Most construction cash flow forecasts run a month behind because they're rebuilt at month-end from the accounts, which only know what has already been invoiced and paid. A forecast that looks ahead has to start from the jobs instead: when each progress claim will go out and get paid, which retentions are due back, what you've committed to subcontractors and suppliers and when those bills fall due, and how much each job still costs to finish. Put those into a 13-week cash flow forecast, update it every week from your job system and Xero or MYOB, and the tight weeks show up while you can still do something about them.
This is general information, not financial advice; talk to your accountant about your own numbers.
Why a forecast built from the accounts is always late
The usual routine: the month closes, someone waits for the last bills and subcontractor claims, updates the WIP (work in progress) spreadsheet, and only then rolls the forecast forward. By the time it's ready, the first few weeks it "forecasts" have already happened.
The deeper problem is what the accounts can see:
- Receipts come from invoices already raised. Next month's claims aren't in Xero or MYOB yet.
- Costs come from bills already entered. A subcontract signed last week isn't in the accounts until the bill arrives; we cover that delay in the 3 week blind spot.
- Retentions sit as a balance, not a date. The accounts don't know when they'll be released.
So a forecast built from the accounts is mostly a look backwards with averages added, and in construction, where cash moves in large, lumpy claims, averages hide exactly the weeks you need to see.
The inputs a forward-looking forecast needs
A construction cash flow forecast works job by job, then adds up. For each active job you need six things.
1. The progress claim schedule
When will you claim, and roughly how much? The contract sets the claim date and the amount follows the work done, so the job program is a better guide than last month's invoice.
2. When each claim will actually be paid
The claim date isn't the cash date. Each contract sets payment terms, and security of payment law sets limits and deadlines that differ by state. Rather than restate them here, see our guide to progress claims, payment schedules and retention tracking, which sets out the Queensland, NSW and Victorian rules. In the forecast, each claim lands in the week it's due to be paid under that contract, adjusted for how that client actually pays.
3. Retentions held and due for release
Retentions your clients hold come back at practical completion and the end of the defects period, so those dates go in as receipts. Retentions you hold from subcontractors go back out on the same kind of dates. If retentions sit in a trust account, check the current rules on qbcc.qld.gov.au and with your accountant, because that money isn't free for day-to-day spending.
4. Committed costs and when they fall due
Every signed subcontract and purchase order is cash you'll pay out. The forecast needs the amount still to be billed on each, when the bill will land, and the payment terms on top. Most forecasts miss this, because it lives in the job system or on email, not in the accounts.
5. Cost to complete and percentage complete from WIP
Cost to complete covers what hasn't been ordered yet: labour, materials and later subcontracts. Spread it across the job's remaining weeks using percentage complete and the program. A current WIP report gives you this directly; our WIP reporting guide for builders on Xero explains the report itself.
6. Over and under billing
WIP also shows whether each job is billed ahead of or behind the work done:
- Over-billed jobs have collected cash before the work is done. The bank looks healthy, but the costs are still coming, so the forecast shows them going out with no matching claim.
- Under-billed jobs have done work you haven't claimed, cash you've effectively lent the client. The forecast should show a larger next claim.
A simple structure for a 13-week forecast
Here's a hypothetical layout, just to show how the pieces fit.
Columns: the next 13 weeks, starting from this Monday.
Rows:
- Opening cash (this week from the bank; later weeks from the previous week's closing cash).
- Receipts by job: progress claims in the week they're due to be paid.
- Retention releases due back to you.
- Other receipts (for example, a deposit on a new contract).
- Subcontractor payments by job, from committed subcontracts and claims received.
- Supplier payments by job, from purchase orders and their terms.
- Cost to complete not yet committed, spread by week.
- Retentions you're due to release to subcontractors.
- Wages, super and PAYG.
- Overheads: rent, vehicles, insurance, loan repayments.
- GST and other tax payments, on the dates your accountant gives you.
- Closing cash, and the lowest week flagged.
For example, if Job A's claim goes out in week 2 but its payment terms put the cash in week 5, while its formwork subcontract is billed in week 3, the forecast shows a dip in weeks 3 and 4 that a monthly view would smooth over.
Run it weekly, not monthly
A monthly forecast is out of date within a fortnight; one late claim can change the picture. A weekly rhythm keeps it useful:
- Roll forward each Monday: drop last week, add a new week 13.
- Swap in actuals for anything paid or received.
- Update each job: new orders and subcontracts, changes to the program, claims sent, payment schedules received.
- Look at the lowest week and decide what to do: chase a claim, move a payment, or hold a purchase.
If you're not yet in a weekly habit at all, start with the three numbers in cash flow management for builders who hate spreadsheets. The 13-week forecast is the next step up.
What has to flow from your systems
The forecast is only as current as its slowest input. To keep it current without a day's work each week, these need to flow across automatically:
- From the job or project system: claim schedule, contract values and variations, subcontracts and purchase orders still to bill, cost to complete, percentage complete, and completion and defects dates.
- From Xero or MYOB: bank balance, invoices and bills (raised and paid), payment terms and payroll totals.
- Entered once per contract: payment terms, retention percentage and release stages, and the state the job is in.
Joined up, WIP and the forecast come from the same numbers and neither waits for month-end. That's what our construction cash flow forecasting and construction WIP reporting work does: connect the job system to the accounts so both reports update themselves.
When a spreadsheet is fine, and when to automate
A cash flow forecast template in Excel is fine when:
- you run a handful of jobs at a time,
- one person owns it and has time to update it weekly, and
- orders, claims and retentions are already easy to find.
It's time to automate when:
- the forecast only gets rebuilt at month-end,
- commitments and claim dates are copied by hand from several places,
- the WIP report and the forecast disagree, or
- you run several entities, or jobs in more than one state.
Before you buy anything, check your current job system. Some construction software has forecasting built in, and if it already holds your claims and commitments, using it properly may be all you need. More on the whole picture is on our construction industry page.
Frequently asked questions
What is a 13-week cash flow forecast?
A week-by-week view of cash in and out over about the next three months: short enough to be accurate, long enough to show a tight week coming.
Why is my cash flow forecast always a month behind?
Usually because it's rebuilt at month-end from the accounts, which miss future claims and committed costs until they're invoiced or billed.
Does Xero or MYOB do construction cash flow forecasting?
They hold invoices, bills, bank balance and payment terms. They don't hold claim schedules, committed subcontracts, cost to complete or retention release dates, so most builders combine them with their job system.
How does WIP affect cash flow?
WIP shows cost to complete, which is future spending, and over or under billing. Over-billing means you've already collected cash for work still to be paid for. Under-billing means cash is waiting on your next claim.
If your forecast only catches up at month-end, book a free initial chat. We'll look at where your claims, commitments and WIP live now and tell you honestly whether a better spreadsheet will do or whether connecting your systems is worth it.