A cash flow forecast starts from the bank balance and tracks money by the week it moves. The 13-week example uses invented figures for an engineering firm, and the article list covers contractors, shops, practices, stores and buyers.
How Stephens County, OK engineering firms prepare a cash flow forecast
A cash flow forecast for a Stephens County, OK engineering firm starts from the bank balance, not from the profit and loss statement, because the question it answers is when money moves rather than whether the firm earns it.
- Open the forecast with today's balance in the operating account, to the dollar.
- List money coming in by the week it is expected, invoice by invoice, using each client's real payment history instead of the due date.
- List money going out by the week it leaves: payroll dates, rent, software subscriptions, vehicle and equipment payments, insurance.
- Carry each week's ending balance forward as the next week's opening balance.
- Mark the week with the least cash and set a floor the firm does not want to drop below.
- Each week, replace the estimate with what came in and went out, and add a new week at the end.
A 13-week cash flow forecast for Duncan, OK engineering firms
Illustration only, invented figures: a Duncan, OK engineering firm opens with $32,000 in the bank, spends $2,150 every week on rent, software and vehicle payments, and runs a $12,400 payroll every second week. Client payments land unevenly, as the table shows.
| Week | Cash in | Cash out | Cash at the end of the week |
|---|---|---|---|
| Week 1 | $4,200 | $2,150 | $34,050 |
| Week 2 | $0 | $14,550 | $19,500 |
| Week 3 | $15,800 | $2,150 | $33,150 |
| Week 4 | $0 | $14,550 | $18,600 |
| Week 5 | $2,600 | $2,150 | $19,050 |
| Week 6 | $9,400 | $14,550 | $13,900 |
| Week 7 | $6,500 | $2,150 | $18,250 |
| Week 8 | $0 | $14,550 | $3,700 |
| Week 9 | $22,300 | $2,150 | $23,850 |
| Week 10 | $1,800 | $14,550 | $11,100 |
| Week 11 | $0 | $2,150 | $8,950 |
| Week 12 | $17,600 | $14,550 | $12,000 |
| Week 13 | $6,100 | $2,150 | $15,950 |
In this invented forecast the balance bottoms out at $3,700 in week 8, which is $6,300 under a $10,000 floor. Over the 13 weeks $86,300 comes in and $102,350 goes out, so the firm ends at $15,950. A gap of that size, dated and short, fits a line of credit drawn before week 8 and paid down from the week 9 receipts more closely than a long term loan does (our arithmetic on the invented figures).
How Duncan, OK oilfield service companies can improve cash flow before borrowing
Some cash gaps close without borrowing. Steps a Duncan, OK oilfield service company can take before any request goes out:
- Bill the operator from the signed field ticket the day the job closes, instead of batching invoices at month end.
- Put each open invoice into the forecast at the date that operator's past payments suggest, so the gap is a dated number.
- Count what idle equipment costs each month in payments and insurance, and decide whether each unit earns its keep.
- Keep equipment purchases off the operating account: a machine financed over its working life leaves cash for payroll.
- Follow up on every invoice past its terms with a statement and a call.
A forecast that still shows a gap after those steps points to working capital or a line of credit; funding partners review the request and decide.
Articles for Duncan, OK auto repair shops and oilfield service companies
The articles on this blog take up six funding questions, written for Duncan, OK businesses:
- Covering crews and materials before a contractor's job pays.
- When a short-term loan can carry a business through a slow quarter.
- How a business credit line works for shops buying parts and fuel.
- Repayment terms physician offices can see on equipment and lease buyouts.
- Paying for coolers and shelf stock in a convenience store.
- Financing the purchase of an existing store or shop.
The credit-line article fits auto repair shops and oilfield service crews alike, and the contractor cash-gap article fits oilfield service companies that bill operators after the work is done.
By Tealreach Lending · Updated