0370: How Cash Flow Forecasts Help Contractors

<h1 style="text-align: center;"><span style= "color: #0000ff;"><strong>This Podcast Is Episode Number 0370, And It's About How Cash Flow Forecasts Help Contractors</strong></span></h1> <div>Managing cash flow is a vital part of running a successful construction business. Some contractors think managing cash flow means keeping track of how much money enters and leaves their business, but there's actually more that goes into it. </div> <div> <h3 style="text-align: center;"><span style= "color: #0600ff;"><strong>[Starting Cash + Cash In - Cash Out] = Cash Flow</strong></span></h3> </div> <div>Contractors and sub-contractors know there is more to profits than what is shown above, and most of you rely on your "gut feel" to see when the project has made a profit or not.</div> <div> </div> <div>Cash flow forecasting is an incredibly valuable tool that helps you anticipate cash flow issues, plan for days when your cash flow is limited, and show the bank that you are prepared. <span style="color: #000000;">It's a necessary process that you shouldn't ignore.</span></div> <div> </div> <div> <div> <p><span style="color: #000000;">Here are some ways cash flow forecasts help construction business owners.</span></p> <span style="color: #0600ff;"><strong>They help identify cash flow issues before they happen.</strong></span></div> <div><br /> <div>Most construction companies go through slow periods. Sometimes, those periods are apparent. A seasonal trade business, for example, will have decreased income during the off-season than during the on-season.</div> <div> </div> <div>There can be less obvious peaks and valleys in your income, though you have to prepare for it. </div> <div> </div> <div>Your cash flow forecast can help you monitor your day-to-day cash flow and anticipate when times will be slow before they hit. By predicting when the cash coming into your business might be light—or when you might have to spend more than you're accustomed to—you can avoid a cash crisis.</div> <div> </div> <div>By examining your cash flow ov