Once you have your total cash flow for the month, you can add your beginning balance to your current cash flow to arrive at your ending cash balance for the month. This is the balance that you’ll use as your beginning cash balance for the following month. After all cash in and cash out has been estimated, you can subtract your total expenses from your total income to see your cash flow for the month. This number is important since it displays whether you had more incoming cash than expenses. If you have a one-time expense upcoming, you can include it in a separate line item. For example, you have a subscription to a professional newsletter that you pay $90 for quarterly.

Monitoring the cash position is crucial for construction firms to ensure they have the liquidity necessary for daily operations and unexpected expenses. Based on ~692 million fully diluted shares and a share price of US$1.76, New Gold trades at a market cap of ~$1.2 billion and an enterprise value of ~$1.4 billion. The setup is like that of K92 Mining that expects to see a 40% plus reduction in all-in sustaining costs from 2024 to 2027, coupled with significant production growth. Hence, while New Gold may not jump out as overly cheap from the below chart of its junior/mid-tier peers and for those taking a rearview mirror approach, this is a company whose future will look nothing like its past. In fact, New Gold is still quite cheap here for those with a long-term horizon, trading at just ~5x conservative FY2025 free cash flow estimates of ~$280 million. When we are considering the project’s level, the difference between a certain project’s income and expense is named as “The project’s cash flow”.

An Improved Free Cash Flow Outlook

This comprehensive article explains more about managing construction finances during a crisis. While having the right tools and processes in place is essential, the significance of training cannot be overstated. Construction professionals need to be trained not only in the technical aspects of cashflow management but also in the strategic elements.

All of these aspects — cash flow management, cash flow projection reports, cash flow statements and cash position — play a vital role in the financial health and operational success of construction projects. They collectively form a comprehensive picture of a firm’s financial position, guiding strategic decisions and enabling effective construction project management. Calculating projected cash flow is a crucial process for businesses to anticipate their future financial health and make informed decisions. This process involves forecasting expected cash inflows and outflows over a specific period using historical data, sales forecasts, expense projections, and other relevant information.

What Is Cash Flow Projection?

Understanding the financial nuances of construction projects requires a deep dive into forecasting, planning and financial evaluation to determine a project’s success and profitability. When it comes to creating and maintaining cash flow projection reports, specificity and thoroughness in the initial setup are key. Dedicating time and effort to meticulously detail these reports from the start pays dividends in the long run. A cash flow projection report is a financial document specifically designed to forecast the cash outflow on a construction project over a certain period, estimating when and how much.

Incorporating change orders and other modifications into both the schedule of values and thus the cash flow projections is essential. Construction projects often evolve in scope and scale, and these changes can have significant financial implications. Timely and precise adjustments in the projections ensure that they accurately depict the project’s evolving financial landscape. Accurately reflecting these adjustments in real-time helps in maintaining a true picture of the project’s financial health and future cash needs.

Cash Flow Projection FAQs

Adjustments based on these variances help in refining future projections, making them more reliable and minimizing errors. Cash position refers to the amount of construction cash flow cash that a company has on hand at any given moment. It provides a snapshot of the firm’s liquidity, indicating its ability to meet short-term obligations.