13-Week Cash Flow Forecasting — The Tool That Keeps Contractors Out of Trouble

More contractors go out of business from cash flow problems than from lack of work. You can have a full backlog, profitable jobs, and still miss payroll if your cash timing is off. A 13-week rolling cash flow forecast is the tool that prevents this — and most small contractors don't have one.

Why Monthly Cash Flow Isn't Enough for Contractors

A monthly cash flow statement tells you what happened. A 13-week forecast tells you what's about to happen. For contractors whose revenue comes in large irregular chunks (draw requests, milestone billings, retainage releases) while expenses go out every week (payroll, materials, subs), monthly visibility isn't granular enough.

You need to know: Will I have enough cash to make payroll in three weeks when that large material invoice is due and my customer is 30 days slow paying?

What a 13-Week Cash Flow Forecast Includes

A good 13-week forecast tracks week by week:

• Cash Inflows — job billings sent out, expected collection dates based on customer payment patterns, retainage releases, other income

• Cash Outflows — payroll (the most predictable), material suppliers and their payment terms, subcontractor payments, overhead costs, loan payments, tax deposits

• Opening Balance — what you start each week with

• Net Cash Flow — inflows minus outflows for the week

• Closing Balance — what you end each week with

• Minimum Reserve — a floor below which you want to be alerted

The Minimum Cash Reserve

Set a minimum cash reserve — the amount you need to always have in the bank to feel safe. For most contractors this is one to two weeks of payroll plus one week of overhead. Put that number in your forecast and highlight any week where your projected closing balance falls below it.

Those highlighted weeks are your action items. You have time to do something about them — accelerate a billing, delay a discretionary payment, draw on your line of credit — before the shortage actually happens.

How to Build One

Start with your current bank balance. Then for each of the next 13 weeks, enter every expected inflow (be conservative — use expected collection date not invoice date) and every known outflow. Update it every Monday morning with actual results from the prior week and roll it forward.

It takes about 30 minutes per week once it's set up. And the clarity it provides is worth far more than that.

Our contractor financial toolkits at Hilkey Financial Group include a 13-week cash flow forecast tab with automatic minimum reserve alerts, seasonal demand planning rows, and a net cash position summary — pre-built and ready to use.

Stop being surprised by cash crunches. Download our contractor financial toolkit at HilkeyFinancial.com or schedule a free consultation to talk about your cash flow management.