Apr 14

E434: Projecting And Managing Cash Flow

Stay on top of your cash flow with proper planning and projections.


  1. Cash flow is the biggest small business killer
    1. As contractors we often have to spend money before we can invoice
    2. On some projects it can take 90+ days to get payments
    3. This struggle often causes us to Rob peter to pay Paul – a bad habit
  2. Avoid these issues with good planning
    1. Start with the project – create a cash flow projection for each project
      1. Track costs, billings and receipts – both planned and actual
    2. Summarize the information on a single spreadsheet for the company
    3. Know your numbers
  3. When we plan ahead we can prepare for short-falls
    1. Get the best terms you can on suppliers and subcontractors
    2. Set aside funds from every payment to build a reserve – I recommend at least 3 months of overhead costs in reserve
    3. Control spending when you see a downturn coming
    4. Borrow only when necessary