Hazelford Funding, a small-business funding service in Lebanon, Tennessee, wrote this article for builders and trade contractors in Wilson County, TN. It explains recurring cash flow issues in construction, shows how to build a simple weekly construction cash flow forecast, and lists practical ways to shorten the gap between paying for a job and getting paid for it.
Why construction cash flow is different
Construction spends first and collects later. Materials are bought before a stage starts, crews are paid every week, and the draw for that stage arrives only after inspection. Retainage holds back part of every payment until the job is accepted. Change orders add work before anyone agrees on the price.
Permit counts show the scale of local building. Wilson County, TN authorized 1,874 new housing units in 2023, 1,927 in 2024 and 1,982 in 2025 (Census Building Permits Survey), and the county had 405 construction employer establishments in 2023 (County Business Patterns). More jobs mean more overlapping gaps to manage.
Cash flow issues in construction, and where each one starts
- Draw delays: inspections, paperwork or lender review push a draw back by days or weeks.
- Retainage: a share of each payment is held until closeout, often long after the crew has moved on.
- Unpriced change orders: extra work done before the price is signed off.
- Front-loaded materials: big orders at the start of a stage.
- Slow-paying customers: commercial clients on long terms, or homeowners who dispute a bill.
- Equipment bought with cash: a machine paid for outright drains the account that pays the crew.
Build a weekly construction cash flow forecast
A construction cash flow projection does not need software. A spreadsheet with one column per week for the next twelve weeks is enough:
- List the opening bank balance at the top.
- For each job, enter expected draws and payments in the week you realistically expect them, not the week the contract says.
- Enter payroll every week, materials when they will be ordered, and fixed costs such as rent, insurance and equipment payments.
- Subtract costs from receipts each week to get the closing balance, which becomes next week's opening balance.
- Mark any week where the balance drops below what you need to feel safe.
Update it every Friday. The weeks you marked are where the business needs a plan.
Illustration: two jobs overlapping
Illustration only: a builder runs two houses. Job A's second draw of $46,000 is expected in week five; Job B starts in week three with a $31,000 materials order and adds $6,500 a week in crew costs. With $22,000 in the account at the start of week three, the forecast shows the balance falling below zero in weeks three and four, then recovering when Job A's draw lands. The shortfall reaches about $22,000 by the end of week four, after two weeks below zero. That number, not a round figure, is what to plan for. These are example figures.
How to improve cash flow in a construction business
- Bill each draw the day the stage is complete, with every document the lender or owner needs.
- Price and sign change orders before doing the work.
- Track retainage owed to you job by job and invoice it promptly at closeout.
- Ask the lumber yard and other suppliers for invoice dates that land after your draw dates.
- Ask for deposits on residential remodel work, where contracts allow.
- Finance equipment instead of paying cash, so the operating account stays available for payroll.
For the gaps that remain, a line of credit lets a builder draw for the short weeks and pay down when the draw lands. The construction funding page covers lines of credit, equipment financing and working capital for contractors.
Retainage, worked through on one job
Retainage is easy to forget because it arrives so late. Writing it into the forecast as its own line, job by job, shows how much of the business's earned money is waiting at closeout.
Illustration only: a framing subcontractor bills $60,000 across four draws on one house, with 10% held back from each. The sub receives $54,000 during the job and $6,000 at closeout, perhaps months later. Across three overlapping houses, $18,000 of earned money can sit with general contractors at once, which is about three weeks of crew costs for a crew paid $6,000 a week. The figures are an example, not an offer.
A line of credit can bridge that wait, but tracking retainage and invoicing it the week a job closes out shrinks the gap first.
Keep the paperwork ready
Partners reviewing a contractor's request want contracts, draw schedules, receivables including retainage, and license and insurance documents. The Tennessee contractor license guide lists what to gather. The Lebanon, TN page holds the county's builder and permit figures.
