Cash flow is the lifeblood of every construction company — but too often, it feels like a mystery. 

You might have a profitable backlog and a busy schedule, yet still find yourself asking, “Where did all the cash go?”

It’s a fair question — and a solvable one. 

For construction firms, cash flow forecasting isn’t about predicting the future — it’s about understanding how timing, billing, retainage, and job progress affect your day-to-day liquidity. The difference between staying ahead or falling behind often comes down to how clearly you can see your cash position before it becomes a problem. 

At Parkins Financial, we help contractors transform that uncertainty into confidence using QuickBooks Online (QBO), structured job costing, and monthly controller oversight. Here’s how to take control of your cash — and keep your crews, subs, and bonding agents happy. 

1️⃣ Why Cash Flow Is So Tricky in Construction 

Most industries bill for products or services once they’re delivered. Construction doesn’t work that way. You deal with: 

• Progress billings (partial payments as milestones are reached) 
• Retainage (money withheld until completion)
• Delayed change orders 
• Upfront costs (for labor and materials long before payment arrives)

This timing gap between “work done” and “cash received” can stretch for weeks — or even months. 

Add multiple active projects, each with its own billing cycle, and it’s easy to lose sight of your true cash position. A single late payment or unapproved change order can trigger a domino effect of payroll stress, delayed vendor payments, and bonding headaches. 

That’s why forecasting cash flow is so important. It’s not a luxury report — it’s a management tool. 

2️⃣ Start With a Clean Foundation: Your QBO File 

Before you can forecast, your numbers must be accurate and up to date. 

A QuickBooks Online Cleanup is often the first step in meaningful cash flow forecasting. It ensures your books reflect reality — not best guesses. 

During a cleanup, we: 

• Reconcile every bank and credit card account
• Correct misclassified job costs 
• Fix payroll allocations 
• Match retainage receivable and payable 
• Align the Chart of Accounts with construction categories (labor, materials, subcontractors, equipment, overhead) 

With a clean QBO file, you can trust that every dollar coming in and going out is recorded properly — which makes your forecasts credible. 

💡 Pro Tip: Automate as much as possible. Set up bank rules, recurring transactions, and payroll allocations to jobs so data stays accurate month to month. 

3️⃣ Understanding the Cash Flow Formula 

At its core, cash flow forecasting answers one question: “How much cash will we have (or need) in the future?” 

The formula is simple, but details matter: Beginning Cash + Expected Inflows – Expected Outflows = Ending Cash 

The challenge in construction is estimating those inflows and outflows accurately. 

Here’s what each piece looks like for your business:

Inflows: 

• Progress billings due (AR)
• Retainage released 
• Change orders approved 
• Loans, draws, or line-of-credit advances 

Outflows:

• Payroll and benefits 
• Subcontractor draws 
• Material purchases 
• Equipment leases
• Overhead and insurance 
• Loan payments and taxes 

The key is timing. Even profitable projects can cause cash shortages if billing lags behind expenses. 

4️⃣ Build a Rolling Cash Flow Forecast

The most effective tool we recommend is a 13-week rolling cash flow forecast. 

Why 13 weeks? It covers one full fiscal quarter — long enough to see trends, short enough to react. 

Here’s how to build it: 

1. Start with your current bank balance.
   – Pull directly from QBO’s reconciled balance. 

2. List weekly expected inflows.
   – Include projected customer payments, retainage releases, and loan draws.
   – Use due dates from your Accounts Receivable report.
   
3. List weekly expected outflows.
   – Payroll, materials, subcontractors, rent, insurance, credit cards.
   – Use your Accounts Payable report and recurring bills as references.
   
4. Add subtotals per week.
   – Ending cash from one week becomes the beginning cash for the next.
   
5. Update it weekly.
   – As payments come in or bills change, adjust your forecast. 

This rolling approach gives you visibility into when you’ll be tight on cash — before it happens. You can then shift job billings, adjust payment timing, or draw on a credit line strategically. 

💡 Pro Tip: Use Excel, Google Sheets, or Smartsheet for flexibility — or automate your forecast inside QBO using Fathom, or custom dashboards

5️⃣ Factor in Work Progress (WIP) 

A good cash forecast goes hand-in-hand with your Work In Progress (WIP) report. 

Your WIP schedule shows: 

• Contract value
• Costs to date 
• Billed-to-date 
• Percent complete
• Over/under billings 

Cash flow forecasting connects the dots between WIP and timing:

• Overbilled jobs (billed more than earned) improve short-term cash flow. 
• Underbilled jobs (earned more than billed) strain cash flow. 

By overlaying WIP and cash forecasts, you can spot which jobs might cause future shortfalls and take corrective action early — such as expediting billing or negotiating retainage terms.

💡 Pro Tip: Review WIP monthly with your controller. It’s one of the best forward-looking cash indicators you have. 

6️⃣ Don’t Ignore Retainage 

Retainage is one of the biggest hidden drains on cash flow in construction. 

Typically, 5-10% of every invoice is held until project completion — meaning cash you’ve earned is tied up for months. 

