A 13-week cash flow forecast shows, week by week, the cash you expect to come in and go out over the next three months. For a contractor it’s built around pay applications, retainage, payroll and big supplier and subcontractor payments. It’s updated every week, so you see a shortfall while there’s still time to fix it.
Thirteen weeks is one quarter: long enough to see a problem coming, and short enough to forecast with real numbers instead of guesses.
What goes in it
Cash coming in
- Pay applications you expect to be paid, by job and by week, based on when each customer really pays, not the contract terms
- Retainage released at closeout
- Approved and billed change orders
- Other receipts, like equipment sales, loan proceeds or money the owners put in
Cash going out
- Payroll and payroll taxes, every week
- Union benefits, if you have union crews
- Subcontractor and supplier payments, by due date
- Equipment payments, rent, insurance and bond premiums
- Loan payments and interest
- Tax payments and owner draws
How to build one
- Start with today’s bank balance. Use what’s actually in the bank, not the book balance.
- Map receipts by job. For each job, when will the next pay applications be paid, based on how that customer really pays?
- Enter payroll and fixed costs. They’re the most predictable lines, so put them in first.
- Add payables by due date. Pull them from your accounts payable aging and the subcontracts and purchase orders you’ve committed to.
- Add one-time items. Equipment purchases, insurance renewals, tax payments, loan payments. If you’re buying materials early to get ahead of construction material tariffs, put those purchases in too.
- Find the low point. The lowest weekly balance, and the week it hits, is the number that matters.
- Update it every week. Replace the week that just ended with actual results and add a new week at the end.
A sample forecast
| Week | Starting cash | Cash in | Cash out | Ending cash |
|---|---|---|---|---|
| 1 | $250,000 | $180,000 | $210,000 | $220,000 |
| 2 | $220,000 | $40,000 | $150,000 | $110,000 |
| 3 | $110,000 | $60,000 | $190,000 | -$20,000 |
| 4 | -$20,000 | $260,000 | $160,000 | $80,000 |
In this sample, week 3 goes negative because two payrolls and a large supplier payment land before the next pay application is paid. You can see it a month ahead, so you can bill earlier, move a payment, or draw on your line of credit, instead of finding out on payroll day. We’ve had forecasts catch weeks like this for clients, with time to fix them before payroll.
What to watch
- The lowest balance, and the week it hits
- How last week’s forecast compared with what actually happened
- Customers who pay slower than you forecast
- Retainage that should be released but isn’t
- How much you’re leaning on your line of credit
Forecast, budget and WIP: three different tools
Your budget plans the year by month. Your WIP schedule shows profit job by job. The 13-week forecast shows cash week by week. You need all three, because they answer different questions.
Mistakes to avoid
- Forecasting receipts on the contract terms instead of how customers actually pay
- Forgetting retainage
- Leaving out once-a-year payments like insurance renewals and tax deposits
- Building it once and never updating it
We hear “I keep it in my head” a lot, mostly from smaller companies. Nobody can hold the cash timing of every job in their head while doing a hundred other things. The opposite problem is just as common: an owner gets a forecast, says it looks nice, sets it aside and five minutes later makes a decision that isn’t in the plan. A forecast only helps if you check your decisions against it.
How we help
We build your 13-week cash flow forecast around your draws, retainage and payroll, and keep it current every week. See our cash flow forecasting for contractors, read cash flow vs profit, or see all our construction accounting services. See how we work with roofing and HVAC companies.
FAQs
What is a 13-week cash flow forecast?
A week-by-week estimate of the cash coming in and going out over the next 13 weeks, so you can see shortfalls before they happen.
Why 13 weeks?
It’s one quarter: long enough to see a problem coming, and short enough to forecast with real numbers.
How often should a 13-week cash flow forecast be updated?
Every week. Replace the week that just ended with actual results and add a new week at the end.
What should a contractor include in a 13-week cash flow forecast?
Pay applications by job and week, retainage releases, payroll, subcontractor and supplier payments, equipment and loan payments, insurance, taxes and owner draws.
Is a 13-week cash flow forecast the same as a budget?
No. A budget plans the year by month. A 13-week forecast tracks cash by week and changes as jobs and payments move.
Should I build more than one version of the forecast?
Yes. Keep your base forecast, plus a version where a big customer pays a month late or a job slips. Comparing the two shows how much cash or credit you’d need if things go wrong.
