A month-by-month forecast shows where a machine purchase leaves the least cash on hand; customer-furnished steel takes a materials bill off a job at the cost of the markup on it; and every worked figure in the articles is labeled, printed at its exact rate and totaled from the rounded payment.
Month 2 runs thinnest: a four-month cash forecast around a Lincolnton, NC fabricator's new machine
A cash flow forecast for a machine purchase lists, month by month, what comes in, what goes out and what the machine itself takes in cash before and after it arrives. Illustration only, invented figures: a Lincolnton, NC fabricator orders a $90,000 machine with a 10% deposit of $9,000, finances the other $81,000 over 60 months at a 10.95% annual rate ($1,759.12 a month, first payment in month 3) and pays $2,750 for rigging when the machine arrives in month 2. The invented shop starts with $41,500 in cash.
| Month | Customer receipts | Operating costs | Machine costs | Closing cash |
|---|---|---|---|---|
| Month 1 | $96,000.00 | $88,400.00 | $9,000.00 | $40,100.00 |
| Month 2 | $91,500.00 | $90,100.00 | $2,750.00 | $38,750.00 |
| Month 3 | $103,200.00 | $92,600.00 | $1,759.12 | $47,590.88 |
| Month 4 | $104,800.00 | $93,300.00 | $1,759.12 | $57,331.76 |
Month 2 is the low point at $38,750.00: the machine is rigged and on the floor, the deposit and the rigging have both left the account, and the added work has not been billed yet. A forecast like this shows whether the low point stays above the cushion the shop wants to keep, or whether a draw on a line of credit would carry it through. Over the full term of this invented loan, the 60 payments total $105,547.20, of which $24,547.20 is interest; the equipment financing page covers loans and leases for a purchase like this.
Customer-furnished steel on a Lincoln County, NC fab shop's plant job: the materials bill the shop no longer carries
Some customers can supply the material for a job from their own stock, which moves the materials bill off the shop's account. Illustration only, invented figures: a Lincoln County, NC fab shop quotes $18,400 for equipment guards and access platforms at a plant customer. The steel and hardware cost the shop $7,150 at order, the quote bills them at an invented 12% markup ($858.00), and the work is invoiced on completion 45 days later.
- The shop buys the steel: the invented $7,150 materials bill leaves the account at order. Carried on a credit line at a 13.4% annual rate for the 45 days, it costs $118.12 in interest, and the $18,400 invoice includes the $858.00 markup.
- The customer furnishes the steel: nothing leaves the account for materials, and the invented invoice drops to $10,392.00 for fabrication and finishing, without the markup.
In this invented case the furnished steel saves $118.12 of interest and gives up $858.00 of markup, so it trades margin for cash timing. The agreement between shop and customer also has to say who checks the grade and the quantity. For jobs where the shop buys its own steel, a line of credit or inventory financing for steel bought ahead of an order carries the gap.
Reading a Plumbend article's worked figures: invented labels, printed rates and rounded payments
Each worked example in the articles follows the same labeling rules, so a reader can check the arithmetic:
- Made-up figures carry the label "Illustration only, invented figures", and the rates in them are not offers and say nothing about what a funding partner would charge.
- The printed rate is the exact rate the math uses, such as 10.95%, never a rounded stand-in.
- Monthly payments are rounded to the cent, and totals are the rounded payment times the number of months, so the interest figure can be reproduced from the page.
- Real Lincoln County, NC figures come from Census programs named with their year (County Business Patterns, Nonemployer Statistics, the Building Permits Survey) and stay out of invented paragraphs.
- ZIP 28092 figures are labeled as ZIP figures, because ZIP 28092 reaches past the Lincolnton, NC city limits into Gaston County, NC and Catawba County, NC.
The CNC machine payment calculator runs the same level-payment math for any price, rate and term entered into it.
Six Plumbend articles, each built around one purchase or one payroll gap
- Waterjet and EDM financing for fab and machine shops: a waterjet over seven years, a used wire EDM on two terms, garnet and plate on a credit line, and finishing machines priced two ways.
- Drywall and paint crew payroll: six weeks of wages before a builder pays, finishing tools, and draws taken house by house.
- Hybrid battery gear and a shop compressor: equipment, fluids by the drum and training days for an auto repair shop.
- Outgrowing a tube bender: what a loan and a lease still leave owed after 24 of 48 payments.
- Business loan rates and two offers compared: what can move an offer, a longer term, and fees read line by line.
- Paperwork behind an equipment request: the seller, bank statements, cash down and insurance on a used line borer.
By Plumbend Lending Group · Updated
