Cash flow forecast for contractors
A cash flow forecast is a week-by-week estimate of the cash coming into and going out of your bank account, so you can see the week payroll comes up short before you get there. For a contractor, build it for the next 13 weeks. Start with today's balance, add the payments you expect in the week they'll actually land, subtract payroll, supply-house bills, truck notes, taxes and your draw, and carry the ending balance into the next week. Update it every Monday.
Your P&L can't do this job. It tells you whether you made money last month. The forecast tells you whether the money will be in the bank on Friday.
Why do profitable contractors run short?
Because you pay for the work before the customer pays you. The crew gets paid every week, the supply house in 30 days, and the customer at completion or on terms. The money stuck in that gap is your working capital, and it grows with the business.
That's why busy season eats cash. Add a crew in April and you carry their payroll and materials for weeks before the first check clears. Brandon Vaughn, who coaches home service owners, lived the extreme version in one of his own companies:
We hired 25 employees in a 30 day time period… And we added four trucks in one month and added one truck every single month for almost the entire year. It was insanity. … the only way that we were able to do it was we set really really detailed forecast of things. How many sales people how many office people how many operations managers how many technicians how much truck how much working capital do we need.
Slow season squeezes from the other side: the trucks, insurance and core crew still cost money when the phone goes quiet.
Build it in five lines
- Starting cash: what's in the operating account today. Sales tax you've collected and payroll tax you owe aren't yours to spend, so leave them out.
- Cash in, by week: completed and scheduled jobs, in the week each customer actually pays. Residential pays at completion. Commercial pays on its real average, not the terms printed on your invoice. Unsigned estimates stay out.
- Cash out, by week: payroll on payday, supply-house bills on their due dates, truck notes and insurance on their draft dates, rent, software, tax deposits and your draw.
- Taxes: if you pay quarterly estimated taxes, the 2026 due dates are April 15, June 15 and September 15, 2026, and January 15, 2027. Put each payment in its week. Tax planning for contractors covers how to size them.
- Ending cash: starting cash plus cash in, minus cash out. It becomes next week's starting cash.
A spreadsheet with 13 columns is enough, as long as the bank balance and open invoices it starts from are reconciled. Which financial reports contractors need covers the rest of the set.
A worked 13-week forecast
An example landscaping company doing about $1.2 million a year, forecasting from the first week of November into January. Cash out covers payroll (falling from $22,000 a week in November to $13,000 in January as the crew shrinks), $3,000 a week of fuel, supplies and software, $9,000 of truck notes and insurance in the first week of each month, and a $12,000 estimated tax payment in week 11.
| Week | Cash in | Cash out | Ending cash |
|---|---|---|---|
| Start | $60,000 | ||
| 1 | $38,000 | $34,000 | $64,000 |
| 2 | $31,000 | $25,000 | $70,000 |
| 3 | $29,000 | $25,000 | $74,000 |
| 4 | $24,000 | $25,000 | $73,000 |
| 5 | $16,000 | $27,000 | $62,000 |
| 6 | $12,000 | $18,000 | $56,000 |
| 7 | $10,000 | $18,000 | $48,000 |
| 8 | $8,000 | $18,000 | $38,000 |
| 9 | $6,000 | $25,000 | $19,000 |
| 10 | $6,000 | $16,000 | $9,000 |
| 11 | $8,000 | $28,000 | −$11,000 |
| 12 | $8,000 | $16,000 | −$19,000 |
| 13 | $9,000 | $16,000 | −$26,000 |
The bank balance in week 1 looks healthy, and November even adds cash. The forecast shows a $26,000 hole by the end of January, and it shows it 10 weeks early. That's time to collect every open invoice, line up credit, push a truck purchase to spring and set the owner's draw to what the business can carry.
The P&L hides the winter burn
Brandon walked an owner heading into a slow winter through his first-quarter numbers. The P&L showed a loss. The cash forecast showed a bigger one:
We'll look at this and we'll see, oh, $70,000 is how much we're going to lose, but that's net profit… You're still paying all your capital expenditures, which aren't showing up here. The real number we have to do is this cashflow number right here. … you're projecting $108,000 you're going to be burning cash during January, February, and March.
Equipment payments, loan principal and your draw don't show up on a P&L, and they're often what breaks the bank account in a slow month.
How much cushion do you need?
Brandon's rule from his own companies:
I always wanted to have at least three months worth of expenses in my bank at any given point in time. … Make sure you have a business line of credit that's at least 10% of your overall revenue. … Even if you don't use it, have it there as a, as a cushion.
For the example company, that's a $120,000 line of credit. Apply in the fall, while the year's numbers are strong, not in week 11.
Update it every week
The forecast will be wrong, and that's fine. Brandon told an owner who felt like he was typing in made-up numbers:
the one thing I can promise you about our forecast we have now is that it's wrong. So, guarantee you this is not correct. Every number you're putting here is wrong. So, don't get caught up on that. We're just going to make our best educated guess.
Each Monday, replace last week's guesses with what happened and add a new week 13. When a guess keeps missing, like a commercial customer who always pays 20 days late, fix the assumption. Accounts receivable for contractors covers how to speed those payments up.
Keeping the forecast current and acting on it is the core of fractional CFO services.
If you'd like help building the first one, bring your bank balance, open invoices and upcoming bills to a free profit call. Bookkeeping, payroll and tax sit in one house at YetiBooks, so the numbers that feed the forecast come from one place (how it works).
Questions owners ask
How far ahead should a contractor forecast cash?
Thirteen weeks, by the week, to run the business. Add a 12-month version by the month for the bigger decisions: hires, trucks and how deep the slow season will cut.
What's the difference between a cash flow forecast and a P&L?
The P&L counts profit when the work is done and leaves out loan principal and equipment payments. The forecast counts cash when it moves. You need both, and they'll disagree most in your busiest and slowest months.
