Concrete & construction
Construction Cash Flow Calculator
Works construction cash flow, where retention and slow payment compound.
Result
Profit and cash are different things and a growing contractor can run out of cash while profitable, because the work is paid for before the invoice is. This models collection speed, not seasonality.
Get a Free Business AuditHow the calculation works
Progress payments against the timing they actually arrive, with costs paid on supplier and payroll terms, plus the opening balance, giving the running position. Construction has an unusually adverse cash profile: labour and material are paid before the progress claim is submitted, approved and paid, and retention is held beyond that.
What moves the number
- Payment terms against payroll and supplier terms.
- Retention held and when it is released.
- Progress claim approval delays.
- Material purchased ahead of the work.
Where this one goes wrong
Retention is the cash that funds the industry's problems, because a percentage of every claim is held until completion and sometimes beyond, which means a contractor at full capacity has a meaningful amount of its own money sitting in other people's accounts. Price for it. Growth makes it worse rather than better, since more work means more money funded ahead of payment, which is why busy contractors fail more often than quiet ones.
Before you quote
- Model retention and when each release is actually due.
- Plan for growth consuming cash before producing it.
- Submit progress claims promptly and completely.
Questions
About this calculator
Why do busy contractors run out of money?
Because growth consumes cash. More work means more labour and material funded before the progress claim is paid, and retention holds a share back beyond that. Being busy makes the cash position worse rather than better.
What does retention cost?
The use of that money for however long it is held, which on a contractor at full capacity is a meaningful amount sitting in other people's accounts. It is a real financing cost and it belongs in the price rather than being absorbed.
How can the cycle be improved?
By submitting progress claims promptly and completely, since an incomplete claim is returned and the clock restarts. It is the part of the cycle the contractor controls, and it is frequently the longest avoidable delay in it.
The formula
cash tied up = daily invoicing x days to get paid
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How to use this calculator
- Invoiced per month ($). Enter your own figure; the page starts at $57,000.
- Payment terms (days). Enter your own figure; the page starts at 30.
- Days customers actually take. Enter your own figure; the page starts at 46.
- Costs paid out per month ($). Enter your own figure; the page starts at $38,000.
- Cash in the bank now ($). Enter your own figure; the page starts at $22,000.
The result updates as you type, so you can try a figure, see what it does to days of funding gap, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Invoiced per month | $57,000 |
| Payment terms (days) | 30 |
| Days customers actually take | 46 |
| Costs paid out per month | $38,000 |
| Cash in the bank now | $22,000 |
What comes out
| Result | Value |
|---|---|
| Days of funding gap main result | 16 |
| Cash tied up in invoices | $87,400 |
| Monthly surplus | $19,000 |
| Months of cover | 999.0 |
There is $87,400 sitting in unpaid invoices, and customers take 16 days longer than your terms allow. That gap is the money you are lending them for free.
How sensitive the answer is
Holding everything else steady and changing only invoiced per month, this is what happens to days of funding gap. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Invoiced per month ($) | Days of funding gap |
|---|---|
| $28,500 | 16 |
| $42,750 | 16 |
| $57,000 example above | 16 |
| $85,500 | 16 |
| $114,000 | 16 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Invoiced per month ($)
- A money amount, starting at $57,000.
- Payment terms (days)
- A number, between 0 and 180, starting at 30.
- Days customers actually take
- A number, between 0 and 365, starting at 46.
- Costs paid out per month ($)
- A money amount, starting at $38,000.
- Cash in the bank now ($)
- A money amount, starting at $22,000.
What the results tell you
| Result | What it is |
|---|---|
| Days of funding gap | The headline result. A number. |
| Cash tied up in invoices | A money figure. |
| Monthly surplus | A money figure. |
| Months of cover | A decimal figure. |
Order slightly more than this
Volume calculations assume a level, properly prepared base and exact dimensions. Sub-base variation, over-excavation and spillage all consume concrete, which is why most contractors add a margin. Running short mid-pour is far more expensive than a small overage.
Estimating is the easy part
The jobs you never hear about cost more than the ones you mis-measure. BDEVY builds the marketing, systems and automation that bring them in.