A large cash flow gap usually looks much the same: work continues, payroll and supplier payments are on the calendar, there is no money in the account, and the next customer payment is due later. The project may still be profitable under the contract and estimate; the payment dates simply do not line up.
In this situation, it is easy to start scrambling: borrow, postpone, plead, cut back. This may help in the moment, but without a quick diagnosis and a clear plan, the cash flow gap can return on the very next project.
Below is a practical guide to quickly calculating the size of the gap, deciding what to do in the next 48 hours, and setting financial rules that reduce the risk of it happening again.
Contents:
- What counts as a cash flow gap, and when is it already “large”?
- Quick diagnosis: the figures a workable plan needs
- A 48-hour action plan for stabilising cash flow
- Negotiations: how can you ask for payment and more time without losing your dignity?
- After the immediate crisis: rules for keeping cash under control
- How does 101 App help you see the cash position of each project?
- Mistakes that make the gap a recurring problem
What counts as a cash flow gap, and when is it already “large”?
A cash flow gap occurs when a business does not have enough money to make current payments on specific dates. Receipts are expected and the project may be profitable, but the payments fall due sooner.
A “large” cash flow gap goes beyond inconvenience. It is the point at which you start choosing who will not be paid: the crew, a supplier, the landlord or the tax authorities. Penalties, work stoppages, team conflicts and slower progress on site can follow.
In construction, a gap often arises from unexpected spending, a growing number of projects and a weak habit of planning payments in advance. Payment after completion adds to the pressure: you effectively finance the project until the customer pays.
Quick diagnosis: the figures a workable plan needs
Panic starts when there is no answer to one question: “How much money do we need to make it to the next receipt?” Diagnosis requires a simple dated cash flow model: when and how much will come in, and when and how much will go out. This is a cash flow forecast by date; planned receipts and payments must be distinguished from the actual transactions recorded in the cash flow statement.
Gather data for the next 14–30 days. If you are already short of cash for the coming week, you do not need a long-range forecast yet, but two weeks give you room to negotiate and reschedule payments.
For the initial calculation, you need the opening available cash balance within the scope you have chosen to assess. Exclude unavailable money and amounts earmarked for other purposes; do not treat funds entrusted to participants for business expenses or reserves as freely available for any payment. Check their purpose and availability by the required date separately. Forecast balance for each day = opening available balance + cumulative available receipts − cumulative payments within the same scope. Shortfall over the forecast horizon = max(0, −minimum forecast daily balance). If all balances are non-negative, the shortfall is 0; a positive closing balance does not rule out an earlier dip below zero. If a reserve is already included in the opening balance and the payment it covers is in the schedule, do not deduct the reserve again: the payment itself will reduce the balance. Reconcile money and the corresponding payments outside this scope separately, without double counting. Consider uncertain receipts in separate scenarios; if the order of transactions within a day matters, check it separately.
| What to gather for the calculation | How to record it so you can use it later |
|---|---|
| Available bank and cash balances; funds entrusted to participants shown separately | As of today, by project. Record restrictions and reserves separately; for funds entrusted to participants, record who can pay which obligation by its due date, or when the money will be returned. Count a return only once. |
| Customer receipts by date | Expected date, amount and confirmation status; uncertain receipts in separate scenarios |
| Payments to crews and employees | Date, amount and who is critical to maintaining progress |
| Suppliers, rent, equipment and logistics | Date, amount and what will stop if payment is not made |
| Taxes, loans and mandatory payments | Date, amount and consequences of late payment |
If you run several projects, keep them separate: a cash flow gap on one project is often covered with money from another, making the overall picture misleading. It may look as though “the company has money”, when in fact that money is already committed to other obligations.
A 48-hour action plan for stabilising cash flow
Next, you need a plan that puts you in control. Its purpose is to stop obligations from growing, accelerate receipts, reschedule some payments and cover the shortfall with due regard for cost and risk.
It helps to work in stages, starting with negotiations and a revised schedule before turning to borrowing. This order reduces the cost of getting through the crisis and helps you retain a reputation for managing the situation rather than pleading for help.
- Put a “pause on new obligations” in place for 48 hours: new purchases, new advances and new promises to the crew must wait until the cash position has been recalculated.
- Draw up a payment list for the next 7–14 days and mark priorities: what will stop the project, what will trigger penalties and what can be postponed.
- Contact customers with payments expected. The aim is to bring the receipt forward or split the amount into two payments, with the first arriving sooner.
- Follow up on receivables: reminders, work acceptance documents, completion paperwork and invoices. Money is often stuck at “almost done” because nobody follows through on the paperwork.
- Agree on a permitted extension where the risk is lower: some suppliers, rent, equipment or some payments to the crew. Confirm the new date immediately instead of leaving it at “we’ll speak later”.
