The problem is timing, not profit
Contractors routinely run profitable jobs and still run short of cash. Labor and material go out weekly; progress billings collect on a lag; retainage collects last. A profitable year can contain several weeks where payroll is the binding constraint.
Build the projection on the job schedule
A useful construction projection starts from the work-in-progress schedule, not from last year's income statement.
- Expected billing dates and amounts per job
- Historical collection lag by customer or general contractor
- Retainage balances and expected release dates
- Weekly payroll and payroll-tax deposit dates
- Material and supplier terms per job
- Equipment debt service and lease payments
Update weekly, on a rolling horizon
Thirteen weeks is long enough to see a squeeze forming and short enough to stay accurate. Updated weekly, it turns cash management into a scheduling decision instead of an emergency.
Keep payroll-tax deposits out of the flex
When cash tightens, payroll-tax deposits can look like a place to buy time. They are not. Unpaid trust-fund amounts carry personal exposure for responsible individuals and are among the most aggressively pursued balances in the system. Treat those deposit dates as fixed in the projection.