Florida nexus — the business is Florida-organised, the owner is Florida-resident, the contracts include Florida choice-of-law, or any combination — we run that analysis early. See our state differences page for the broader comparative read.

Will you work with my existing accountant or attorney?

Yes, and we usually prefer to. The accountant who knows the books is an asset. The attorney who has been advising on the specific contracts is an asset. We coordinate with existing professionals as part of our standard practice and bring in our own partner network only where additional capability is needed. The point is to assemble the right team for the situation, not to replace the team that is already in place.

What happens if my situation cannot be resolved without bankruptcy?

We tell you plainly, on the first call where we can see it, and we coordinate with bankruptcy counsel from our partner network. We stay in the room through the filing decision and through the early phase of any case rather than handing off and disappearing. The kindness, in those situations, is in the directness about what is actually fitting and what is not.

What to bring to the first call

The first conversation is free and is most useful when you bring a few specific items. None of these are required — we will work with whatever you have — but the more of them you have ready, the faster we can get to the substantive part of the conversation.

• A list of every creditor, with current balance, contractual rate or factor rate, monthly or daily payment, and date of most recent statement.
• The two most recent monthly profit-and-loss statements (or a reasonable approximation if your books are not closed monthly).
• The most recent two months of bank statements from the operating account.
• A short list, in your own words, of the items you are most worried about — the ones that wake you up at three in the morning. We start with those.
• Any formal correspondence you have received from creditors or tax authorities in the past sixty days.

If you do not have these, call anyway. We have run intake conversations with nothing more than the owner’s memory and a coffee. The point of the items above is to make the conversation faster, not to make it possible.