The 13-Week Cash Flow Forecast- A Survival Tool for Contractors

Cash flow keeps contracting businesses alive. It determines whether a contracting business can operate smoothly from week to week. Projects require cash long before revenue is collected. Payroll runs on a fixed schedule. Material suppliers expect timely payment. When cash timing is not managed closely, pressure builds quickly across the business.

A cash flow forecast provides clear visibility into expected inflows and outflows. The 13-week cash flow forecast is very important for contractors because it focuses on the near term. It captures enough detail to highlight upcoming cash constraints while remaining practical to maintain.

This forecast does not replace a budget or a profit and loss statement. It serves a different role. It tracks liquidity and working capital on a weekly basis, allowing contractors to plan expenses, manage collections, and make decisions with current cash realities in mind rather than assumptions. Let’s understand the cash flow forecast in more detail.

Why Cash Flow Forecasting Matters for Contractors

Cash flow forecasting plays a direct role in how contractors manage day-to-day operations. Construction work requires spending cash before it is collected. Labor, materials, equipment, and subcontractors all require timely payment, while customer payments follow billing schedules and approval cycles. This timing difference makes cash management a top priority.

A cash flow forecast brings structure to this process by focusing on when cash moves. It helps contractors see problems before they appear in the bank account.

Key reasons cash flow forecasting matters include:

• Visibility into timing: A forecast shows when receivables are expected to turn into cash and when payments must be made. This improves planning around payroll, vendor payments, and other fixed obligations.
• Better working capital management: By tracking inflows and outflows week by week, contractors can manage liquidity instead of reacting to shortages after they occur.
• Reduced timing risk: Progress billing, retainage, and change orders often delay collections. A forecast highlights these gaps early, allowing time to follow up on billing, accelerate collections, or adjust payment schedules.
• Stronger financial planning: Regular forecasting supports more informed decisions around hiring, purchasing materials, and committing to new projects without stressing cash reserves.

What Is a 13-Week Cash Flow Forecast

A 13-week cash flow forecast shows expected cash inflows and outflows over the next three months. It focuses on actual cash movement, not profits or accounting numbers. For contractors, this type of forecast helps track when money will arrive from clients and when it needs to go out for payroll, materials, and subcontractors.

Short-Term Cash Flow Forecasting

Short-term cash flow forecasting breaks down cash movement by week. It helps contractors:

• See weeks with potential cash shortages before they happen.
• Schedule payments for payroll, suppliers, and subcontractors to avoid overdrafts.
• Plan collections by monitoring when invoices are due and following up if payments are late.
• Estimate impact of changes like delayed payments or extra expenses.

This approach relies on actual numbers from ongoing projects, making it more accurate than long-term forecasts.

Why the 13-Week View Works for Contractors

A 13-week forecast works well because it balances accuracy and usability:

• Long enough to spot cash gaps and plan actions.
• Short enough to rely on real data rather than assumptions.
• Matches project cycles since most construction contracts and billing schedules fall within three months.
• Supports planning for payroll, supplier payments, and client collections in a realistic timeline.

Key Components of a Contractor Cash Flow Forecast

Such forecast works, if it captures all the critical cash movements in a contracting business. Contractors need to track both inflows and outflows in detail so they can see exactly when money will be available and when obligations must be met.

Weekly Cash Inflows

Cash inflows represent all the money coming into the business each week. For contractors, the main sources include:

• Client payments: Progress billings, milestone payments, retainage, and final invoices.
• Change orders: Approved project modifications that result in additional revenue.
• Other income: Equipment rentals, consulting, or small side projects.

Tracking inflows weekly allows contractors to:

• Identify weeks where collections are low and plan to cover gaps.
• Monitor trends in customer payments and spot delays early.
• Align incoming cash with planned outflows to avoid shortfalls.

Payroll, Materials, and Fixed Outflows

Outflows represent the money leaving the business. Contractors must account for both regular and variable expenses:

• Payroll: Salaries, wages, and benefits for employees and subcontractors.
• Materials and supplies: Payments for materials already ordered or scheduled for delivery.
• Fixed costs: Rent, utilities, insurance, equipment leases, and loan payments.
• Project-specific expenses: Subcontractor fees, site costs, and permits.

Breaking out these outflows weekly helps contractors:

• Ensure critical obligations are covered before cash is committed elsewhere.
• Spot weeks where multiple large payments overlap, creating temporary cash stress.
• Adjust spending or delay non-essential purchases when cash is tight.

How to Build a Weekly Cash Flow Forecast

A weekly cash flow forecast tracks cash for the next 13 weeks. The goal is to see your cash position at the start and end of each week and understand how inflows and outflows affect your business.

Here’s how a typical 13-week forecast can be structured:

Weeks 1–4: Immediate Cash Visibility

The first four weeks focus on cash you already know is coming or going.

Inflows:

• Client payments that are already invoiced and expected within the month.
• Retainage releases or milestone payments scheduled in the next 30 days.

Outflows:

• Payroll and subcontractor payments for ongoing jobs.
• Materials and supplies for jobs underway.
• Fixed costs like rent, insurance, and equipment leases.

Identify any immediate gaps between incoming cash and obligations. If a shortage appears, contractors can plan short-term measures like delaying discretionary expenses or requesting faster payments from clients.

Weeks 5–8: Mid-Term Planning

Weeks 5–8 are slightly less certain but still actionable.

Inflows:

• Scheduled payments based on signed contracts and progress billings.
• Anticipated change orders that are already approved.

Outflows:

• Payroll projections for upcoming weeks, including planned overtime.
• Upcoming material deliveries and subcontractor schedules.
• Expected loan or lease payments.

