Watch when money moves as well as what the job earns
A profitable job can create a cash shortage if you pay suppliers and staff long before the customer pays you. A healthy-looking bank balance can also include money needed for taxes, payroll or work you have not delivered yet.
Keep a forward view of receipts and payments alongside your job profitability review. A cash forecast records when money is expected to enter and leave the business. It helps reveal a shortfall early enough to make a decision. [R9]
Build the first version simply
Use weekly periods for the next several weeks when timing is tight, then extend the view as useful. Start with the actual cash available. Add expected receipts by realistic payment date and subtract expected payments when they must be made. The closing balance becomes the next period's opening balance.
Include payroll, suppliers, rent, debt payments, tax payments and owner withdrawals where applicable. Loan receipts are cash movements, not sales. Tax held for payment is not freely available profit. Your accountant can help you organize the categories consistently.
Mark uncertainty
Separate confirmed commitments, expected receipts and speculative work. A quote awaiting a decision should not quietly become the cash you rely on for next week's payroll.
For uncertain receipts, record why you expect the date and what could change it. Run a downside version in which a major payment arrives later. Avoid a weighted average that makes a serious timing risk disappear into a comfortable-looking total.
Use the warning to make a decision
If the forecast shows pressure, review timing, purchasing commitments, overdue invoices, agreed billing milestones and spending you can genuinely defer. Discuss appropriate options with your accountant or advisor early. Do not assume you can change agreed payment terms or delay obligations unilaterally.
Workload matters here too. Accepting another job may require materials and labor before it generates usable cash. Growth can increase the need for working capital.
A weekly habit: replace last week's forecast with actual cash movements and explain the differences. Was a customer late, a supplier payment early, a cost omitted or the assumption simply optimistic? Update the remaining weeks.
The forecast does not need to be impressive. It needs to give you a useful warning. A clear sheet you review every week is worth more than a detailed model based on dates nobody checks.
A four week forecast that reveals the tight point
Here is a fictional cash forecast in currency units. It is deliberately short so you can see the mechanism. A real forecast needs all relevant receipts and payments, including tax and financing movements, and a horizon suited to the business.
| Cash movement | Week 1 | Week 2 | Week 3 | Week 4 |
|---|---|---|---|---|
| Opening cash | 12,000 | 9,000 | 2,000 | 4,000 |
| Expected receipts | 8,000 | 2,000 | 12,000 | 6,000 |
| Planned payments | 11,000 | 9,000 | 10,000 | 7,000 |
| Closing cash | 9,000 | 2,000 | 4,000 | 3,000 |
The month ends above zero in this simplified view. The low point is still only 2,000 at the end of week two. If payments fall early and receipts late within a week, the daily position could be tighter. Use finer detail where that matters.
Test the important assumption
Now move the 12,000 receipt from week three to week four. Week three would close at negative 8,000. Week four would still end at 3,000 if all the assumed movements happened. The month-end result hides the intervening shortage.
That negative figure is a warning that the plan cannot be funded from the stated cash alone. It is not permission to miss obligations. You need a feasible response before the payments fall due.
Ask useful questions
Is the 12,000 payment date agreed and credible? Has the milestone invoice been issued correctly? Are any required approvals still missing? Which outgoing payments are fixed commitments, and which are genuinely optional or negotiable? What cash buffer does the business need for uncertainty?
The answers may reveal an administrative fix, a commercial negotiation, a financing need or a job you should not take on under the proposed terms. Keep the decision specific to the situation and involve your advisor where appropriate.
Reuse the structure
Write opening cash, receipts, payments and closing cash for each week. Beneath it, list the assumptions most likely to change the result. Give each important assumption an owner and a review date.
You can start with this four-week view today. Extend it to cover the commitments your business makes further ahead. The purpose is to see the point where cash becomes constrained while there is still time to respond, rather than discovering it when an invoice must be paid.