Cascading GC Payment Risk
Your contractor doesn't control when they get paid, the GC does. GC payment disputes, project delays, or GC bankruptcy cascades directly into your receivables. Root cause of most defaults
Commercial HVAC, Electrical & Plumbing Distribution
You're selling to contractors who don't get paid until the project is done. Their risk is your risk.
HVAC, electrical, and plumbing distributors sell to contractors whose payment depends on a general contractor they've never met. When the GC fails, your invoice fails with it.
The Problem
The risk hiding in plain sight
Distributing to the trades means your customer's ability to pay you is directly tied to someone you've never done business with: the general contractor above them. When a project drags, when a GC restructures, when payment is withheld, your contractor absorbs the cash flow hit and passes it upstream to you. In an industry where contractor failure rates are high and payment cycles stretch 60-90 days, you're underwriting risk three layers deep.
The project that everyone thought would pay: Your contractor customer had a $2M commercial HVAC project. They ordered $180,000 in equipment and supplies on Net-60. Then the project owner ran into financing issues. Construction stalled. The GC stopped paying subs. Your contractor, who always paid you on time, suddenly couldn't. By the time the project resolved 9 months later, you had written off $60K and spent more in collections.
60-90
day payment cycles are standard (project-based billing means you wait longer than most)
23%
of specialty contractors experience significant financial distress annually
$180K
average equipment order exposure on a mid-size commercial MEP project
What You're Up Against
The specific risks commercial hvac, electrical & plumbing businesses face
Large Equipment Orders on Extended Terms
HVAC, electrical, and plumbing equipment orders are high-value. One project order can represent $50-200K in exposure on terms, all riding on a project you can't see.
Project-Dependent Payment Timing
Payment often comes in tranches tied to project milestones. Delays mean delays for you too, stretching a Net-60 invoice into Net-120 reality with no recourse.
Contractor Overextension
Contractors who take on too much work at once start managing cash flow by delaying supplier payments. By the time it's visible in your receivables, they're already in trouble.
Specialty Items That Can't Be Resold
Custom-spec commercial equipment often can't be returned or resold. Default on a custom order is a total loss, not a collections problem.
Public Sector Payment Cycle Extensions
Government and institutional projects often have mandated payment timelines that stretch 90-120 days. Contractors working those jobs need longer terms, and more scrutiny.
How CommandInsight Helps
Make every decision with data, not hope
Vet contractor accounts before extending terms on large equipment orders.
Vet contractor customers' financial health before extending large equipment terms
Identify contractors who are overextended across too many simultaneous projects
Check payment patterns to spot contractors managing cash flow at your expense
Set credit limits proportional to the contractor's actual capacity, not just current orders
Monitor key accounts during long projects, not just at order placement
Require deposits on custom-spec items that can't be resold on default
Real scenario
A $6.99 report justified $28.5K in protection on a contractor who looked clean.
A commercial electrical distributor was filling a $95K order for a contractor on a hotel renovation. The contractor had been a 2-year customer with clean payment history. Before releasing the order, they ran a CommandInsight report. The report showed the contractor was active on 6 simultaneous projects, had taken on 40% more work than their previous peak, and payment scores across trade lines had declined significantly in the past 3 months. The distributor required 30% down on the order. The contractor agreed. Four months later, two of their GC projects stalled and the contractor had to restructure.
Two paths forward
The cost of not knowing vs. the confidence of knowing.
Without CommandInsight
- Extend equipment credit to contractors whose GC you've never heard of
- Absorb losses when project cascades hit your receivables
- Watch Net-60 terms stretch to Net-120 with no recourse
- Write off custom equipment orders that can't be resold
- React to payment problems that were visible 90 days earlier in trade data
With CommandInsight
- Know each contractor's financial health before releasing large equipment orders
- Spot overextended contractors before their crisis becomes yours
- Set terms that reflect the actual project risk, not just the customer relationship
- Require deposits on high-value custom specs before committing inventory
You can't control the GC. You can control the credit decision.
Know the financial health of every contractor before the equipment ships.
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