How to Build a 90-Day Cash Flow Forecast for Your Contracting Business
A 90-day cash flow forecast is the difference between reacting to your bank balance and making proactive decisions about your business. It tells you whether you can afford to take on a new job, whether you need to accelerate collections before payroll week, and whether your line of credit is a safety net or a crutch you are relying on every quarter.
Why 90 Days Is the Right Window for Contractors
A 30-day forecast is too short to catch the cash gaps that kill contracting businesses. Most jobs have a 30–60 day lag between when you front costs and when the first draw arrives. A 30-day view will show you making payroll this week but miss the $40,000 shortfall coming in week seven when two jobs are in the cost-heavy phase simultaneously.
A 12-month forecast is too speculative for most small contractors. You do not know which jobs you will win in Q4. You cannot predict material price swings six months out. The further you project, the less useful the numbers become.
Ninety days is the sweet spot. It covers your current active jobs through their next draw cycles. It includes your next two payroll periods. It captures the fixed overhead commitments you know are coming. And it is short enough that your inputs are based on real data rather than guesses.
The Five Inputs for a Contractor Cash Flow Forecast
Opening balance: Your actual bank balance today, minus retainage held and minus any committed spending that has not yet cleared. This is your Safe-to-Spend number, not your bank balance.
Projected inflows: Expected draw payments from active jobs, retainage releases scheduled for the period, and any new job deposits you expect to receive. Be conservative — use the contract draw schedule, not your optimistic estimate of when the GC will actually pay.
Projected direct costs: Material purchases, subcontractor payments, and equipment rentals tied to active jobs. These should be estimated from your job budgets, not from historical averages, because they are job-specific.
Fixed overhead: Insurance, truck payments, software subscriptions, office rent, and any other costs that recur regardless of job volume. These are the most predictable inputs in the forecast.
Variable overhead: Fuel, small tools, marketing, and other costs that scale loosely with activity. Use a rolling 90-day average from your transaction history as the baseline.
The most common forecasting mistake: Using revenue as the inflow number instead of cash received. A $120,000 draw request is not $120,000 in cash — it is $108,000 after 10% retainage. Model the cash you will actually receive, not the invoice amount.
The Three Scenarios You Must Model
A single-line forecast is not a forecast — it is a hope. A real 90-day forecast runs three scenarios simultaneously so you understand your range of outcomes and can make decisions accordingly.
Base Case: Current Trajectory
The base case uses your actual draw schedule from active contracts, your historical overhead averages, and no new work. This tells you what happens if you execute your current backlog cleanly and do not win any new jobs. For most contractors, the base case reveals a cash trough in weeks 6–10 when job costs are high and draws have not yet arrived. Knowing this trough exists lets you plan around it — accelerate a collection, delay a discretionary purchase, or arrange a short-term credit facility before you need it.
Optimistic Case: New Job Starts on Schedule
The optimistic case adds the job you are currently bidding, assumes it starts on the proposed date, and models the cash impact of front-loading costs before the first draw. This case often surprises contractors — winning a new job can temporarily worsen your cash position before it improves it. If the optimistic case shows a negative cash balance in week four, you need to negotiate a deposit or a faster first draw before signing the contract.
Stress Case: One Draw Is 30 Days Late
The stress case delays your largest expected draw by 30 days. GCs pay late. Owners dispute invoices. Inspections get rescheduled. The stress case tells you whether a single payment delay would threaten payroll or force you to draw on your line of credit. If the stress case shows a negative balance, you need a larger cash reserve or a smaller overhead structure before you are comfortable running at your current volume.
Frequently Asked Questions
How far out should a contractor's cash flow forecast extend?+
A 90-day forecast is the standard for most general contractors. It covers one full billing cycle for most projects, captures upcoming payroll obligations, and gives enough runway to make hiring and bidding decisions. Extend to 180 days if you are carrying large commercial projects with long draw schedules.
What inputs do I need to build a 90-day cash flow forecast?+
You need four inputs: your current bank balance, your expected inflows (draw schedule by job), your expected outflows (payroll dates, material orders, sub payments, overhead), and your retainage balances. The forecast is only as accurate as these inputs.
What is the difference between a base case, optimistic, and conservative cash flow scenario?+
The base case uses your most likely draw dates and payment timing. The optimistic scenario assumes all draws arrive on schedule and no unexpected costs occur. The conservative scenario delays draws by 2 to 3 weeks and adds a 10% cost buffer. Running all three shows you the range of outcomes and helps you decide whether you need a line of credit.
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