A Green River, WY service company working net-60 jobs uses working capital to pay its crew, its parts houses and its rig-up costs while the operator's payment is still outstanding. The money bridges the distance between work done and money received; it does not make the job itself more profitable.
On net-60 terms a service company carries several paydays, parts bills and rig-up costs before the operator pays. Working capital or a credit line covers that stretch; the partner can look at bank statements, receivables and the contract to see how the draw is paid back.
Working Capital for Company and Retainage Gaps: Notes for Green River, WY Contractors
Contractors on larger jobs meet the same gap in another form: retainage. A general contractor or project owner holds back part of each progress payment until the job is closed out, so a subcontractor finishes the work, pays for it, and waits for the last slice.
Invented example, for illustration: an electrical subcontractor on a $180,000 contract with 5% retainage has $9,000 held back until close-out. In this example that $9,000 is earned and invoiced, but it is not money the company can spend on the next job's wire and fittings.
Working capital fills that space: a lump sum or a revolving draw that pays current costs and is paid down as the held-back money comes in. A funding partner reviewing the request may ask to see the contract's retainage clause and the progress billing so far.
Small offices are common in the trade. Construction accounts for 30 establishments with a ZIP 82935 address in the 2023 ZIP Code Business Patterns file, and under five employees is the size class for 63.3% of that ZIP count. For the county, CBP lists 18 electrical contractor establishments with 243 paid employees. The construction page has more on the trades.
Working Capital for Cash Flow: Parts, Rentals and Insurance Between Invoices
A service crew's payroll comes due every payday, and it is not the only bill that lands before the operator pays. Parts houses bill on their own terms, rented equipment is invoiced by the week or month, and insurance premiums arrive on the carrier's schedule.
- Parts and consumables bought on account for the job.
- Rented equipment that the job calls for beyond what the company owns.
- Insurance premiums and the certificates a contract can require.
- Crew travel and lodging when the job site is away from Green River, WY.
Invented example, for illustration: a crew's biweekly payroll is $9,600. Between the day a net-60 invoice goes out and the day it is paid, 4 or 5 paydays fall, depending on where the first one lands. In this example the company pays $38,400 to $48,000 in wages before that invoice turns into cash.
A line of credit suits that pattern because it can be drawn and paid down again. Invented example, for illustration: $40,000 drawn for 60 days at an annual rate of 14% costs $920.55 in interest if the draw is paid back in full when the invoice clears. In this example the interest stops when the balance is paid.
Rig-Up Costs Paid Before the First Invoice Goes Out
Rig-up is the cost of getting to work: moving equipment to the location, setting it up to the operator's standard and putting the crew through any site orientation. Those costs are paid before the first ticket is written.
Invented example, for illustration: a $6,200 crane rental, $3,400 of crew lodging, $1,800 of safety orientation and $4,100 of rig mat rental come to $15,500 for one rig-up. In this example the $15,500 goes out of the account before the job produces an invoice at all.
Support Activities for Oil and Gas Operations (NAICS 213112) establishments in Sweetwater County, WY paid $61.8 million in wages across the year 2023 (CBP). That sum covers all 47 establishments in the code together; it says nothing about what one company pays. Owners can compare their own rig-up costs with the oilfield services page, which lists the kinds of equipment and payroll costs a partner may review.
Crew Payroll and the Bank Statements a Partner Can Ask to See
A funding partner reviewing a service company's working capital request can look at how money moves through the business, not just how much revenue it books. The paperwork it can ask for is concrete:
- Recent business bank statements, which show payroll going out and operator payments coming in.
- A receivables aging report listing each open invoice and how long it has been open.
- The master service agreements or contracts with the operators, including payment terms.
- Payroll reports that match the deposits on the statements.
- Any existing equipment or credit payments already on the books.
For a fixed amount on a fixed schedule, a term loan is the product to look at; it suits a one-time cost such as a large rig-up or a new crew's first stretch of payroll. A line of credit suits costs that repeat. If the question is whether to lease or buy the unit the crew runs, the pulling unit lease-or-buy article works through an example. The Green River, WY page sets out the counts for oilfield service, repair shops, retail and clinics; contractor figures are on the construction page.
By Ridgehollow Finance · Updated
