13-week cash forecast for home builders
See the tight week before it arrives.
Short answer: A 13-week cash forecast lists expected cash in and cash out for each of the next 13 weeks. For a builder, cash in is mostly deposits and lender draws, and cash out is subs, suppliers, payroll, loan interest and spec carrying costs. It is updated regularly so the builder can spot weeks where cash runs short and act early.
What goes in it
- Starting cash
- Expected draws by house and the week they should fund
- Customer deposits and change order payments
- Sub and supplier payments when they are due
- Payroll, overhead and loan interest
- Spec carrying costs such as interest, taxes, insurance and utilities
- Ending cash for each week
Why builders need it
Draws arrive on the lender's schedule, after inspections. Bills arrive on the subs' schedule. A profit and loss statement will not show that gap. A weekly forecast does.
How we deliver it
A 13-week cash forecast, updated monthly, is part of Builder Controller, with a draw and cash snapshot every 2 weeks. See fractional controller.
Common questions
Why 13 weeks?
It covers about one quarter, long enough to see a problem coming and short enough to estimate with confidence.
How accurate is it?
It is a forecast. Its value is updating it often and comparing it with what actually happened.
Do I need it with only 2 or 3 houses?
It helps most when draws and bills overlap across several houses or when you carry spec homes.
Related
By John Mos, Founder. Updated . We do not give tax or legal advice. Please ask your CPA or attorney.
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