How much extra money will a big contract need?
A big contract can make a profit and still leave you short of cash, because you pay for the goods before the customer pays you. Enter your numbers and see the worst point and how long it lasts.
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Your contract
The numbers below are an example. Replace them with yours. Use your own currency; no currency sign is needed.
The answer
Profit and cash, month by month
Profit so farCash in the bank so far
The shaded part between the lines is the money tied up.
The numbers
Red numbers are below zero. The worst point can fall inside a quarter: switch to months to see it.
What if the terms change?
How it counts
- Time is counted in months. Month 0 is the day you sign. Month 1 is the first delivery. The picture covers 24 months.
- Profit is counted when the goods are delivered: the sale times your margin. Cash is counted when money really moves: you pay suppliers on their date and the customer pays you on theirs.
- Days are turned into months by dividing by 30. If that is not a whole number, the amount is split between the two nearby months. For example, 45 days means half of the money moves 1 month later and half moves 2 months later.
- The goods are bought before delivery, as many days ahead as they wait with you. Anything bought more than a month before the first delivery is counted in month 0.
- The reserve is bought for the first delivery, paid like other purchases, and kept. It is never sold, so it stays tied up.
- Not included: taxes, interest on a loan, and changes in sales other than the first big order. This is a simple estimate to help you plan, not a promise of what will happen.