Your forecast should clearly separate: 

• AR Retainage Receivable (what clients owe you but haven’t released)
• AP Retainage Payable (what you owe subs but haven’t paid) 

Tracking both ensures you’re not overstating available cash. It also highlights when large retainage will occur — allowing you to plan for upcoming inflows or outflows. 

💡 Pro Tip: In QuickBooks Online, use retention tracking accounts or sub-customers for retainage so you can run accurate aging and release reports. 

7️⃣ Build “What-If” Scenarios 

A controller’s secret weapon is scenario planning. Instead of relying on one version of your forecast, create three cases: 

• Best Case: All invoices are paid on time; change orders approved immediately. 
• Base Case: Typical delays and standard retention terms. 
• Worst Case: Key payment delayed, job slowdowns, or added costs. 

This lets you see how much cushion you really have — and where your risk lies.

For example: 

If a $150,000 payment is delayed by 30 days, will you still make payroll? 

If retainage on two jobs isn’t released, will your line of credit cover the gap? 

Scenario planning transforms cash flow management from reactive to strategic. 

8️⃣ The Controller’s Role in Cash Flow Management 

Even the best forecast is useless without oversight. 

That’s where a controller (in-house or outsourced) comes in. 

At Parkins Financial, our outsourced controller services include: 

• Reviewing cash flow forecasts weekly
• Updating WIP and retainage data 
• Identifying short-term cash risks 
• Advising when to accelerate billing or hold vendor payments 
• Coordinating with CPAs and bonding agents

This continuous monitoring helps clients maintain consistent cash flow — and confidence with lenders and bonding companies. 

💡 Pro Tip: Even if you don’t need a full-time controller, consider monthly or quarterly controller check-ins for review and accountability. 

9️⃣ Use Dashboards for Real-Time Insight 

Forecasts are forward-looking — dashboards are right now. 

Combine the two or full visibility. Inside QBO or connected tools like Smartsheet, Fathom, or LivePlan, set up dashboards showing: 

• Current cash balance by bank account
• Outstanding AR & AP 
• Upcoming payroll
• Retainage held and due 
• Projected cash position (from your forecast) 

When your entire team — from owner to project manager — can see these numbers, better decisions happen naturally. 

💡 Pro Tip: Review dashboards weekly in team meetings. Use them as a scorecard for accountability. 

🔟 Common Cash Flow Mistakes Construction Firms Make 

Even experienced contractors fall into these traps: 

1. Confusing profit with cash.
   You can show a profit on paper and still run out of cash if billing lags behind spending. 
2. Ignoring retainage.
   Out of sight, out of mind — until you can’t make payroll. 
3. Not forecasting at all.
   Relying on your bank balance today doesn’t tell you where you’ll be next month. 
4. Skipping reconciliations.
   If your QBO balances aren’t reconciled, your forecast is built on fiction. 
5. Failing to review WIP and AR aging. 

Old receivables and underbilled jobs choke future cash flow. 

Avoiding these pitfalls comes down to consistent habits — and the right financial partner to keep you accountable. 

1️⃣1️⃣ Turn Forecasts Into Decisions 

Cash flow forecasting isn’t about creating pretty spreadsheets — it’s about making better business decisions. 

Here’s how top construction firms use their forecasts: 

• To plan equipment purchases: Confirm cash surplus before buying. 
• To time draws credit lines: Borrow strategically, not reactively. 
• To schedule job starts: Avoid overlapping high-expense projects.
• To community with lenders & bonding agents: Provide data-driven confidence.

When you can show a forecast with supporting WIP and reconciliation schedules, you demonstrate financial maturity — the kind that wins bigger projects and better credit terms. 

1️⃣2️⃣ Cash Flow and the Bigger Picture 

Managing cash flow is part of a broader financial ecosystem that includes: 

• Job costing accuracy 
• Budgeting and overhead allocation
• WIP and percentage-of-completion revenue recognition 
• Payroll burden tracking 
• Financial reviews and audits 

All of these tie back to one principle: control through clarity. 

When your numbers are accurate, timely, and visible, you can make proactive decisions — instead of reactive ones. That’s what a true controller’s mindset delivers. 

🚀 The Parkins Financial Approach 

At Parkins Financial, we don’t just reconcile accounts — we help contractors build financial systems that run themselves.

Our Cash Flow & Controller Oversight Program includes: 

✅ QuickBooks Online cleanup and setup

✅ Job costing structure and WIP reporting 

✅ Cash flow forecasting templates and dashboards 

✅ Retainage tracking and scenario planning

✅ Monthly controller review sessions 

You can get clean books, clear insights, and cash flow confidence — all without hiring a full-time controller. 

Ready to Take Control of Your Cash?
Stop reacting to cash shortages and start forecasting them. 

With a clean QuickBooks file, a simple 13-week forecast, and consistent controller review, your construction company can finally break free from cash flow chaos. 

At Parkins Financial, we help you build systems that tell the truth about your business — before your bank account does. 
👉 Schedule a free consultation today and let’s create your custom Cash Flow Forecasting & Controller Plan.