A 12-month cash-flow forecast for trades businesses (template)

Ask a builder’s accountant how the year went and you’ll hear about margin. Ask the builder and you’ll hear about February — the month the progress claim was disputed, wages fell on a Thursday, and the BAS was due Friday. Both are describing the same business. Only one of them is describing the bank account.

A trades business lives and dies on timing: you buy materials and pay wages this week for work you’ll invoice at month’s end and collect — maybe — 30 to 60 days later, minus retention you’ll see next year. Profit can be excellent while cash is terrifying. The fix isn’t a bigger overdraft; it’s seeing the squeeze months out. That’s all a 12-month cash-flow forecast is: the next twelve Februaries, on paper, while there’s still time to change them.

The template, column by column

Build twelve monthly columns. Each one answers four questions.

Opening cash — what’s actually in the bank on the 1st (last month’s closing figure).

Cash in — modelled on when clients actually pay. Not your invoice dates: your collection dates. Split receipts into: progress claims (enter the claim schedule per job, then lag each by your genuine average — pull last year’s debtor days from Xero, and if claims take 45 days, model 45, not the 14 on your terms); retentions, listed job by job with their contractual release dates and your own honesty discount — a retention scheduled for June that history says arrives in September should be modelled in September; small jobs and maintenance work at their faster cycle; and any known one-offs (insurance recoveries, asset sales).

Cash out — on the dates money truly leaves. Wages plus 12% super, every payday — payday super ended the quarterly float, so a fortnightly $40k wage bill is a fortnightly $44.8k cash event (the checklist is here). Materials as a percentage of the revenue they relate to, offset by supplier terms. Subcontractors on their invoice cycle. Then the calendar items that ambush people: BAS in the lodgement months, income tax instalments, annual insurance and licence renewals in their true months, equipment finance repayments, and the owner’s drawings — modelled honestly, because the model fails the day its author starts lying to it.

Closing cash — opening plus in minus out. That number becomes next month’s opening, and the twelve of them in a row are the actual product: a line you can trace with a finger to find the dip.

Reading it like an advisor

Three things to look for the first time you build one:

The January trench. Most trades businesses collect almost nothing between mid-December and late January while wages, rent and finance keep running. The forecast turns that from an annual fright into a number — say $35k — which becomes an October decision: hold buffer, invoice harder in November, or arrange a facility before you need it (banks price desperation accurately).

The BAS pulse. Quarterly BAS months show a repeating spike. The structural fix: a set-aside account fed weekly with the GST and tax slice of every dollar collected. Clients who adopt this one habit stop having BAS crises entirely — the money was never “theirs” to spend.

The growth trap. Winning a big job usually means two to three months of wages and materials before the first claim pays. The forecast prices that gap in advance, which is the difference between growing and growing broke. If the model says the great new contract needs $60k of working capital you don’t have, you’ve just been handed the negotiating agenda: deposit, shorter claim cycles, or supplier terms.

Keeping it alive

A forecast built once is a souvenir. The rhythm that works: on the first week of each month, drop in actuals, roll the window forward a month, and spend fifteen minutes on the variances — why did receipts miss by $18k, and which assumption was wrong? After a quarter of this, your model knows your business better than your gut does; after a year, the bank notices the difference in how you talk about the future.

This is precisely the machinery our virtual CFO service runs for trades and construction clients: the 12-month model built in your Xero data in month one, refreshed monthly, reviewed with you on video, with retentions and claim schedules tracked job by job. If you’d rather own the spreadsheet yourself, take the structure above — it’s the same one — and we’ll happily sanity-check the first version in a planning call.

Questions we get about this

How is this different from the profit report my accountant gives me?

Profit ignores timing; cash is nothing but timing. A profitable month where you invoiced $80k but collected $30k is a cash crisis wearing a good report. The forecast models when money moves, which is what the bank balance actually experiences.

How accurate does a forecast need to be?

Directionally honest beats decimally precise. If it predicts a $20k dip in January and the real dip is $26k, it did its job — you arranged the buffer in October. Update it monthly against actuals and the accuracy improves on its own.

What software should I build it in?

A spreadsheet is fine to start; the upgrade is a live model connected to Xero so actuals flow in automatically and the forecast rolls forward every month. That's exactly what our virtual CFO service maintains for clients.

What's the single most important line for a trades business?

The GST/tax set-aside. Treating the GST and tax components of every payment received as untouchable — moved to a separate account weekly — removes the BAS-quarter panic that drives most trade cash crises.

Where to from here: Virtual CFO · Accountants for tradies & construction — or start online and ask us directly.

General information only — it doesn’t consider your circumstances and isn’t financial product advice. Get advice on your own position before acting; that’s literally what we’re for.