A cash forecast is the payment cycle, drawn out in advance

A cash forecast answers one question: how much money will be tied up in this job, and when will it come back. On an Irish contract the timing side of that question is unusually firm, because the Construction Contracts Act 2013 fixes the dates. The forecast is only as good as the dates you feed it, so start with the ones the Act gives you.

The cycle sets the curve

Each payment cycle turns on the payment claim date. The claim is served, and under the default position in the Act the amount claimed falls due no later than thirty days after that date. So for every cycle you can plot two points: when the value is claimed, and the outer limit of when the cash should arrive. String those points across the programme and the shape of the job in cash terms appears.

• Claim date to due date. Thirty days by default, counted as calendar days, is the lag between value earned and cash due.
• Retention drag. The slice held back each cycle pushes cash out to the release milestones, not the monthly due date.
• Outflows lead inflows. Wages, plant and materials are paid before the claim that covers them falls due.

Where the strain is

The gap between paying for work and being paid for it is where a construction business lives or dies. On the Irish cycle that gap is the thirty day lag plus whatever the payer takes up to that limit, and it is widened by retention held on every claim. Model it cycle by cycle and the peak funding requirement, the deepest point of the curve, becomes a number you can plan around rather than a surprise you discover at the bank.

Down the chain

The same cycle governs payments to subcontractors, because the Act applies down the chain. A main contractor forecasting cash has to see both sides: the claim to the employer and the claims coming up from below, each on its own payment claim date. Line them up and the timing risk is visible. Ignore one side and the forecast is only half a picture.

The discipline

Build the forecast from the actual payment claim dates, not from round months. Apply the thirty day default to each, hold retention out to its release milestones, and lead the inflows with the real outflows. A forecast built on the statutory dates is one you can take to a lender. A forecast built on optimism is one you explain after the fact.