This period helps contractors prepare for trends in cash flow, not just immediate gaps. For example, if multiple jobs require material purchases in the same week, the forecast highlights potential overlap that could strain cash.

Weeks 9–13: Forward-Looking Awareness

The final five weeks focus on visibility rather than certainty.

Inflows:

• Forecasted payments from contracts in progress, based on historical collections and project milestones.
• Pending change orders that are likely to be approved.

Outflows:

• Planned payroll for expected projects.
• Large equipment purchases or major subcontractor payments scheduled for upcoming jobs.
• Any anticipated tax or insurance payments.

These weeks allow contractors to plan, such as scheduling financing, adjusting billing timing, or delaying non-essential purchases. While not exact, they provide enough insight to prevent surprises.

Weekly Structure Example – (Can make a image from this)

A simple weekly layout can include:

• Track starting and ending cash weekly to spot low points.
• Include both known and anticipated inflows for accurate planning.
• Update weekly as invoices are paid, projects change, or expenses are added.

Why Weekly Tracking Matters

1. Shows cash gaps early – Contractors can act before running short.
2. Supports operational decisions – Hiring, purchasing, or bidding for new work becomes easier with visibility.
3. Improves collections – Identifies weeks when client payments need follow-up.
4. Reduces reliance on short-term credit – Weekly clarity allows for better scheduling of bank lines or overdrafts if needed.

Managing Liquidity and Working Capital

A 13-week cash flow forecast is only useful if contractors use it to manage liquidity and working capital effectively. Liquidity means having enough cash to cover obligations as they arise, while working capital refers to the cash tied up in projects, inventory, and receivables. Tracking these closely helps prevent surprises and keeps projects running smoothly.

1. Weekly Liquidity Management

Using the 13-week forecast, contractors can monitor cash on a weekly basis:

• Weeks 1–4: Focus on covering immediate obligations. Ensure payroll, subcontractor payments, and essential material costs are funded. If a gap appears, consider accelerating collections or temporarily delaying non-essential spending.
• Weeks 5–8: Evaluate trends in cashflow. Multiple projects may have overlapping expenses. Identify weeks where multiple payments coincide and plan to stagger spending.
• Weeks 9–13: Look to anticipated cash needs, such as large equipment purchases or tax payments. Early visibility allows for planning financing or negotiating better payment terms with clients or suppliers.

2. Managing Working Capital

Working capital is affected by:

• Accounts receivable: Cash tied up in unpaid invoices
• Inventory and materials: Prepaid supplies or materials on-site
• Accounts payable: Payments due to vendors or subcontractors

By tracking these in a weekly forecast, contractors:

• Prioritize collections: Identify weeks where client payments are crucial for cash coverage.
• Schedule purchases: Align material deliveries with cash availability rather than project start dates alone.
• Plan payments: Delay non-critical vendor payments if needed to maintain liquidity without harming relationships.

3. Aligning Cash Timing with Operations

The 13-week forecast helps contractors match cash inflows to outflows:

• Progress billing: Ensure milestone payments arrive before major project costs hit.
• Payroll: Schedule employee and subcontractor payments according to expected cash.
• Materials and overhead: Avoid tying up cash unnecessarily in inventory or fixed costs.

Improving Cash Inflows Through DSO Optimization

For contractors, getting paid on time is just as important as controlling expenses. Days Sales Outstanding (DSO) measures the average number of days it takes to collect payment after invoicing. A high DSO ties up cash, creates working capital strain, and increases reliance on borrowing. Using a 13-week cash flow forecast can help contractors monitor and improve DSO week by week.

1. Track Invoices Weekly

• Week 1–4: Record all invoices issued and expected payment dates. Compare actual collections to forecasted inflows. This highlights client paying late or milestones delayed.
• Week 5–8: Review trends in collections. Are certain clients consistently late? Identify recurring issues and plan follow-ups proactively.
• Week 9–13: Use historical data to anticipate future cash timing. Adjust forecasted inflows for clients with slower payment patterns.

2. Prioritize Collections

Weekly tracking allows contractors to focus on invoices that impact immediate cash needs:

• Identify invoices due in the next one to two weeks.
• Send reminders or escalate follow-ups for overdue payments.
• Consider offering early payment incentives for key clients to accelerate cash.

3. Align Billing With Project Milestones

• Invoice as soon as milestones are completed, rather than waiting until the end of the project.
• Ensure retainage is clearly tracked and forecasted in the weekly cash flow.
• Adjust billing schedules in the forecast to match cash requirements for upcoming weeks.

4. Analyze DSO to Make Decisions

• Use weekly DSO trends to spot clients that consistently slow down cash flow.
• Factor expected delays into the 13-week forecast to prevent surprises.
• Adjust project or payment terms where possible to maintain steady cash inflows.

Conclusion

Managing cash flow is one of the most important tasks for any contractor. A 13-week cash flow forecast lets you see exactly when money will come in and when it needs to go out. By tracking weekly inflows and outflows, planning for payroll and material costs, and keeping an eye on collections, you can prevent short-term cash shortages and avoid last-minute borrowing.

Regularly reviewing your forecast also helps you make smarter decisions. You can plan project expenses, schedule subcontractor payments, and prioritize collections without guessing or reacting under pressure. It turns cash management from a problem into a tool for smoother operations.

If you want to implement a 13-week cash flow forecast that fits your business and gives real-time visibility over your cash, book a call with Atheneum today. Our team can help you set up a system that makes planning, monitoring, and decision-making much easier.