The problem: A contractor accepts a job with good expected margin but cannot see how much cash it must carry before the first payment.
The solution: Put weekly job spending beside billing milestones and expected receipts before the job starts.
The math
Carrying $500,000 of job costs for 60 days at an illustrative 10% annual borrowing rate would cost roughly $8,200 in financing.
The bid looks sound. Material is ordered, crews start, and subcontractors send their first invoices. The owner submits a progress claim at month end, then waits through review and payment. Payroll does not wait.
The job can eventually earn a good margin and still create a cash squeeze today. Looking at margin alone hides the weeks when the contractor funds the project.
Draw the job's cash curve
Before award, lay out weekly labor, material, and subcontractor payments. Add each planned progress claim, approval step, and expected payment date. The difference between cumulative cash out and cash received is the job's funding need. Show the highest negative point, not just the final profit.
Keep uncertainty visible. An owner payment may arrive later than the contract's nominal term if review takes time. Use the company's own history to choose a realistic date, and separate approved billings from drafts still waiting for documentation.
A look at a general contractor
Consider a $12 million contractor taking on a project that requires about $500,000 of spending before cash catches up. If that balance is carried for roughly 60 days on a line costing an illustrative 10 percent annually, financing alone is about $8,200: $500,000 times 10 percent times 60 divided by 365. Actual borrowing cost will depend on the contractor's facility and cash pattern.
The estimate may still justify the job. The point is to price the funding need into the decision and know when it peaks. A contractor running several such jobs at once may need more working capital than the annual profit number suggests.
Keep the forecast live
AI can update the curve when a purchase order changes, a subcontractor invoice arrives, or a billing milestone slips. The project manager and finance lead should confirm dates and contract terms. The useful alert is specific: this job's expected cash gap next month is larger than the approved plan, and this billing item is the reason.
The four-step check, in your business
- Map cash out. Forecast labor, materials, and subcontractor payments by week.
- Map cash in. Add each billing milestone, approval step, and realistic receipt date.
- Find the peak gap. Review the maximum negative balance before accepting the funding plan.
- Update weekly. Replace estimates with actual costs and confirmed payment dates as the job moves.
Profit answers whether the job is worth doing. Its cash curve answers whether the contractor can carry it while doing it.