One of the more common concerns we hear from subcontractors is that financial statements will be used against them in negotiations. It's a reasonable concern. If a customer knows you're profitable, won't they just try to squeeze your margins?
What's interesting is that after years of conversations with GCs, we've never heard anyone express concern that a subcontractor is making too much money. If anything, the concern is usually the opposite: that profitability is too low to provide a buffer if something goes wrong.
The questions tend to be much more practical:
- Can the company support the amount of work it's taking on?
- Is growth outpacing working capital?
- If a project runs into trouble, does the business have enough financial strength to absorb the impact?
GCs are typically looking for signs of financial stability, not opportunities to negotiate away profitability.
That's an important distinction, because many subcontractors view their financial statements as information that needs to be protected. Meanwhile, the project team reviewing them is often trying to answer a completely different question: whether the company will still be financially healthy six months from now.
“After years of conversations with GCs, we've never heard one worried that a subcontractor is making too much money.”
— COMPASS analytics team