- Sell or turn back into cash anything that does not affect your ability to meet current obligations: surplus materials, tools or idle equipment. This may sound obvious, but it can sometimes cover the cash shortfall without a loan.
- If a shortfall remains, choose an available source of finance: an overdraft, credit card or loan. Compare costs and terms, and tie it to a specific repayment date.
Company overheads deserve separate attention. When cash is tight, even small recurring costs quickly eat into the remaining balance because they are paid regardless of the project. To stabilise cash flow, it helps to know your monthly fixed costs and keep that minimum under control.
Negotiations: how can you ask for payment and more time without losing your dignity?
Negotiation is the main tool for dealing with a cash flow gap. In construction, money moves through people: the customer, supplier, site supervisor and crew. If you speak to each of them clearly and with figures, part of the gap can be covered without borrowing.
With a customer, the approach is to link stages of work with transparency: “Here is the completed work, here is the acceptance document, here is the date the crew next comes to site, and here is the amount needed by that date.” A request tied to the work schedule and documents is received more calmly.
- Earlier payment. Offer to split the payment: part today and the rest as planned. In return, confirm the work schedule for the coming week.
- More time to pay a supplier. Give a specific date and arrangement: “payment in two instalments” or “an advance today, with the balance after the customer pays”.
- Payment to the crew. Explain the dates plainly and propose an arrangement that is permitted: a fixed portion now and the remainder on a specific day. Avoid vague promises.
If you work on payment-after-completion terms, cash flow gaps become a systemic risk. An agreed move to advances and stage payments can reduce the working capital required and make cash movements more predictable. The 101 blog has a separate guide to moving to advance payments (in Russian).
After the immediate crisis: rules for keeping cash under control
Once cash flow has been brought back into balance, it is tempting to relax and return to the old routine. This is where the problem repeats itself. You need three foundations: clear costs, a safety cushion and a working capital calculation.
The first foundation is fixed and variable costs. Fixed costs are the minimum you pay regardless of workload. If you have not calculated that minimum, it is harder to assess in advance whether your cash position can withstand a delayed payment. For the basics, see the article on fixed costs (in Russian).
The second foundation is a reserve fund. This is a separate company cash cushion to which you regularly transfer available money, taking profit and upcoming obligations into account, to cover shortfalls in emergencies and weather downturns. Accrued profit alone does not establish that cash is freely available. The 101 blog explains in detail how to set the amount and build the discipline.
The third foundation is working capital. It shows whether you have enough resources to finance your current portfolio of projects until customers pay. If working capital is insufficient, the business has to rely on postponements and borrowing. The formula and reasoning are explained in the article “Why calculate working capital?”.
One more practice helps you spot risks earlier: financial accounting by project and a regular cash flow statement. Compare actual data with the forecast schedule of receipts and payments: this helps reveal an expected gap in advance, without guaranteeing that the forecast will match what happens. See the article on financial accounting for income and expenses.
How does 101 App help you see the cash position of each project?
A cash flow gap often starts with money being mixed together: one project is in surplus, another is in deficit, a third is waiting for payment, while the bank account shows a single total. Separate accounting helps you compare receipts and recorded expenses by project. To assess available cash, separately reconcile actual money, restrictions and the schedule of upcoming payments.
In 101 App, you can manage each site as a separate project: track receipts, expenses, the balance and funds entrusted to participants, based on the data entered and with checks on transaction confirmation. The project balance is the difference between receipts and recorded expenses; it is not the money held by a particular participant. These records help you notice when one project is financing another, but payment decisions require a separate check of available money and obligations.
To discuss your company’s situation and see examples of how 101 App works, book a product demonstration.
If you need deeper company and project analytics, take a look at PRO+ in 101 App: the offering includes advanced analytics and approval of Company Fund events. Check the current feature set against the current plan comparison, taking access rights and the version you use into account; the financial picture depends on the data entered. These features do not replace reconciling available money with the schedule of future payments.
Mistakes that make the gap a recurring problem
A cash flow gap is rarely the only problem. More often, it reveals that records are kept “from memory”, margins go unchecked, money moves between projects without rules, and decisions are based on gut feeling. The 101 blog has examined these issues as common management accounting mistakes.
- Covering the gap with personal money without rules for repayment. This masks the problem and turns the owner into a permanent source of finance.
- Making payment after completion the default. Cash timing becomes dependent on someone else’s payment discipline, while your payroll and supply obligations remain firm.
- Failing to calculate fixed costs. You do not know the monthly minimum you need, so you cannot plan cash flow.
- Failing to compile a cash flow statement by date. Money is assessed by the account balance, even though future payments and receipts matter.
- Mixing projects. A profitable project pays for an unprofitable one, and you find out too late.
If the cash flow gap is already large, start with a diagnosis and a 48-hour plan. Once cash flow has stabilised, establish rules: calculated costs, a reserve fund, working capital control and project accounting. This helps reduce the risk of having to look for money every month.
