Could your business
survive a slow month?

How the math works. Every number is a transparent calculation from your slider inputs. The formulas:

monthly cash out = overhead + (crew × labor per crew)

scenario revenue = monthly revenue × (1 − revenue drop)

total days late = typical days late + severe extra delay (severe only)

collection efficiency = 1 − (late % × total days late ÷ 30 × (1 − deposit %))

monthly cash in = scenario revenue × collection efficiency

monthly net = monthly cash in − monthly cash out

runway months = cash on hand ÷ |monthly net| (when net is negative)

Billing structure — deposits & progress payments. The deposit is collected at job start; progress draws spread evenly through the job (average lag = half the job length); the final payment lands at job end plus payment terms. The formulas:

progress total % = min(progress payments × avg progress %, 100% − deposit %)

final % = 100% − deposit % − progress total %

avg collection lag = deposit % × 0 + progress total % × (job length ÷ 2) + final % × (job length + terms)

cash tied up in AR = monthly revenue × avg collection lag ÷ 30

The deposit is collected before work starts, so it never sits in receivables and is never exposed to late payers — that's why deposit % both shrinks the AR figure and lifts collection efficiency. Progress billing shrinks the AR figure by pulling cash forward, but progress draws can still be paid late. With deposit % and progress payments both at zero, this reduces to the lump-sum case: AR = monthly revenue × (job length + terms) ÷ 30.

Profit First for Contractors overlay. The formulas:

Real Revenue = monthly revenue × (1 − materials & subs %)

Profit / Owner's Pay / Tax / OpEx = Real Revenue × the TAP for each

Scenario mapping. Current = no revenue stress, but typical lateness still applies. Mild = revenue drop with typical lateness. Severe = revenue drop plus the extra delay slider stacked on top of typical lateness. The collection-efficiency formula measures cash arriving this month — money owed but late still gets collected, just later. The stress test shows the squeeze during the transition.

The runway zones (red <2 / yellow 2–4 / green 4+ months) are a standard small-business cash-reserve rule of thumb — keep a few months of operating expenses in reserve. They are a teaching framework, not a cited industry statistic about contractors.

Profit First for Contractors. Standard Profit First splits every dollar of revenue four ways — which misleads contractors, because most of your revenue is already committed to materials and subcontractors. Shawn Van Dyke's Profit First for Contractors adds a sixth account: materials & subs come out of total revenue first as a pass-through. What's left is Real Revenue, and only Real Revenue is split into Profit, Owner's Pay, Tax, and OpEx. Van Dyke's guidance: keep materials & subs under about 70% of total revenue, and keep OpEx inside roughly 15–25% of Real Revenue. The 10% Profit / 45% Owner's Pay / 20% Tax / 25% OpEx split shown here is a starting target inside Van Dyke's stated ranges — he says to calibrate it to your trade and ramp the Profit allocation up over time. We are not affiliated with the author; we use the method with clients because it works.

The Excel companion carries the same content on its "Methodology — Cited / Examples / Sources" tabs.