WOLLASTON WEDNESDAY #40: How We Manage Cashflow

In our business, cashflow is king. The more cash you have, the quicker you can move through a real estate project. With that said, unless you have your entire renovation budget liquid as cash up front, you have to plan your cash flow accordingly. Here is a glimpse in on how we manage our cashflow on a project by project basis.

Cool pic right?!

We plan our projects out week by week generally for 6-8 weeks at a time on a relatively micro level. We have individual bank accounts for each project so we can keep the accounting and cash planning simple. This is all done from our Google Drive account. We have a "master" sheet for cashflow across all of our projects.

Below you’ll see the first month of construction progress for a new and upcoming project we have.

We then create a set of columns for positive cash coming into the project. This includes startup capital and any bank reimbursements based on progress draws. Banks reimburse you for money you’ve spent based upon an agreed budget and timeline.

We then create a set of columns based off of all expenses related to project. We use excel formulas to quickly add up all of our expenses and subtract them from the cash in our bank account. We can quickly ensure we have enough capital based off any given week to pay for all of our materials, labor or expenses related to the project. If we see that we’re short on cash, we can then get creative and ultimately not be surprised by a set of circumstances.

If you’re a developer or builder, we’d love to see how you manage your cashflow. This is by far one of the most important parts of the business and we’re always looking to improve.

Alex