A 13-week forecast looks far enough ahead to reveal developing cash constraints while remaining close enough to update with reasonable accuracy. Unlike an annual budget, it is built around timing: when cash is expected to enter the bank account and when specific obligations must be paid.

That distinction matters in commercial construction. A contractor may show a profit on paper while still waiting for an approved pay application. Meanwhile, payroll, subcontractor invoices, equipment costs, and material deposits continue to fall due. The forecast makes that timing gap visible.

START WITH THE OPENING CASH BALANCE

Begin each week with the amount of cash actually available—not the balance shown on an income statement and not the unused portion of a credit facility. Restricted funds or money already committed to another purpose should not be counted as freely available operating cash.

The closing balance from one week becomes the opening balance for the next. This creates a continuous view of the company’s expected liquidity rather than thirteen isolated estimates.

FORECAST RECEIPTS CONSERVATIVELY

List expected customer receipts by project and by week. Base the timing on the payment process that exists in practice, including the date a pay application will be submitted, the time required for approval, contractual payment terms, and the customer’s actual payment history.

Separate likely receipts from uncertain ones. Pending change orders, disputed invoices, and retention should not be treated as ordinary cash receipts simply because they have been earned. Retainage should be scheduled for the period in which it can realistically be collected, which may be well after the related work i

A useful discipline is to move a receipt to a later week when its timing is uncertain. This produces a more dependable warning system than assuming every customer will pay on the earliest possible date.

MAP EVERY SIGNIFICANT CASH REQUIREMENT

Next, enter the payments the business expects to make each week. Include payroll and payroll taxes, subcontractor payments, materials, equipment rentals, fuel, insurance, debt payments, overhead, and owner distributions. Large deposits or mobilization costs for upcoming projects should be entered when payment will be required—not when the associated work begins.

Project managers can improve the forecast by reporting upcoming commitments, approved change work, and cost overruns promptly. A forecast maintained only by the accounting team may miss obligations that are already developing in the field.

REVIEW THE LOWEST POINT

The most useful number is often the lowest projected cash balance during the thirteen weeks. A positive balance at the end of the period can hide a serious shortfall in week four or five.

When a low point appears, identify what causes it. Is payroll falling before a major progress payment? Are several material deposits due together? Is a large receivable being delayed by documentation or approval? The cause determines the appropriate response.

USE THE WARNING TO TAKE PRACTICAL ACTION

Early visibility gives a contractor more options. The company might accelerate billing, complete missing closeout documents, resolve disputed change orders, negotiate supplier timing, stage a purchase, adjust the start date of a new project, or postpone a nonessential expense.

The forecast can also show when outside working capital may need to be arranged. If the gap cannot be resolved operationally, contractors may compare commercial construction financing options before an urgent payroll or supplier deadline. Any financing cost should be compared with the cost of the underlying timing gap and the expected source of repayment.

UPDATE IT EVERY WEEK

A 13-week forecast is a management process, not a one-time spreadsheet. Each week, replace projections with actual receipts and payments, investigate material differences, and add a new thirteenth week. Assumptions about customer payments, project costs, and new commitments should be revised as conditions change.

Commercial construction will always involve timing uncertainty. Progress billing, retainage, change orders, and overlapping projects make it difficult to judge liquidity from revenue or profitability alone.

A disciplined 13-week forecast turns those moving parts into a practical weekly picture. It will not eliminate delayed payments or unexpected costs, but it can provide enough warning to protect payroll, maintain supplier relationships, and make better decisions about which projects and commitments the business can safely take on. 

for more information

Contractors can use a free 13-week cash-flow calculator at www.rockdrivebusinesscapital.com to organize projected receipts and expenses and maintain this rolling view. The value of the tool comes from consistent, realistic inputs and regular discussion among accounting, project management, and company leadership.

Author Marc Obadia is the founder of Rock Drive Business Capital and writes about business cash flow, working capital, and financing issues affecting small and growing businesses. Rock Drive Business Capital helps U.S. businesses understand and access commercial financing options.