Written for general contractors, remodelers, framers and carpenters, roofers, drywall, masonry and concrete contractors, and kitchen and bath installers in the US, from one-truck outfits to small GCs.
The short version
- Forecast cash 13 weeks ahead, job by job.Update it every week: each pay app and when it should be paid, retainage, payroll, subs and tax. Find your lowest cash week.
- Keep over-billed cash with its own job.Cash billed ahead of the work is held, not earned. It belongs to that job, not to another job's payroll.
- Never let more than one draw go unpaid.Tie draws to visible milestones, and submit pay apps on the contract date with conditional lien waivers attached.
Payroll goes out every week and suppliers want paying in 30 days, but pay apps are paid 30 to 60 days after you submit them under typical contract terms, and retainage waits for substantial or final completion. That is why contractors run out of cash while they are profitable.
The 13-week cash flow
Build it by job and refresh it weekly. Show:
- Each pay app and the date you expect it paid
- Retainage you are owed and retainage you hold
- Materials, sub payments, payroll and payroll tax deposits
- Estimated tax dates and loan payments
- The lowest cash point and the week it falls in
Over-billing is not profit
| Earned revenue: $1,200,000 contract x 45% complete | $540,000 |
| Over-billed: billed ahead of what is earned | $60,000 |
| Billed to date | $600,000 |
| Gross profit earned to date | $108,000 |
$540,000 earned less $432,000 cost to datePercent complete is cost to date over current estimated total cost: $432,000 / $960,000 = 45%. The $60,000 is cash held but not earned, and it must not fund another job.
Over-billed cash has not been earned yet, and over-billings spent on overhead are a known growth trap. In Texas, job payments are also trust funds: knowingly diverting them is misapplication, and the officers who direct it can be liable (Tex. Prop. Code ch. 162). As of Oct 2026.
Banks and sureties read a monthly WIP schedule: contract sum, estimated cost, cost to date, percent complete, earned revenue, billed, over or under billing, and gross profit by job. Fade (a falling estimated margin) and growing under-billings are what sureties question first.
Rules that keep the gap closed
- Take deposits within your state's limit. In California a home improvement down payment is capped at 10% or $1,000, whichever is less, and progress payments cannot run ahead of the work. As of Oct 2026.
- Tie draws to visible milestones, and never let more than one draw go unpaid.
- Submit pay apps on the contract date with conditional lien waivers attached.
- Front-load the schedule of values only as far as the owner's reviewer will accept.
- In northern states, plan for lost exterior days in winter: build a reserve or line up interior work, and use the slow months for estimating.
Lines of credit and SBA loans
A contractor's line of credit is usually priced off prime or Term SOFR, with a borrowing base on eligible receivables that usually excludes retainage and items over 90 days, so check the facility letter rather than a rule of thumb. SBA 7(a) loans can be up to $5 million. As of Oct 2026.
Set up job costing before the first pay app: QuickBooks projects or classes, or Xero tracking categories, with cost codes that match the estimate and retainage receivable and payable in their own accounts. The WIP schedule is only as good as the cost to date behind it.
Asked in Greymill
Percent complete: $432,000 / $960,000 = 45%
Earned: $1,200,000 x 45% = $540,000
Billed: $600,000, so over-billed by $60,000
Gross profit to date: $540,000 - $432,000 = $108,000
That $60,000 is held, not earned. It pays for work still ahead of you on that job.
In Texas it is also a legal risk. Job payments are trust funds. Knowingly diverting them is misapplication, and the officers who direct it can be liable (As of Oct 2026).
The fix: a 13-week cash forecast by job, updated weekly, so you see a short week coming.
FELIX can talk you through a line of credit for the gap. Want me to build the forecast with both jobs in it?
Ask it about your own business
Paste this into Greymill with your own figures, and Cash & Profit works it through for your business.
I run a construction or building business in [state], in the US. I have [number] jobs running: for each, the contract sum, estimated total cost, cost to date, amount billed, retainage held, and the pay app dates and terms [details]. Payroll is [amount] a week and my line of credit is [amount]. Build a 13-week cash flow and a WIP schedule, show my lowest cash point, and flag any job that is over-billed or fading.
More for construction and building in the US
- Pricing labor when the wage is only part of what a carpenter costs meWork out the burdened cost of each productive hour, then price for margin, not markup.Read the lesson
- Not knowing who owes sales tax on the materials and labor in my contractsWhether you pay tax on materials or collect it from the customer depends on the state, the type of work and how the contract is written.Read the lesson
- Starting a job without the license, permits and notices my state requiresLicensing is set by the state and the city, home improvement contracts carry their own notices, and OSHA's construction rules apply on every site.Read the lesson
- Signing a GC's subcontract without knowing which clauses my state will enforcePay-if-paid, lien waivers, indemnity, retainage and venue clauses work differently in each state. Know which to strike before you sign.Read the lesson
- Paying my crew as 1099 subs when they work like employeesIn California an unlicensed sub doing licensed work is presumed to be an employee, and at the comp audit an uninsured sub's pay is usually added to your own payroll and charged premium.Read the lesson
- Getting prequalified with GCs and public owners instead of chasing platform leadsHomeowners check reviews and your license, GCs check your financials, bonding and safety record, and public owners check registration and bonds.Read the lesson
- The GC is late paying and I am not sure I still have lien rightsLien rights can be lost in the first weeks of a job with a missed preliminary notice, so check your notices and deadlines before you chase the money.Read the lesson
Open the interactive lesson · Every construction and building lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- sec. 7159.5(a)(3) (Cash, pay apps, bonding and finance)
- SBA loan program limits; Surety Bond Guarantee limits; current SOP 50 10 (Cash, pay apps, bonding and finance)
- ASC 842 (Cash, pay apps, bonding and finance)
- Surety underwriting and terms; review executed indemnity agreement (Cash, pay apps, bonding and finance)
- Topic 751 (Pricing, estimating and WIP: the math)
- Monthly release (Market sources, rates and lending conditions)
- PPI (Market sources, rates and lending conditions)
- Product pages (Market sources, rates and lending conditions)
- FOMC statement (Market sources, rates and lending conditions)
- NY Fed SOFR (Market sources, rates and lending conditions)
- H.15 bank prime loan (Market sources, rates and lending conditions)
- HB 2237 secs.8, 9 and 11; Tex. Prop. Code secs.53.052(b), 53.055 and 53.056(a-1) (Hard cases: liens, CONTRACTS and payment)
- secs. 162.031, 162.032 (Hard cases: liens, CONTRACTS and payment)
- Bus. and Prof. Code secs.7048(a) to (c), 7031 (Hard cases: liens, CONTRACTS and payment)
- secs. 7108.5, 8412, 8414 (Hard cases: liens, CONTRACTS and payment)
- secs. 713.06, 713.23, 713.345 (Hard cases: liens, CONTRACTS and payment)
- N.Y. Gen. Bus. Law secs.756(1), 756-a(3), 756-c; Lien Law sec.34 (Hard cases: liens, CONTRACTS and payment)
- Bus. and Prof. Code sec.7068.2 (Size, growth and exit)
- Fla. Stat. secs.489.119(3)(a) and 489.127(1)(g) (Size, growth and exit)
- IRC sec. 453 (Size, growth and exit)