Contractor field notes
Estimate cash needed while waiting for project payments
Profitable work can still require cash before the customer pays. This planning estimate combines daily material, labor, and other spending, the funding gap in days, concurrent projects, total upfront payments across those projects, and an additional cash reserve.
Project funding-gap formula
Gross float = (daily materials + daily labor + daily other spending) × payment-gap days × concurrent projects. Working capital = max(0, gross float − total upfront payments) + cash reserve.
Worked example
Daily materials of $400, labor of $500, and other costs of $100 give $1,000 daily spending per project. Over 20 funding-gap days for two projects, gross float is $40,000. Subtract $10,000 total upfront payments and add a $3,000 cash reserve to get $33,000 working capital.
Common estimating pitfalls
- Use the gap between spending and collected funds, not just the invoice due date.
- This simplified average does not replace a dated project cash-flow forecast.
Frequently asked questions
Is this the accounting definition of working capital?
No. Accounting working capital is current assets minus current liabilities. This calculator estimates cash required to carry projects between customer payments.
How do customer deposits affect the result?
Enter total upfront payments across all modeled projects. They reduce gross float, with the remainder floored at zero before adding the cash reserve.
What if spending is concentrated at project start?
Average daily spending can understate an early materials purchase. Use a detailed cash-flow schedule to check the timing of large expenses.