Why you're busy but broke: tradie cash flow, fixed
Flat out all year. Phone ringing, jobs booked weeks ahead, quotes done at night. Then you check the bank account and wonder where it all went. If that sounds familiar, the problem usually isn't how hard you're working. It's how money moves through the business.
Profit and cash aren't the same thing
A job can be profitable on paper and still leave you short. You pay for materials, wages and subbies up front, then wait 14, 30 or 60 days to get paid. The more work you take on, the more cash you need to carry in the meantime. That's why growth can feel worse, not better.
Five places the cash goes
- Paying before you're paid. Deposits and progress claims that are too small or too late.
- Money that isn't yours. GST, PAYG and super sitting in your account and getting spent before the bills land.
- Slow invoicing. Job finished on Friday, invoiced three weeks later.
- Underpriced work. A thin margin leaves nothing to cover the gaps. (See markup vs margin.)
- Overhead creep. A new ute repayment here, another subscription there.
The tax trap
GST is the big one. When a client pays you, about one-eleventh of that payment belongs to the ATO. If it sits in your everyday account, it feels like yours and it gets spent. Then the BAS arrives and you're scrambling. With Payday Super now in place, employers also need to pay super within days of each payday, so there's less room to juggle.
A separate account for tax money is one of the simplest changes a trade business can make.
What a healthy setup looks like
Businesses that stay ahead on cash flow do the same few things well. They get money in before they spend it, invoice fast, know what to put aside every week, and price jobs with enough margin to ride out a slow month.
None of it is complicated. The hard part is building it into how you run the business so it happens every week without you having to think about it.
Where to start
Look at your last three months. On average, how long did it take from finishing a job to getting paid? If the answer is more than a couple of weeks, that's your first fix.
If you'd like a second set of eyes on where your cash is going, that's what the free discovery call is for. We'll look at how money moves through your business and show you the first leak to plug.
General information only, not financial, tax or legal advice. Speak to your accountant or adviser about your own situation.