Subcontractor Cash Flow Planner vs. treating materials as cash out on day one

Same materials line, two different real answers

On this calculator's own default scenario — a $10,000 invoice, $2,500 in materials, $700/week burn, net-30 client terms, 10% retention, a 14-day late-payment buffer, and $5,000 starting cash — the client is expected to pay on day 44.

The net-30 account changes nothing, because its due date still falls before the client's expected payment — you are still funding the materials out of pocket, just for a shorter window than a true day-zero purchase. The net-45 account is due one day after the client pays, so the client's own money covers the materials purchase and the entire funding gap disappears. Same $2,500 line, same kind of supplier relationship, opposite answer — decided by a single day on one invoice due date most back-of-envelope plans never look up.

Why the naive assumption is not "conservative"

Treating a materials purchase as immediate cash out reads as the safe, pessimistic choice — if anything, you would expect it to overstate the gap rather than get it wrong in a way that matters. But "overstate by how much" is exactly the part a day-zero assumption cannot answer, and on this scenario the overstatement is the entire gap: $1,900 that a supplier account already due after the client pays would never actually need funding. A cash plan that books materials on day zero cannot distinguish a real $1,900 shortfall from a $0 one that only looks like $1,900 because the supplier's own terms were never priced in.

This is not a claim that supplier credit is free or that you should take it — a supply-house account may carry fees, limits, or terms this calculator does not model, and the payment-terms side of the gap still needs sizing on its own. It is a claim about sizing: whichever way you finance materials, the one date that decides whether it matters is the supplier's due date against the client's expected payment day, and a day-zero assumption throws that date away before you ever get to compare it.

Common questions

Why does assuming materials are cash out on day one overstate the funding gap?

Because most subs do not pay a supply house on the spot -- they buy on an account with net terms, commonly net 30 or net 45. If that due date falls after the client's expected payment, the client's money covers the materials before the supplier ever collects, and the materials line needs no bridging at all. Treating the purchase as day-zero cash out, as a back-of-envelope plan usually does, prices a gap that may not exist.

Why doesn't every supplier account close the gap the same way?

Because it is a race between two dates, not a feature of having terms at all. On this calculator's own default scenario the client is expected to pay on day 44. A net-30 supplier account is due on day 30 -- still before the client pays -- so the requirement is completely unchanged at $6,900 and the $1,900 gap stands. A net-45 account is due on day 45, one day after the client's payment lands, so the materials never need bridging and the gap closes to $0. Same $2,500 materials line, same supplier relationship in spirit, opposite answer, decided by a single day.

Is a supplier account always better than paying cash for materials?

Not necessarily -- this page is not a recommendation to use supplier credit, only a correction to a sizing assumption. A supply-house account may carry its own fees, credit limits, or relationship terms this calculator does not model. What it does show is that the naive day-zero assumption is not a conservative simplification, it is a specific and sometimes large overstatement, and the size of the overstatement depends on one date you would not otherwise think to check.

Open the calculator and set your own materials cost, supplier terms, and expected payment day — nothing you enter is uploaded.