What a Fractional CFO Actually Does for a $5M Contracting Company

I work with trade contractors in the $3-8 million revenue range — plumbing companies, electrical contractors, HVAC businesses, general contractors. Owners who built something real with their hands and their reputation. Owners who know how to run a job but feel like the financial side of the business is running them.

Here's what a month actually looks like when I'm your fractional CFO.

Week 1: The Numbers Tell the Story

At the beginning of each month, I pull your financials from the prior month. Not the bookkeeper's default QuickBooks report — a reformatted P&L organized the way your business actually works.

That means revenue broken out by service line or job type, not lumped into one "Sales" line. Cost of goods sold that includes materials, direct labor, and sub costs — so you see true gross margin by the work you do. Overhead separated from production costs so you know what it really costs to keep the lights on.

Most contractors I start working with have never seen their P&L this way. Their bookkeeper categorizes expenses the way QuickBooks suggests, not the way the business operates.

The Three Numbers You Need to Know

Gross margin tells you whether your pricing and production are working. If it's declining month over month, something is wrong — material costs are up, labor efficiency is down, or you're underpricing jobs. You need to catch this before it eats your year.

EBITDA tells you what the business is actually earning before tax and financial structure decisions. This is the number a bank looks at when you want a line of credit. It's the number a buyer looks at if you ever want to sell.

Net income is what you'll owe taxes on. If EBITDA and net income are the same number, it means your tax strategy isn't doing any work. That's a problem I address.

I review these numbers, flag anything unusual, and prepare a one-page summary with three to five observations. No jargon. No 40-page report. Just: here's what happened, here's what it means, here's what to do about it.

Week 2: Cash Flow Forecasting

Cash flow kills more contractors than bad work ever will. I've seen $6M companies with strong backlogs almost go under because they couldn't make payroll during a slow collection month.

Every month, I update a rolling 13-week cash flow forecast. This shows you — week by week — what's coming in, what's going out, and where the gaps are.

For contractors, this is critical because of the timing mismatch. You buy materials and pay crews before you collect on the job. If you're doing $800K in monthly revenue but your average collection cycle is 45 days and your payables are due in 15, you've got a permanent cash gap that grows with every new job.

The forecast lets us see that gap before it becomes a crisis. It also lets us make proactive decisions: when to push for faster collection, when to negotiate longer vendor terms, when to draw on a line of credit, and when to hold off on that equipment purchase.

If you don't have a business line of credit, getting one set up is usually something I address in the first 60 days. Not because you need it today — because when you need cash, you don't have time to apply for it.

Week 3: Tax Projection & Strategy

This is where the tax preparer and the CFO functions merge — and it's why most contractors need both in the same person.

Every quarter, I update your tax projection. Not just "you'll owe approximately this much." A real projection that accounts for your current income pace, your estimated deductions, your entity structure, and any strategic moves we're planning.

If you're on pace to net $500K and we haven't maxed out retirement plan contributions, we adjust. If a big job closes in December and we can defer payment to January, we model both scenarios. If you bought $200K in equipment and need to decide between Section 179 and bonus depreciation, we run the numbers against your specific situation.

The goal is that April 15th is never a surprise. You know what you owe, you've been setting the right amount aside, and you've made every legal move available to reduce that number.

Week 4: The Strategic Conversation

Once a month, you and I talk. Not about data entry or bookkeeping — about the business. These are the questions that actually come up with my clients:

• "I've got $400K sitting in checking. What should I do with it?" — We build a cash management plan. Operating reserve, tax reserve, investment allocation. Every dollar gets a job.
• "My gross margins dropped 3% this quarter." — We dig into which job types or crews underperform and whether it's pricing, labor efficiency, or materials.
• "I want to buy the building we're renting." — I model the buy-vs-lease analysis, tax implications, entity structuring, and cash flow impact.
• "My partner wants to bring his brother in." — We cover entity structure implications, tax consequences, and proper documentation.
• "I'm thinking about selling in five years." — We start engineering the business now: clean books, consistent EBITDA, proper structure, reduced owner dependency.

What This Isn't

I'm not your bookkeeper. I don't do data entry, reconcile accounts, or categorize transactions. You need a good bookkeeper — and I'll help you find one. I work with the numbers your bookkeeper produces.

I'm not a one-time consultant. A consultant writes a report and leaves. I'm in your business every month, watching trends, catching problems early, adjusting strategy. The value compounds over time because I learn your business deeply.

I'm not a full-time hire. A full-time CFO for a $5M contractor costs $175-250K in salary plus benefits. Most companies in this range don't need that. They need 8-15 hours per month of real CFO-level thinking. That's what fractional means.

Why Contractors Specifically?

Most contractors have a bookkeeper who enters transactions and a CPA who files the return once a year. Between those two people, there's a giant void where financial strategy should live.

Nobody is watching the cash flow. Nobody is projecting taxes quarterly. Nobody is restructuring the P&L so you can make decisions from it. Nobody is modeling whether to buy vs. lease, hire vs. sub, expand vs. hold.

That void is where money leaks out. Slowly, invisibly, consistently.

The contractor doing $5M and netting $400K could often be netting $500-600K with the same revenue — just by fixing the financial architecture. Better entity structure, optimized tax strategy, smarter cash management, renegotiated vendor terms, right-sized crew allocation.

What the First 90 Days Look Like

Month One: The Financial Audit

Complete audit of your entity structure, P&L format, bookkeeping quality, last two years of tax returns, insurance coverage, banking relationships, and liabilities. Your P&L gets reformatted into a CFO-grade report with a written assessment of what's working and what's not.

Month Two: Quick Wins

Entity restructuring if needed (S-Corp election, holding company setup), retirement plan optimization, estimated tax recalculation, vendor term renegotiation. These changes often pay for the entire engagement immediately.

Month Three+: The Rhythm

Monthly P&L reviews, 13-week rolling cash flow forecasts, quarterly tax projections, and strategic advisory. By now I know your business well enough to spot problems in the numbers before you feel them on the ground.

Is This Right for You?

Not every contractor needs a fractional CFO. Under $1M with straightforward finances? A good bookkeeper and proactive CPA may be enough.

But if you're in the $3-8M range and any of these sound familiar — you check your bank balance instead of your P&L, you find out your tax liability in April, you've never had someone model a financial decision before you made it, you have cash sitting idle, or you're thinking about selling with no financial framework — then we should talk.