Most roofers who go under aren't unprofitable. They're illiquid. The job made 22 points on paper and the money showed up eleven weeks after the crew got paid. That gap — between when you spend and when you collect — is the single most dangerous number in a roofing business, and almost nobody puts it on the bid sheet.
Your payment terms are not an administrative afterthought you staple to the back of the proposal. They are a pricing decision. A job at net-60 with no deposit is a fundamentally different job than the same scope at 30% down with progress draws, and it should not carry the same number.
Run this on your last three jobs. Write down the date you paid for material, the date you paid labor, and the date the money actually cleared your account — not the invoice date, the cleared date. The spread is your cash gap.
On a typical residential tear-off, material hits your supplier account at delivery and comes due on the 10th of the following month. Labor gets paid that Friday. If you invoice at completion and the homeowner's insurance carrier releases depreciation six weeks later, you have floated roughly 60 to 75 days of hard cost on a job that took three days to build.
On commercial, it's worse and more structured. A GC on net-45 who pays 30 days late is really net-75, and if they hold 10% retainage until the whole building closes out, part of your profit is sitting on someone else's balance sheet for eight months. That's not a payment term. That's an unsecured loan with no interest and no maturity date.
The number that matters: if your cash gap is 60 days and you're running $180K a month in cost of goods, you need roughly $360K of working capital just to stand still. Growth makes it worse, not better. That's why the fastest-growing roofing companies are usually the ones closest to insolvency.
A deposit is not a good-faith gesture and it's not a down payment on your profit. It exists to cover the cash you spend before you have any recourse. Price it that way.
A useful rule: your deposit should cover 100% of non-returnable material plus mobilization, not a flat percentage you picked because it sounded reasonable. On a straightforward asphalt re-roof, that's maybe 15%. On a $340K architectural metal package with 14-week lead time on the panels, 15% is malpractice — you need 40% or better, and you need it before the coil order goes in.
Check your state law. Several states cap residential home improvement deposits — California is 10% or $1,000, whichever is less; Maryland is a third; other states have their own limits and trust-account requirements. Where a cap binds you, you don't just eat it. You restructure: a small deposit plus a material-delivery draw the day the load hits the site gets you to the same cash position legally.
Monthly billing is a GC convention that exists to serve the GC's accounting, not your cash position. Whenever you can, tie draws to events that correspond to when you actually spend money.
For a mid-size commercial re-roof, a schedule that works:
The principle underneath all of it: you should be cash-positive on the job by the end of week one and stay that way. If your draw schedule has you $60K in the hole at the halfway point, you built the schedule wrong, no matter what the margin says.
Retail residential should almost never be deposit-then-final. Two payments means the entire back end of the job — your whole profit and a chunk of your cost — rides on one conversation with a homeowner who is now, for the first time, looking at their roof and finding things to be unhappy about.
Three payments is better: deposit at signing, a draw at material delivery or at tear-off, and the balance at substantial completion. Define substantial completion in the contract and define it as watertight — not "customer satisfied," not "final walkthrough," not "gutters cleaned." Watertight and functioning. Punch items get a short, dated list and don't hold the balance.
The line that resolves most of these before they start, said at the kitchen table and printed in the proposal: "Final payment is due when the roof is complete and watertight, which is usually the same afternoon. My crew doesn't leave the driveway until you've walked it with the foreman."
Collecting on site the day of completion is worth several points of margin all by itself. A check you're mailing an invoice for is a check you're chasing in 40 days.
Insurance restoration inverts the cash flow. ACV comes early, recoverable depreciation comes after completion and after the carrier gets your final invoice, and the deductible is the homeowner's to pay. Three separate sources, three separate timelines.
What protects you: collect the deductible before or at start, not at the end. Bill ACV promptly and get the check endorsed — if there's a mortgage company on it, start that endorsement process the day the check arrives, because mortgagee endorsement routinely adds three to six weeks and nobody remembers to start it early. And get supplements documented and submitted before you close the job out, not after, because a carrier's appetite for a supplement drops to roughly zero once they've paid depreciation.
Never, ever front the deductible. It's insurance fraud in most states, it voids your ability to enforce the contract, and it converts a cash-flow problem into a legal one.
Terms without enforcement mechanisms are wishes. Put these in writing:
Here's the part most contractors skip. If you're going to accept net-60 with 10% retainage, that carries a real cost, and it belongs in the number.
Rough math: 90 days of float on $200K of cost, at a 12% cost of capital, is about $6,000. That's not a rounding error — on a job with $40K of gross profit, you just gave away 15% of it, and you gave it away silently. Either charge for it or don't take the terms.
This is why two bids on identical scope can legitimately differ by 4 to 6 points. The contractor who understands their cost of capital is pricing a different product than the one who isn't. And when a GC pushes back on your number, "my terms are 30 days with materials-on-site billing; I can do net-60 for 3% more" is a far stronger position than dropping your price and hoping.
Bury payment terms in paragraph nine of the contract and you get an argument later. Put them on the proposal, in plain language, in a box the customer can't miss — deposit amount, each draw and what triggers it, final payment and what "complete" means — and you get agreement up front.
The customers who balk at clear terms are the ones who were going to be slow payers anyway. That's not a lost job. That's free credit screening.
The best time to fix your cash flow is the moment you build the bid, when you still have leverage and a blank page. Once the crew is on the roof, you're negotiating from the bottom of a ladder.