The cash flow forecast of a company will review
and analyse the predicted incoming and outgoing
cash for a set period of time (usually a year) and is
often used for business and resource planning and
for analyzing the financial health of companies.
The cash flow forecast of a construction contract
or project deals specifically with the payments
due under a particular construction contract.
The construction contract cash flow will often
inform a company’s overall cash flow as they are
intrinsically linked. It is important to understand both types of cash flow forecast and how and why they are used within the construction industry.
The Contracting project contains many finance elements such as advance payment and retention and performance bond, bank grantee, and subcontractors, banks letter of credit(lc).
This Financial model helps you to deal with all these elements to manage your project.
Cash flow projection gives you the knowledge to better predict your cash needs months in advance. In turn, this can help your construction business grow and show you when a problem is coming on the horizon. Cash flow can be a significant problem for construction companies. Understanding how cash moves through your business throughout the year is critical to success.