Profit and cash flow are not the same
A project may be profitable on paper and still create a cash squeeze if supplier bills or payroll come due before a customer payment arrives. Cash flow planning helps you anticipate timing gaps and make informed decisions before they become urgent.
List expected money in and money out
Start with expected customer deposits, progress payments, final payments, and any other reliable receipts. Then list payroll, materials, subcontractors, equipment rentals, insurance, vehicle costs, taxes, and recurring overhead. Use realistic dates, not just monthly totals, because timing is often the main issue.
Build a rolling forecast
Look ahead several weeks and update the forecast as invoices are sent, payments arrive, project schedules change, and new costs become known. Separate confirmed amounts from estimates. If a payment date is uncertain, note that uncertainty rather than treating it as guaranteed cash.
Plan for slow payments and surprises
- Invoice promptly when contract milestones are met.
- Track receivables and follow up professionally on overdue invoices.
- Review deposit and progress-payment terms before accepting work.
- Keep a realistic allowance for irregular costs and delays.
- Compare forecast cash with the minimum balance your business needs to operate.
Make the forecast useful
A forecast is only useful when it is maintained. Set a regular review time, compare projected balances with actual balances, and record why major differences occurred. Use what you learn to improve future timing assumptions and discuss financing or tax questions with qualified professionals when needed.
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General educational information only. This is not financial, tax, or legal advice.