Every month that a pay application isn't submitted on time, the gap widens. Underbilling across three jobs adds $30K–$100K to the gap with no action required other than inaction. The WIP schedule is the tool that catches it — but only if it's running.
Every 10 days added to average collection time at $3M revenue is roughly $80–100K of additional cash tied up in the AR pipeline. Without a formal collections process — follow-up at 30 days, demand at 45, lien at 60 — GCs pay at their own schedule.
Without a 13-week cash flow forecast, a shortfall lands the day it happens. There's no time to draw the LOC, accelerate an AR collection, or delay a payable. The crisis arrives as a surprise even when it was fully predictable three weeks earlier.
Run a WIP schedule at month-end against every active job. Any underbilled job gets a pay application submitted before the GC's billing cutoff. This single system — done consistently — eliminates the most common source of unplanned cash gaps. Use the free WIP schedule template to start.
Written follow-up at 30 days. Formal demand letter at 45 days. Preliminary lien notice at 60 days. Every invoice, every time, automatically. GCs respond to documented process and lien exposure in a way they don't respond to phone calls. Set up the process once and let it run.
Every Sunday, project the next 13 weeks of expected inflows (AR collections, upcoming pay app payments) and outflows (payroll, material invoices, equipment, loan payments). Flag any week where the projected balance drops below your minimum operating reserve. Act on shortfalls when they're three weeks out — not the day they land.
Recalculate your overhead rate quarterly. Update your bid markup every time. If your overhead is 16% and you're pricing in 12%, every job ships with a 4-point margin deficit that the cash flow forecast can never compensate for. The pricing problem has to be solved at the bid — not managed downstream.
Every GC has a billing cutoff date. Build a calendar with every GC's cutoff date for the next 90 days. Treat those dates as hard deadlines — not targets. A pay application submitted one day after the cutoff waits another 30 days. At 1.5% monthly cost of capital on $150K, a missed cutoff costs $2,250. Build the calendar. Hit the dates.
Five systems running consistently: monthly WIP schedule to catch underbilling, formal AR collections process with lien rights escalation, 13-week rolling cash flow forecast, overhead rate recalculated quarterly and built into every bid, and a billing calendar that treats GC cutoff dates as hard deadlines. Miss one and the others can't compensate.
The gap between when costs go out and when cash comes back is structural — labor and materials are immediate, collections take 30–90 days. A $5M contractor may have $400–700K of costs incurred before a dollar of the corresponding revenue is collected. Without a cash flow forecast and aggressive AR management, that gap produces recurring near-misses regardless of revenue.
A weekly projection of every expected cash inflow and outflow for the next 13 weeks. The value is visibility — seeing a shortfall three weeks before it lands gives you time to act. A LOC draw, an accelerated AR collection, a delayed payable. Seeing it the day it hits gives you nothing. Schedule a call — SPM runs 13-week forecasts for Executive Financial clients every month.
SPM builds the five systems and runs them every month. You run the business.
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